ASAP
Training Cost Clawback Clauses in the UK: Potentially Unenforceable as a Restraint of Trade
A recent UK Court of Appeal decision points to limitations of the use of training repayment provisions as a protection of investments.
Many employers use training repayment provisions to protect investments made in developing their workforce. The Court of Appeal’s recent decision in Geeks Ltd v Watts has recently held that these arrangements may not only be susceptible to challenge as penalty clauses (as earlier cases have considered), but are also capable of engaging the restraint of trade doctrine and, where they do, will be unenforceable unless they go no further than reasonably necessary to protect a legitimate business interest. Significantly, the Court rejected any suggestion that financial disincentives are immune from restraint of trade scrutiny simply because they do not prohibit competition outright.
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