Geeks Ltd v Watts – HR Alert: Training Repayment Clauses Face Fresh Scrutiny – Can You Really Charge Employees For Internal Training?
When Training Costs Become an Unlawful Barrier to Leaving
If Internal training repayment clauses are increasingly common in employment contracts, but when do they become unenforceable by the courts?
In Geeks Ltd v Watts [2026], it was held that such a clause becomes unenforceable if, in practice, it operates as a significant financial barrier to an employee changing jobs.
What happened?
- Mr Watts was a quality assurance engineer on a salary of £18,000. He signed a separate training agreement which valued his internal training, mentoring and study support at £8,108.
- Under the agreement, the full amount was repayable if he left during his first 12 months. The debt would then reduce gradually over the following 18 months.
- After eight months, Mr Watts resigned to take a better-paid job. Geeks sought to recover the full £8,108.
- Although the company succeeded at earlier stages of the proceedings, the Court of Appeal found the repayment provision unenforceable.
- It was held that the clause could operate as a restraint on Watt’s ability to change jobs and this was deemed unfair.
- The courts deemed it especially substantial compared with Mr Watts’ relatively low salary.
- Further, the repayment obligation was not limited to circumstances where the employee voluntarily resigned.
- Taken together, these factors meant the provision went beyond genuine cost recovery and operated more like a restriction on employee mobility.
What does this matter for employers?
The decision does not mean that employers cannot recover training costs.
Instead, it reinforces the need for training repayment arrangements to be reasonable, proportionate and supported by evidence.
Further, employers should differentiate between their treatment of internal and external training costs. The courts are far less likely to enforce repayment terms for internal training as internal training is often notional and refers to a repayment of time.
What can HR do to prepare for this?
- Link repayment to genuine costs, the amount should reflect the employer’s actual expenditure on training rather than an arbitrary figure.
- Include exemptions to ensure that repayment is not enforced when employment ends through circumstances outside the employee’s control, such as redundancy.
- Draft less restrictive terms for internal training costs.
- Review existing training agreements!
Need help?
At PJH Law we specialise in Employment Law, feel free to call our office on 01780 757589.
