Geeks Limited v Joseph Henry Watts

Employment provisions requiring repayment of salary in specified circumstances engage the restraint of trade doctrine. Financial disincentives are assessed by their practical effect on freedom to work, rather than their contractual form or the employee’s ability to resign. The employer must justify the restraint as going no further than reasonably necessary to protect a legitimate interest. Reasonableness is assessed when the contract is made. Later success in obtaining better-paid employment cannot determine that assessment. On the terms considered, training repayment provisions were unreasonable because they applied indiscriminately to departures other than redundancy and effectively recovered a low-paid trainee’s early earnings. Payment by instalments did not cure those defects. The existence and scope of a legitimate interest in maintaining a stable trained workforce were left open.

Geeks Limited, an IT services company, employed Joseph Henry Watts as a trainee quality assurance engineer. Alongside his employment contract, he signed a training contract providing for repayment of an estimated £8,108 training debt. The debt would begin to be written off after 12 months’ employment and would be discharged over the following 18 months. Outstanding sums became payable by monthly instalments if his employment ended.

Mr Watts resigned after eight months to take substantially better-paid employment. Geeks sued to recover the entire training debt. Deputy District Judge Hope found that the repayment provisions restrained trade but protected a legitimate interest and were reasonable. He ordered repayment, and Judge Evans-Gordon dismissed Mr Watts’s first appeal.

Mr Watts appealed to the Court of Appeal on legitimate interest and reasonableness. Geeks sought to uphold the decisions on the additional ground that the restraint of trade doctrine did not apply. The central issues were whether the financial repayment obligation engaged that doctrine and, if so, whether it could be justified.

The appeal was allowed unanimously. Bean LJ, with whom Males and Jeremy Baker LJJ agreed, held that the repayment provisions were unreasonable and unenforceable. The county court decisions in Geeks’s favour were set aside.

1. The court permitted Geeks to raise its additional argument about the doctrine’s applicability. It was a pure point of law, closely connected with the grounds of appeal, which Mr Watts’s representatives could adequately address. The principles governing new points on appeal in Singh v Dass [2019] EWCA Civ 360 were applicable. Any possible costs penalty for the earlier conduct of the argument required no further consideration ([42]–[43]).

2. The doctrine depended on substance and practical effect. An employee’s legal freedom to resign did not exempt financial disincentives from scrutiny. A provision requiring repayment of salary in specified circumstances engaged the doctrine, including where it appeared in a separate document forming part of the employment terms. Describing the obligation as an unconditional debt did not avoid that conclusion ([48]–[54]; [62]).

3. Employees and trainees remained free to take their acquired skill and knowledge to another employer, subject to justified restraints protecting legitimate interests. The established categories of legitimate interest were flexible. The court assumed, without deciding its existence or scope in this case, an interest in maintaining a stable trained workforce ([46]–[47]; [63]–[66]).

4. The result in Steel v Spencer Road LLP [2024] ICR 137 was accepted, but part of its analysis of Marshall v NM Financial Management Ltd was rejected. Indirect financial restraints could engage the doctrine. Conversely, not every forfeiture of an employment benefit restrained trade. Conditions requiring continued employment or a specified period of service, without otherwise restricting other employment, fell outside the doctrine or were at least lawful ([55]–[62]).

5. The employer bore the burden of justification. Assessment was required at contract formation. Absence of independent legal advice was relevant but inconclusive, and inequality of bargaining power could be highly significant. Mr Watts’s subsequent salary increase could not determine the original reasonableness of the provisions ([66]).

6. There were two independent reasons for finding the provisions unreasonable. Except for redundancy, repayment applied regardless of why employment ended, including dismissal, departure outside the technology sector, departure without a pay increase, or departure without another job. Further, the financial effect retrospectively reduced a trainee paid little above the minimum wage to the equivalent of an unpaid intern with a repayable loan. Neither feature was justified by the assumed workforce interest ([69]–[70]).

7. Monthly instalments were more reasonable than immediate repayment or acceleration of the whole debt, but did not save the provisions. Concerns about the training-cost calculation did not provide an independent appellate ground because that calculation was not itself a ground of appeal ([67]–[68]).

• Court of Appeal (Civil Division): In [2026] EWCA Civ 889 , unanimously allowed Mr Watts’s appeal and set aside the county court decisions in Geeks’s favour.
• County Court, first appeal: Judge Evans-Gordon dismissed Mr Watts’s appeal following a hearing at Central London County Court on 13 November 2024. The order appealed to the Court of Appeal was identified as dated 14 January 2025.
• County Court at Kingston-upon-Thames: Following trial on 13–14 July 2023, Deputy District Judge Hope gave judgment for Geeks. The trial order dated 3 August 2023 required Mr Watts to pay £8,108 plus interest. Permission to appeal to a circuit judge was granted on 9 October 2023.