South African employers warned to avoid this major own-goal
A recent case involving Mamelodi Sundowns highlights the importance of understanding clawback provisions for both employees and employers.
In August 2025, the Johannesburg High Court delivered a judgment on the enforceability of a clawback clause.
This refers to a contractual term that makes provisions for a company to recover certain monies, bonuses or other incentives that were paid to an employee under a specific circumstance.
This should be distinguished from a malus clause, which requires repayment of unearned benefits or remuneration if employment ends early.
Imraan Mahomed, Thato Maruapula and Ayesha Karjieker from Cliffe Dekker Hofmeyr said that either a clawback or malus clauses need a “trigger event” to be invoked.
A court case involving South Africa’s most successful football club, Mamelodi Sundowns, and its former head coach, Pitso Mosimane, deals with the issues of a clawback clause.
For this case, the “trigger event” was Mosimane’s resignation four months into a 48-month contract.
Sundowns sought close to R8 million repayment from Mosimane or his intermediary, MT Sports.
The sum was the portion of the intermediary’s commission which was paid upfront, with the employment contract and intermediary agreement containing clawback clauses obliging pro-rata repayment if the relationship ended early.
Mosimane was forced to pay close to R8 million to Sundowns in agents’ commission fees and interest after he moved to an Egyptian rival, Al Ahly, in 2020.
The experts said the ruling affirmed a long-standing commercial stance that clawback clauses can be enforced when they are clearly drafted, freely agreed to, and abide by public policy.
The case’s key issue was whether clawback clauses are valid and enforceable, especially in the context of early termination of a contract.
The court said that clawback clauses are enforceable where they are clearly drafted, agreed to by the parties and not contrary to public policy.
It noted that freely and voluntarily concluded contracts must be honoured and highlighted that the clawback clauses in both the employment and intermediary agreements were negotiated at arm’s length, with both parties having legal advice to understand their implications.
The court rejected arguments that the clawback provisions were unreasonable, discriminatory or constitutionally unenforceable.
The court said that requiring pro-rata repayment of amounts paid is a legitimate risk-mitigation tool, particularly if large upfront payments are made.
The court added that such provisions must be expressly included in the contract and that any waiver or variation must be in writing, in accordance with non-variation clauses.
Why employers need to keep an eye out
The experts said the ruling confirms that the provisions will be upheld where they are clearly drafted, especially where they are freely agreed to and not contrary to public policy.
The decision also highlights the importance of written agreemetn and the need for clear contractual mechanism when it comes to recovery unearned amounts following the event of early termination.
The decision also highlights the importance of written agreements and the need for precise contractual mechanisms to recover unearned amounts in the event of early termination.
The experts can provide the following tips for drafting and enforcing clawback clauses:
- Draft clear clawback clauses: Ensure that the clause is unambiguous, sets out the formula for repayment, and is clearly included in the employment agreement or elsewhere.
- Include robust non-variation clauses: Require all parties to sign any waiver or amendment of clawback clauses in writing.
- Document all waivers or releases: Do not rely on verbal agreements or public statements to alter contractual rights – ensure any release from clawback obligations is formally documented.
- Assess risk and reward: Use clawback clauses to balance the risk of upfront payments with the need to attract or retain talent, ensuring that the employer is protected if the relationship ends prematurely.
- Review for fairness and compliance: Regularly review clawback clauses to ensure they are not unreasonable and are consistent with public policy.
“Employers making substantial upfront payments should ensure their contracts contain robust, enforceable clawback clauses to protect against early termination and unearned benefits,” said the experts.
An appeal to the original ruling has been made by Mosimane and MT Sports.
Loading ...