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Background: I'm leaving a position I've had for 8 months. HR informed me that there is a relocation clawback clause in my contract. I knew nothing of any clawback clause. I checked my contract and there is no such clause. HR then informed me that it was in my job offer letter. I checked my offer letter, but there is no such clause. HR then informed me that it is in the relocation policy referenced in my offer letter. The policy is referenced in my offer letter as relocation benefits, and the document does have a clawback section. I had no reason to read that policy document because HR had already presented all the benefits to me. It seems unfair that they can hide an important clause in this fashion. Questions: Is it legally binding when they hide a clause this way? Is it possible for me to fight it?

  • When you say "[t]he policy is referenced in my offer letter... and the document does have a clawback section" are you saying that the policy is spelled out in the offer letter? Or that the offer letter makes reference to the policy and the policy is laid out elsewhere, e.g. an employee handbook perhaps? And also, when you say 'the document' do you mean the offer letter you mentioned a few words prior or are you talking about a separate document? You won't find a precise answer w/out answers to these questions. – A.fm. May 9 at 15:16
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Is it legally binding when they hide a clause this way? Is it possible for me to fight it?

The issue boils down to whether you knew or reasonably should have known about the clawback provision. In the negative, then the clawback provision fails the utmost essential condition in contract law that an agreement between the parties be entered knowingly.

Two important items are

  1. whether you signed the offer letter; and

  2. whether your contract can be reasonably construed as an agreement that is separate from, preceded by, and supersedes, the offer letter.

If the answers to items 1. and 2. are "no" and "yes", respectively, then the clawback is unenforceable. Otherwise, you will need to dig in the particularities of your case.

Note that HR's mere presentation to you of "all the benefits" is not necessarily tantamount to you "ha[ving] no reason to read that policy document". That is why your argument(s) should focus on whether the clawback provision is so hidden that it de facto contravenes the contract law covenant of good faith and fair dealing.

  • Note that the implied covent of good faith only exists in US and Canadian law. – Dale M May 9 at 20:57
  • @DaleM "covent of good faith only exists in US and Canadian law". Of course not. See Dutch & South Africa contract law, Art. 1104 of French Code civil, it "is central to Austrian contract law, similar to the German contract law", etc. – Iñaki Viggers May 9 at 22:14
  • ... within common law jurisdictions- civil law is different – Dale M May 9 at 23:51
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    To be clear - there is no such (general) obligation in England/Wales, New Zealand, Australia or, I believe, Singapore. In those jurisdictions contracts must be followed as written, if the contract grants one party discretionary powers they must exercise them reasonably but they are not required to exercise them in good faith. – Dale M May 10 at 0:18
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The contract killed the offer

Under the parol evidence rule “extrinsic evidence is inadmissible to vary a written contract”. A written contract is complete except for obligations at law or such things as are obviously necessary to give effect to the contract.

A policy referred to in the offer but omitted by the contract is not part of the contract.

  • This is, of course, far too general of a statement and, depending on info that OP has not included, it may or may not be accurate. – A.fm. May 10 at 16:17

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