Training Fee Clawback Clauses After Geeks Ltd v Watts: What Employers Need to Know

Training Fee Clawback Clauses After Geeks Ltd v Watts: What Employers Need to Know | Wednesday 29 July 2026 | 5 min read

Training repayment provisions are a common feature of employment contracts, particularly in sectors where employers invest significant time and resources in developing new recruits. Properly drafted, these clauses can help employers recover the cost of training when an employee leaves shortly after receiving it.

However, the Court of Appeal’s recent decision in Geeks Ltd v Watts [2026] EWCA Civ 889 serves as an important warning: training fee clawback clauses will not automatically be enforceable simply because they are labelled as repayment provisions. Where a clause operates in practice as a barrier to employee mobility, it may be struck down as an unlawful restraint of trade.

The decision underlines the need for employers to ensure that training repayment arrangements are proportionate, evidence-based and carefully drafted.

The Facts of Geeks Ltd v Watts

Mr Watts joined Geeks Ltd in March 2019 as a trainee quality assurance engineer on a starting salary of £18,000 per year. Alongside his employment contract, he signed a separate “Contract of Training Investment” under which Geeks attributed a value of £8,108 to the training, mentoring and study support it intended to provide during his first six months of employment.

Under the agreement, the full amount remained payable for the first 12 months of employment and was then written off gradually over the following 18 months. If Mr Watts left before the amount had been completely reduced, he would be required to repay the outstanding balance, except in cases of redundancy.

After unsuccessfully seeking a pay rise, Mr Watts resigned after only eight months to take up a higher-paid position elsewhere. Geeks subsequently sought repayment of the full £8,108. While the company succeeded in both the County Court and the first appeal, the Court of Appeal reached a different conclusion.

The Court held that the clause was capable of operating as a restraint on the employee’s ability to change jobs and was therefore subject to the restraint of trade doctrine. On the facts, the provision was unenforceable.

Why the Decision Matters

Traditionally, restraint of trade arguments have focused on restrictive covenants such as non-compete clauses, non-solicitation provisions and confidentiality restrictions.

The significance of Geeks is that it extends judicial scrutiny beyond traditional post-termination restrictions. The Court of Appeal confirmed that a training repayment clause may also amount to a restraint of trade where its practical effect is to discourage an employee from leaving employment.

The Court emphasised that simply describing a provision as a repayment obligation or debt does not shield it from challenge, and if the financial consequences of resignation are sufficiently severe, the clause may still be examined as a potential restraint on employee mobility.

The key question on the enforceability of a clawback provision is whether the provision protects a legitimate business interest and goes no further than is reasonably necessary to do so.

Why the Clause Failed

The Court of Appeal accepted that employers have a legitimate interest in recovering genuine training costs and securing a return on their investment in employee development. The difficulty was that the clause in Geeks extended beyond what was reasonably necessary.

Several factors influenced the court:

• The repayment obligation applied even where employment ended at the employer’s initiative, rather than solely where the employee chose to leave.
• The financial burden was particularly severe for a relatively low-paid employee.
• There was an insufficient link between the amount claimed and the employer’s actual training expenditure.
• The overall effect was to create a substantial financial disincentive to resignation.

Taken together, these features meant the clause looked less like a genuine cost recovery mechanism and more like a restraint on the employee’s ability to leave.

Drafting Training Repayment Clauses: Key Lessons

The most important lesson from Geeks is that enforceability will depend heavily on the way a clause is drafted.

Training repayment provisions should be designed to recover genuine losses, not to retain employees through financial pressure. The greater the repayment obligation, the more carefully an employer will need to justify it.

Employers seeking to maximise enforceability should consider including:

• A clear and documented link between the repayment amount and actual training costs.
• A sliding-scale reduction mechanism that reflects the value already received through the employee’s service.
• A repayment period that is reasonable in light of the nature and cost of the training provided.
• Appropriate exceptions, such as redundancy, ill-health dismissal or dismissal for reasons unrelated to employee fault.
• Flexible repayment arrangements, including instalment options where appropriate.

Such features are significantly more vulnerable to challenge following Geeks.

Practical Steps for Employers

In light of the decision, employers should review existing training repayment agreements and ask:

1. Can the training costs be clearly evidenced?
2. Is the repayment amount proportionate to the employer’s actual expenditure?
3. Does the repayment obligation reduce over time?
4. Are there appropriate exemptions where the employee is not responsible for the termination?
5. Could the provision be viewed as a deterrent to resignation rather than compensation for genuine costs?

If the answer to the final question is yes, the clause may face serious enforceability issues.

Conclusion

The Court of Appeal’s decision in Geeks Ltd v Watts does not prevent employers from recovering training costs. Rather, it confirms that training repayment provisions must be drafted carefully and reasonably.

The message for employers is clear: training agreements should be tailored to recover genuine costs, supported by evidence, and drafted in a way that is proportionate and fair.

In light of this decision, employers should consider reviewing their existing training repayment arrangements to ensure they remain enforceable and continue to provide the protection intended.

Our Employment team regularly advises businesses on the drafting and review of training fee clawback provisions and other contractual protections. If you would like to discuss whether your current arrangements are fit for purpose, please get in touch with a member of our team.