Man wins legal battle against former employer over attempts to claw back training costs

The Court of Appeal ruled that the clawback scheme software development company Geeks Ltd was attempting to enforce was unjustifiable and effectively resulted in being paid less than minimum wage. 

Joseph Watts joined Geeks Ltd in March 2019 as a trainee quality assurance engineer on a salary of £18,000.  

When joining, Joseph was obliged to agree to a training contract which meant he had to take on an £8,108 debt of supposed training costs. 

Under the terms of the contract, Joseph could either pay off the debt monetarily or through ‘work contributions’. This would mean that following his first 12 months of employment, the debt would gradually be written off over a period of 18 months as Joseph continued to work for the company. 

After eight months at Geeks, Joseph was forced to move home having found himself unable to survive on his salary at Geeks. He applied for and received a more lucrative job offer elsewhere which he accepted, having unsuccessfully tried to negotiate an improved salary at Geeks.  

Following his departure, Geeks then began to pursue Joseph for the training costs and subsequently, issued legal proceedings against him September 2021.  

The case went to court in July 2023 and a judge ruled in favour of Geeks – determining that while the training contract amounted to a restraint of trade, it protected a legitimate business interest in retaining employees the company had invested time, money and training in. 

After receiving this judgment, Joseph took his case to the Court of Appeal, which overturned the initial judgment and ruled in his favour in July 2026.  

The Appeal Court judges concluded that given the training costs put to Joseph were roughly equivalent to his salary for six months, this effectively amounted to him working unpaid for that period of time and as a result, this undermined public interest policies such as the national minimum wage.  

The judges noted that the debt was payable regardless of the employee’s departure, which could include dismissal or working in a role outside of the technology sector.  

The judges also concluded that while maintaining a stable and trained workforce was a legitimate interest for Geeks, the training contract was an unreasonable measure for this and that the training costs were “highly artificial”.  

Leigh Day solicitor Aman Thakar, who represents Joseph, said:  

“These kinds of unreasonable clauses in contacts often take advantage of vulnerable younger people just entering the job market. They result in a young person’s first experience of employment being extremely arduous, saddling them with debt from the very outset, or forcing them to work for an employer paying significantly below market wage. Meanwhile, the employer enjoys the benefit of their labour on their own favoured terms over an extended period. During the hearing, this type of employment was described as ‘indentured servitude’, which is a term I agree with. This decision is highly significant as it demonstrates that such opportunistic working practices are in fact unlawful.” 

Joseph’s case was supported by the Good Law Project. Director and founder Jolyon Maugham said: 

"This case looked very much like indentured labour to us – a disgraceful exploitation of graduate vulnerability. So, we underwrote the costs risk of bringing the challenge – a risk that grew as we lost at first instance and then again on appeal. We're delighted that it has succeeded in the Court of Appeal."