What Does Receiving a Kickback Mean? Companies Must Assess the Severity

The term “kickback” is often mentioned in the news, but what does it actually mean? A kickback refers to the act of returning a portion of the payment after the full amount for goods or services has been received. In such cases, the seller returns a percentage of the payment to the buyer, and the buyer who receives this money is said to have taken a kickback.

Is receiving a kickback serious? This question must be considered from various angles. Typically, the standard for judgment starts with whether the act harms the company’s interests. For example, if a procurement employee conspires with a supplier to inflate prices but purchases goods at a lower cost while pocketing the difference, the company suffers a direct loss. On the other hand, if a supplier gives a “bonus” without impacting the company negatively, some may view it as the employee’s personal ability and choose to overlook it.

In Taiwan, kickbacks involving government agencies are viewed much more seriously than those in private enterprises, where handling often depends on the discretion of the company’s management.

What Techniques Do Employees Use to Receive Kickbacks?

Kickbacks are often considered a form of “unspoken rule” in business dealings—rarely openly discussed and usually tested subtly before any offer is made. Some people describe how they test whether a buyer or seller is open to kickbacks using indirect language or small gifts. If both parties are agreeable, the transaction proceeds with the kickback. If not, it doesn’t happen.

There are many forms of kickbacks. Some are tangible items such as gift cards or luxury goods, while others include meals, travel entertainment, or direct cash payments. In some cases, employees are compensated using platform tokens (e.g., point cards) or even casino chips. The method often depends on the type of business and the kind of suppliers involved.

What Is the Typical Rate for Kickbacks?

Based on many reports—often involving scandals—the usual kickback rate tends to fall between 10% to 20%. Online forums have also shared similar experiences, including kickbacks for advertising placements, purchasing machinery, and real estate acquisitions such as new building construction. The percentage usually depends on the relationship between both parties.

Even though kickbacks are widespread in some industries, they are still illegal and rarely discussed openly. Whether the organization is public or private, accepting kickbacks may violate the law. Offenders may be charged with breach of trust and face consequences ranging from fines to imprisonment. No matter the situation, it’s crucial not to risk legal consequences for short-term personal gain.

How Should Companies Handle Employees Who Accept Kickbacks? Here’s the Answer

If an employee is found to be accepting kickbacks that harm the company’s interests, many companies will choose to terminate their employment.

For example, in one real case, a sales employee at Company A demanded and received kickbacks from Agency B, then referred the client to another Company C. Agency B, feeling their business was harmed, reported the matter to Company A. After an internal investigation confirmed the report, Company A dismissed the employee.

It’s important to note that the dismissal process must comply with legal procedures. According to Article 12, Paragraph 2 of the Taiwanese Labor Standards Act, if an employee commits violent acts or serious insults toward the employer, employer's family, representatives, or colleagues, the employer may terminate the contract within 30 days of learning about the incident—without prior notice. If the time limit is exceeded, the employee may turn the situation around and claim wrongful dismissal.

During investigations, obtaining confessions, verifying documents, and gathering evidence of fraud often requires the help of professionals. Companies should also maintain vigilance over documents such as quotations and financial statements to prevent damage that may be difficult to repair.