In Geeks Ltd v Watts [2026] EWCA Civ 889, the Court of Appeal has held that a training-fee repayment scheme imposed on a junior employee was an unreasonable restraint of trade and therefore unenforceable.
The appellant joined the respondent IT company as a trainee quality assurance engineer on an annual salary of £18,000. Under a separate training agreement, the appellant assumed an £8,108 debt for mentoring and support, which would not begin reducing until after 12 months’ service. When the appellant resigned after eight months to accept a better-paid role, the respondent sought repayment of the full amount.
The Court rejected the respondent’s argument that the arrangement merely created an ordinary contractual debt. The restraint of trade doctrine looks at a provision’s practical effect, rather than the label attached to it. Although the clause did not expressly prevent resignation, such a substantial financial liability was capable of discouraging the appellant from leaving and restricting the freedom to work elsewhere. The earlier decision in Steel v Spencer Road LLP [2024] ICR 137, involving a bonus clawback, did not establish that financial repayment clauses could never amount to restraints of trade.
Although retaining a trained workforce could be a legitimate business interest, the respondent had to show that the scheme went no further than was reasonably necessary. It failed that test. Except for redundancy, repayment applied regardless of the reason for departure, including dismissal, and whether the appellant moved to another technology role (with a competitor or otherwise), changed career entirely, or did not take another job.
The size of the debt, compared with the appellant’s modest salary, also produced a disproportionate effect. The debt approached half the appellant’s annual salary and could effectively deprive the appellant of the benefit of several months’ earnings. The basis of the calculation was also open to question: mentoring was costed at £60 per hour, around five or six times the amount actually paid to the mentor, while the respondent was also charging clients for the appellant’s work.
The absence of independent legal advice and the parties’ unequal bargaining power further supported the conclusion that the clause represented an unreasonable restraint of trade and was therefore unenforceable. The lower-court orders were thus set aside.
