The Court of Appeal has confirmed that training repayment clauses may be unenforceable where they go beyond what is reasonably necessary to protect an employer's legitimate business interests.
In Geeks Ltd v Watts, the claimant was employed as a trainee quality assurance engineer. Alongside his contract of employment, he signed a separate training agreement requiring him to repay more than 8,000 in "training costs" if his employment ended before the debt had been written off through continued service.
The employee resigned after eight months to take up a better-paid role elsewhere. His employer sought to recover the outstanding balance under the training agreement.
The county court held that the repayment provisions were enforceable. The employee appealed to the Court of Appeal.
The Court of Appeal allowed the appeal.
It rejected the employer's argument that the repayment obligation fell outside the restraint of trade doctrine because it was simply a contractual debt. The court held that the doctrine concerns the practical effect of a contractual provision. A significant financial disincentive to leaving employment may restrain an employee's freedom to move to another employer, even if it does not expressly prevent them from doing so. Financial repayment obligations are, therefore, capable of engaging the restraint of trade doctrine.
The court proceeded on the assumption that the employer had a legitimate interest in maintaining a stable, trained...
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