The Court of Appeal has issued a significant ruling in Geeks Ltd v Watts [2026] EWCA Civ 889, surprising many employment law practitioners across the UK.
The decision examined whether training repayment provisions, commonly known as clawback clauses, can be subject to the same restraint of trade principles traditionally applied to post-termination restrictive covenants.
Mr Watts joined Geeks Ltd as a trainee quality assurance engineer in 2019, signing a separate “Contract of Training Investment” alongside his employment contract.
That agreement required him to repay a training cost debt of £8,108 if he left the business before completing 18 months of employment.
After approximately eight months, having been denied a pay rise, Mr Watts resigned to take a higher-paid role at another employer.
Geeks sought to recover the full amount and succeeded at first instance and on appeal, before the Court of Appeal overturned those decisions and ruled the repayment provisions unenforceable.
Geeks had argued the arrangement simply created a contractual debt and did not prevent Mr Watts from resigning or taking a new job elsewhere, but the Court rejected that analysis entirely.
The Court focused instead on the practical effect of the provision, concluding that a significant financial liability triggered by departure could discourage an employee from leaving employment and therefore engaged the restraint of trade doctrine.
The Court did not suggest employers can never recover training costs, accepting that protecting investments in employee development represents a legitimate business interest worth defending.
The problem in this case was that the particular mechanism adopted by Geeks was found to go further than was reasonably necessary to protect those interests, failing the standard test applied to restrictive covenants.
One significant issue was the method used to calculate the repayment figure, which the Court deemed highly questionable, noting it included mentor time charged at £60 per hour, which Mr Watts said was five or six times what mentors were actually paid.
The breadth of the repayment trigger also troubled the Court, with the obligation applying across most termination scenarios, including if Mr Watts had left to care full-time for a grandparent with dementia.
Given Mr Watts’ low salary, already close to the national minimum wage, the clawback would have retrospectively reduced his effective pay to the level of an unpaid intern, a position the Court viewed as punitive.
The Court also noted that Mr Watts did not receive independent legal advice when signing the contracts, describing this as “a relevant pointer away from reasonableness,” though not conclusive on its own.
Inequality of bargaining power was a relevant factor in the Court’s reasoning, as is frequently the case in employment disputes involving contracts at relatively low wage levels.
Employers should now ensure clawback provisions are clearly tied to identifiable training expenditure, with transparent calculations setting out exactly which elements of training carry a cost and when repayment obligations begin and end.
Tapering provisions are advisable, adjusting repayment levels to reflect the ongoing benefit an employer receives while a trained employee remains in the business and continues to apply their newly acquired skills.
The burden of proving reasonableness rests with the employer, meaning businesses should be prepared to explain how the repayment figure was calculated, why the recovery period was chosen, and why the trigger events are proportionate.
As of 25 August 2026, Geeks had applied for permission to appeal to the Supreme Court, meaning this ruling may not represent the final word on training clawback enforceability in the UK.
Until that permission is determined, employers would be wise to review existing training agreements carefully and ensure any clawback mechanism can withstand scrutiny under established restraint of trade principles.