The Court of Appeal decision in the Geeks Limited v Watts [2026] case provides important information on the limits on clauses in an employment contract and particularly in relation to restraint of trade. This case provides a useful insight and reminder for employers to ensure that they are being as reasonable as possible when drafting and enforcing clauses involving training fees and clawback schemes.
In this article we explore the Court of Appeal's decision in Geeks Limited v Watts, highlighting what employers need to know when drafting and enforcing training fee recovery and clawback provisions in employment contracts.
In 2019 Mr Watts was employed by the IT services company as a trainee engineer with a salary of £18,000 a year. Mr Watts entered into the employment contract and training contact, which in short stipulated that they would retain the right to recover any cost of formal training attended and conducted at the company’s expense if employment terminated within 18 months for any other reason besides redundancy.
It confirmed that Mr Watts would start with a six-month training period, and he would be required to pay back the £8,108 training costs if he resigned, with the debt reducing for every month worked after the 12th month of employment.
Mr Watts began work on 18th March 2019 and subsequently left on 12 November 2019 for a better paying role at another company following a refusal for a pay rise. This company would pay him £30,000 per annum as opposed to his current £18,000 per annum.
Geeks, the claimant, commenced proceedings against Mr Watts, the respondent, on 21 September 2021 to recover the £8,108 and alleging a breach of the clawback provisions in his employment contracts.
It was initially decided in the County Court that the provisions in the contract were not considered unreasonable for the terms of restraint of trade. The trial occurred on 13-14 July 2023 and Mr Watts' defence was that the provisions went further than reasonably necessary. The provisions were considered a restraint of trade but the key issues were:
whether the clauses protected a legitimate interest of the claimant; and
that the claimant went no further than what was reasonably necessary to do that.
It was held that although the clauses gave rise to restraint of trade, they protected a legitimate interest and were not unreasonable.
Following previous appeals the court held on this occasion that although Geeks did have a legitimate aim to protect their interests in training their workforce, they went further than needed to protect said interest.
When termination arose, the provisions would apply regardless of the reason for the employee's departure. The contract prevented the claimant from making career-based decisions and he would have suffered if he had to resign for any extenuating circumstances such as to care for a family member as the debt would have been enforceable upon him.
It was also considered that it was unreasonable for Mr Watts to be lumped with a repayment debt when working for next to national minimum wage. The court therefore sided with Mr Watts in deeming the provisions were unreasonable and a restraint of trade.
Employers should be careful not to draft provisions which would be viewed as providing either a general disadvantage or large financial disincentive to the employee when engaging in providing a benefit for training purposes.
Employers should always consider restraint of trade principles and review them to ensure that they are going no further than necessary, with those provisions and ensure that they are drafted as being appropriate to the specific individual and their role. For instance, staff members in more junior roles may have lesser restrictions; this makes sense given the limited impact that they may have to the protection of a legitimate business interest.
It's helpful to be able to justify the reasonableness of the provisions prior to an employee signing especially as it's the onus of the party invoking the restraint, in this case the employer, to demonstrate that the clause goes no further than necessary to protect it’s legitimate interests as explained in the Harcus Sinclair LLP v Your Lawyers Ltd case .
It's important to note that a provision being considered a restraint of trade by the Employment Tribunal is not grounds alone for it to be ineffective. The provision must be unreasonable.
Employers can improve the enforceability of these provisions by ensuring they are carefully tailored and go no further than is reasonably necessary. For example limiting the debt period to a reasonable time frame, specifying that the debt would be liable on the employee if terminated due to misconduct purposes or only restricting the employee from a specific area of work and for a short period following resignation. These examples are important factors for employers to consider when their contracts will involve considerable training and input into an employee during the course of their employment.
Read the full Geek v Watts Judgment here. For any support or further information, please contact our employment team.
