Training cost clawbacks: recent Court of Appeal decision
Tuesday 21st July 2026
Employers that invest in training sometimes wish to protect that through training repayment or “clawback” provisions. A recent Court of Appeal (CA) decision acts as a reminder that these must be carefully drafted to be enforceable.
In Geeks Ltd v Watts [2026] EWCA Civ 889, the CA held that a training cost repayment provision was an unenforceable restraint of trade.
Background
Mr Watts joined Geeks Ltd as a trainee quality assurance engineer in March 2019. He entered into a “Training Investment Contract”, where he agreed to repay a “training cost debt” of £8,108. The figure represented the employer’s estimate of the costs associated with training and supporting him during his initial period of employment.
The agreement said that the debt would reduce over time. If his employment ended before the debt had been cleared, the outstanding balance became repayable.
Mr Watts resigned after eight months to take up another, higher paid role. Geeks then sought to recover the full £8,108 under the training repayment provisions.
The employer was successful both at first instance and on appeal to the County Court. However, Mr Watts appealed to the CA.
The legal issue
The key question was whether the training repayment provisions constituted a restraint of trade.
Post-termination restrictions are usually unenforceable unless they protect a legitimate business interest and go no further than is reasonably necessary to protect that interest. The CA was required to determine whether the same principles applied to Geeks’ training cost recovery provisions.
What did the CA decide?
The CA concluded that the restraint of trade doctrine had been engaged and that the provisions in the contract did amount to a restraint of trade.
The CA considered whether the repayment obligation would discourage an employee from leaving employment and pursuing work elsewhere. It found that the provisions could have that effect because a substantial repayment obligation arose if the employee left before the debt had been cleared.
Although the CA accepted that employers may have legitimate interests in protecting investments made in employee training, it found that the provisions in this case went further than was reasonably necessary.
The repayment obligation was triggered in almost all termination scenarios other than redundancy. The broad scope of the provision meant that it operated less as a mechanism for recovering genuine training costs and more as a deterrent to employees leaving the business. As a result, the clause was held to be unenforceable.
What does this mean for employers?
The decision does not mean that all training cost repayment provisions are unenforceable. However, it does confirm that employers cannot assume that a clause labelled as a training repayment provision will automatically avoid restraint of trade principles.
Employers should review existing clawback arrangements and consider whether:
- the amount recoverable genuinely reflects training costs incurred;
- repayment is linked to circumstances that justify protection of the employer’s investment;
- the provision is no wider than necessary to protect a legitimate business interest; and
- the clause could reasonably be viewed as deterring employees from moving to alternative employment.
Employers that invest in qualifications, professional accreditation or specialised technical training may still have a legitimate basis for seeking repayment where an employee leaves shortly after receiving that training. However, the drafting will need to be able to withstand scrutiny and demonstrate a genuine link between the repayment obligation and the employer’s actual loss.
The CA has made clear that where a repayment obligation operates as a barrier to an employee moving elsewhere, it may be treated as a restraint of trade.
For employers, now is a good time to review training repayment provisions and ensure they are designed to protect legitimate business interests, rather than simply discourage employees from leaving.
To discuss this, please get in touch with a member of the employment team.
