Can you make employees repay training costs? What employers can learn from Geeks Ltd v Watts

Mark McKeating, Partner

UK employers invest around £26 billion each year in off-the-job training. Developing employees’ skills can improve retention, productivity and business performance – but it also raises an important question.

What happens if an employee leaves soon after you have paid for expensive training?

Many employers address this by including training repayment (or “clawback”) clauses in employment contracts, requiring employees to repay some or all of the costs if they leave within a specified period.

The recent Court of Appeal decision in Geeks Ltd v Watts provides an important reminder that, while these clauses can be enforceable, they need to be drafted carefully. If they go too far, they may be treated as an unreasonable restriction on an employee’s ability to change jobs.

What happened?

Mr Watts joined Geeks Ltd in 2019 as a trainee quality assurance engineer. Although he held a music degree, he had been unable to secure work in the IT sector despite applying for more than 50 roles. His starting salary was around £18,000 per year, close to the National Minimum Wage at the time.

As part of his employment, he signed a training investment agreement. The agreement stated that he owed the company £8,108 to cover his first six months of training, mentoring and study time. This figure was not based on the actual cost of the training but was a standard calculation used by the employer. The repayment obligation did not reduce until he had completed 12 months’ service. The debt then reduced by 1/18^th for every month of service completed thereafter.

Mr Watts resigned after eight months. Geeks Ltd sought to recover the full £8,108 under the agreement and obtained judgement for the debt in the County Court.

Mr Watts appealed. He argued that the clause was unfair because it operated as a financial penalty and effectively prevented him from leaving his employment.

In July 2026, the Court of Appeal agreed. Mr Watts won.

Why did the employer lose?

The court accepted that employers have a legitimate interest in protecting the investment they make in training employees. However, it found that this particular clause went further than was reasonably necessary.

In particular:

• the repayment obligation effectively turned part of Mr Watts’ earnings into a debt, meaning the financial impact of leaving could reduce the value of his wages below the National Minimum Wage;
• the clause applied regardless of the reason for leaving; and
• the amount payable was significant enough to discourage him from accepting another job

The decision demonstrates that courts will look beyond the title of a clause and consider how it operates in practice.

Why does this matter for employers?

Most employers are familiar with restrictive covenants, such as non-compete clauses or restrictions on soliciting clients after employment ends.

The Court of Appeal recognised that a substantial repayment obligation can have a similar effect. If leaving employment carries a significant financial cost, employees may feel they have little realistic choice but to stay. That means training repayment clauses can be scrutinised in much the same way as other post-termination restrictions.

When assessing enforceability, courts are likely to consider:

• Is the employer recovering genuine training costs?
• Can those costs be evidenced?
• Is the repayment proportionate?
• Does the amount reduce over time?
• Is the clause genuinely protecting the employer’s investment, or simply making it more difficult for the employee to resign?

Practical lessons for employers

The case reinforces a number of well-established principles.

Employers can legitimately seek repayment of genuine training costs. However, the amount claimed should reflect the actual expenditure incurred rather than an arbitrary or estimated figure.

Repayment provisions should also be proportionate. As an employee remains with the business, the employer receives increasing value from the skills acquired through the training. Any repayment obligation should therefore reduce over time to reflect that benefit.

Finally, labels alone will not determine whether a clause is enforceable. Calling a provision a “training repayment agreement” will not prevent a court from examining its practical effect.

Is it time to review your contracts?

This decision provides a useful opportunity for employers to review their existing training repayment provisions.

Consider the following points:

• Does the agreement clearly identify the training or qualification covered?
• Can you demonstrate the actual costs incurred?
• Is the repayment based on those genuine costs?
• Does the amount reduce over time?
• Is the repayment period reasonable?
• Could the clause be viewed as a penalty rather than reimbursement?

If the answer to any of these questions is “no”, it may be worth reviewing your agreement.

Drafting tips

Well-drafted clauses are more likely to withstand scrutiny.

Where possible, specify exactly which costs may be recovered, such as tuition fees, examination fees, professional registration costs and external course fees. Avoid including estimated management time or general overheads unless there is a clear and defensible basis for doing so.

A sliding repayment scale will also help demonstrate that the clause is proportionate. For example:

• 100% if employment ends within six months of completing the training;
• 75% within 12 months;
• 50% within 18 months;
• 25% within 24 months; and
• no repayment after two years.

This type of tapering reflects the increasing benefit the employer receives as the employee continues in employment and is generally easier to justify than requiring repayment of the full amount regardless of when the employee leaves.

Need advice?

If you would like to review your employment contracts or discuss whether your training repayment provisions are likely to be enforceable, please contact the Employment team at Kuits.