What is Kickback fee?

A kickback arises when a supplier pays part of the contract value back to the person who makes or influences the purchasing decision, without the knowledge of that person's organisation. This can range from direct cash payments to gifts, travel, discounts on personal purchases, or other benefits.

The core problem is concealment: the organisation pays an inflated price for a product or service, while the decision-maker personally profits. This is a textbook case of conflict of interest.

In the Netherlands, kickbacks fall under Article 328ter of the Criminal Code, which criminalises private-sector bribery. This applies to both the giver (the supplier who pays) and the receiver (the employee who accepts). The maximum sentence is two years' imprisonment. Bribery of public officials carries even heavier penalties.

For SMEs, the risk of kickbacks is greatest in procurement categories with many suppliers, low transparency, and weak oversight: construction and installation, IT suppliers, temporary staffing, and marketing services. A buyer who makes decisions independently without a four-eyes check is particularly exposed.

Kickbacks harm the organisation in two ways: directly through inflated procurement prices, and indirectly through reputational damage and legal liability when the arrangement comes to light. Suppliers who pay kickbacks always build those costs into their pricing.

Kickbacks are not only a legal risk but also a quality risk. When supplier selection is influenced by personal gain rather than objective criteria, you systematically select worse suppliers than you need. You pay more, receive less, and risk reputational damage if the arrangement is discovered.

As an employer you may also face civil liability if you should have detected the kickback arrangement but oversight failed. Preventive measures are cheaper than legal proceedings after the fact.