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Trained him up, then billed him £8,000 for leaving: why the courts just tore up a clawback clause

ended 24. July 2026

A small IT firm that charged a trainee over £8,000 to repay his "training costs" when he quit has lost in the Court of Appeal, in a ruling every small business that pays for staff training needs to read. In Geeks Ltd v Watts, the court decided the clawback clause was an unlawful restraint of trade and could not be enforced, even though the contract carefully said the employee was free to leave.

Here's what happened. Watts joined Geeks Ltd in 2019 as a trainee quality assurance engineer on £18,000 a year, barely above minimum wage. He signed a separate training contract agreeing to a "training cost debt" of £8,108, the firm's estimate of what it cost to mentor and support him. The debt would be wiped at 1/18th a month, but only after his first year. Leave before then, and the balance became repayable. Eight months in, he resigned for a better-paid job elsewhere, and Geeks Ltd took him to court for the full amount.

The Court of Appeal sided with Watts. It said the label on a clause does not matter, only its real-world effect. A repayment bill that lands on you the moment you leave clearly hampers your freedom to move jobs, and a financial handcuff is still a handcuff. Saying "you're free to go" while presenting an £8,000 invoice on the way out is like leaving the front door unlocked but nailing your shoes to the floor.

Then came the killer point. The clause bit no matter why he left, sacked or resigned, new job or no job at all, with only redundancy excused. And standing back, the court said the effect was to turn a near minimum wage trainee into the equivalent of an unpaid intern for his first months, saddled with a loan. He had no independent legal advice and no real bargaining power. So the clause went further than was reasonably necessary to protect the firm, and it fell.

To be clear, the court did not ban training clawbacks. It accepted that keeping a stable, trained workforce is a legitimate thing to protect. A well-drawn clause can still work, as an earlier case on a short bonus clawback showed. The problem here was too broad, too heavy, and aimed at someone who could least afford it.

So how does a smaller business get a fair return on training without this blowing up? Keep it proportionate. Only claw back genuine, evidenced course costs, not a vague figure for general mentoring. Taper it fast and make the write-off start from day one, not month 13. Only trigger repayment when someone chooses to leave, never when you dismiss them or make them redundant. Make sure the wage still stacks up on its own, so training does not quietly turn into unpaid work. And give people the contract in good time, in plain English, with the chance to take advice before they sign. Fair and modest beats big and unenforceable every time.

Read the full judgment here: https://caselaw.nationalarchives.gov.uk/ewca/civ/2026/889

We'd like your views:

  • Is a training clawback a fair way to protect your investment, or a handcuff that traps people in jobs they want to leave?
  • Should employees ever have to repay training costs when they are the ones who paid with low wages while learning?
  • Where's the line between protecting a small firm's investment and holding staff to ransom?
  • If you run a business, would you still use a clawback clause after this ruling, or find another way to hold onto trained staff?
  • What actually keeps trained people from walking, the fear of a bill or being paid and treated well enough to want to stay?

2 responses from the Newspage community

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Editor
Kate UnderwoodVerified
Founder & Chief People Strategist at Kate Underwood HR and Training
Should you get something back when you train someone and they walk? Honestly, yes. Should you bill a near minimum wage trainee eight grand on his way out the door? Absolutely not. I've a lot of time for small firms on this. Training costs real money, and losing someone the week they qualify stings. But this clause was a handcuff dressed up as a loan. It bit whether he resigned or got sacked, gave him no write off for a whole year, and landed on a lad earning barely above the floor with no lawyer and no say. Small wonder the court binned it. Here's the bit that gets missed. You don't keep good people by chaining them to a bill. You keep them by being somewhere they'd rather not leave.
If you want a clawback that actually holds up, keep it small and fair. Real course costs only, tapered from day one, and only when someone chooses to go. Fair and modest beats big and useless every time.
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Editor
Harvey DhillonVerified
Founder & CEO at Zmartly
A financial handcuff is still a handcuff, even when you call it a loan.

Not one pound of the £8,108 was a course fee. It was in-house training, priced by the same firm that later sent the bill. £4,560 of it was mentoring at £60 an hour, or 76 hours of a colleague's time, hours already paid out as wages.

But the sums are not why the clause fell. It fell because the bill landed however you left, sacked or resigned, with only redundancy let off, and because it turned a trainee on £18,000 into what the court called the equivalent of an unpaid intern.

This does not hit senior people on good money. It hits the lowest paid in the building, with no bargaining power and no lawyer.

So charge only for money that actually left your bank account, keep the receipt, and only ask for it back when someone leaves for a better offer. Clawbacks are not banned. Geeks Ltd won twice, then lost both on appeal. Chasing £8,108 for nearly five years cost far more than £8,108.