Although the restraint on trade in employment matters is normally restricted to post-employment restrictions, in July this year the Court of Appeal analysed the concept in its application to repayment of training costs in the case of Geeks v Watts [2026] EWCA Civ 889. This case involved a trainee engineer earning £18,000. His contract required him to repay £8,108 in training costs if his employment ended for any reason their than redundancy, with the debt tapering depending on how long after the training was completed that he left. The employee left after 8 months and the employer sought full repayment of the training costs.
The Court of Appeal held that the repayment clause was an unreasonable restraint of trade and was therefore unenforceable. This was on the basis that a clause requiring an employee to repay money on leaving can restrain trade even though it does not directly stop them working elsewhere. The financial disincentive to leave was sufficient to bring the restraint of trade principles into play, which required an analysis of the reasonableness of the clause.
Although the employer has a legitimate interest in maintaining a stable workforce and gaining the benefit of the employee’s training, the court held that this clause went further than necessary to protect this business interest. Its practical effect was to turn a low-paid trainee retrospectively into something close to an unpaid intern, which was held to be unreasonable. It will be interesting to see how this court impacts on recoupment clauses generally, not just in the context of training costs, but enhanced family leave related pay. Unless the clause is held to be “reasonable”, then it will not be enforceable. At this moment in time, what is “reasonable” in this situation is relatively untested, but we can assume that a judge would look at seniority of the employee, the value of the training costs being recouped compared to the employee’s salary and the legitimate business interest that is said to be protected by the clause.
If you have any queries about the ongoing use of recoupment clauses in employment contracts, then please contact a member of the employment team.
