Tweet
The Court of Appeal has just handed down a very interesting judgment on the question of an employer seeking to claw back training costs following termination of employment: Geeks Limited v Watts.
In this case, the clause in question was held to be in restraint of trade, and therefore unenforceable. The judgment as a whole is worth reading, and we should bear it in mind in future cases in this area. (tagging ULA for info)
The 2 concluding paragraphs of Bean LJ's judgment:
In this case, the clause in question was held to be in restraint of trade, and therefore unenforceable. The judgment as a whole is worth reading, and we should bear it in mind in future cases in this area. (tagging ULA for info)
The 2 concluding paragraphs of Bean LJ's judgment:
69. There are two reasons which lead me to the conclusion that the repayment provisions are unreasonable and unenforceable. The first is that the provisions apply whatever the reasons for the employee’s departure (with the single exception of redundancy); whether he is dismissed (which could have been on one week’s notice) or leaves voluntarily; and irrespective of whether he leaves for a job in the technology sector or elsewhere, with a salary increase or none, or for no job at all: for example, he might have become a carer for his grandfather who suffered from dementia.
70. The second involves standing back and looking at the broader picture. No doubt starter jobs, such as that which Mr Watts obtained at Geeks, are highly sought after and, as in the not so far off days of widespread unpaid internships, many prospective employees, if their personal circumstances permitted it, would be willing to work for nothing. The effect of the clawback provisions is that in the early months of his employment Mr Watts, who was paid not very much more than what was then the level of the national minimum wage, 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.
70. The second involves standing back and looking at the broader picture. No doubt starter jobs, such as that which Mr Watts obtained at Geeks, are highly sought after and, as in the not so far off days of widespread unpaid internships, many prospective employees, if their personal circumstances permitted it, would be willing to work for nothing. The effect of the clawback provisions is that in the early months of his employment Mr Watts, who was paid not very much more than what was then the level of the national minimum wage, 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.
Comment