IT company cannot claw back £8k graduate training costs

The Court of Appeal has ruled that an IT company cannot force a graduate to repay over £8,000 in training costs.

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Mr Watts applied for a trainee role at Geeks, an IT services provider, in March 2019. At the time he was in “considerable debt”, the court heard, and had applied for more than 50 positions in the industry.

He was successful and entered an employment contract. Under the contract’s termination of employment clause, it said that “the Company maintains the right to recover the cost of any formal training course or conferences that you attend or undertake at the Company’s expense in the 18 months preceding the termination of your employment”.

A second agreement stated that he would begin his position with a six-month training period that reinforced the requirement for him to meet the “training cost debt”.

This included mentorship at a rate of £60 per hour for an hour per day for 19 days a month for the first two months, and half an hour a day over the next four months.

Geeks estimated that the total debt was £8,108. He began work in March 2019 as a trainee quality assurance engineer on a salary of £18,000 a year.

He requested a pay rise some months into the role, but this was refused. He resigned in November 2019, having been offered a role at another firm where he would be paid a £30,000 per annum salary.

His contract had also included a restrictive covenant that prevented him from working for certain clients of Geeks for a period of two years.

Geeks began county court proceedings against Watts in September 2021 in a bid to recover the training costs, alleging that he had breached clawback provisions.

In response, Watts claimed they could not enforce the relevant terms of the training contract because they constituted an unlawful restraint of trade.

The county court found in favour of Geeks, arguing that the terms protected a legitimate interest and were not unreasonable.

Watts was granted permission to appeal in October 2023, but this was dismissed, with the judge pointing to previous cases brought against the company that had found the clawback provisions lawful and not to be restraints of trade.

He appealed again in July 2025, and the Court of Appeal has now agreed that the requirement to pay back training costs was an unreasonable restraint of trade and is therefore unenforceable.

Lord Justice Bean argued that a clause requiring an employee to repay money on leaving can restrain trade even though it does not directly stop them working elsewhere.

The financial disincentive to leave was enough to bring the clause within the orbit of restraint of trade principles, and under scrutiny for reasonableness, he added.

There were two key reasons why the repayment permissions were unreasonable, according to the judgment.

First, the provisions applied whatever the reason for the employee’s departure, unless he was made redundant. Second, Lord Justice Bean pointed out that Watts’ starting salary was “reduced in retrospect to the equivalent of an unpaid intern albeit with a loan repayable over a period”.

“I cannot accept that these repayment provisions went no further than reasonably necessary to protect the legitimate interests of Geeks in maintaining the stability of their trained workforce,” he stated.