Training Cost Repayment Clauses – When Do They Become Unenforceable?

In the recent case of Geeks Ltd v Watts, the Court of Appeal held that a contractual clause requiring an employee to repay training costs after leaving within a specified period was an unenforceable restraint of trade.

Background

Mr Watts joined Geeks Ltd (the “Company”) as a Trainee Engineer in March 2019, on a starting salary of £18,000, increasing to £22,000 in three years’ time.

When he joined, Mr Watts signed both an employment contract and a Training Contract. The Training Contract funded a six-month training programme with a training cost debt of over £8,000. On completion of 12 months of employment at the Company, the debt would reduce in increments of 1/18^th per subsequent complete months of employment until it reached zero. If his employment ended before the debt was repaid, then Mr Watts would be required to pay the outstanding balance in monthly instalments until fully paid.