Employment tribunal and court judgments | July 2026

Mr Watts joined Geeks Ltd, an IT services company, as a trainee quality assurance engineer in March 2019. His starting salary was £18,000, increasing to £20,000 and then £22,000 in his second and third years. At the same time as signing his employment contract, he entered into a separate “Contract of Training Investment”. This stated that Geeks had invested £8,108 in his training, including mentoring time and study/practice time, and that Mr Watts would be required to repay the outstanding amount if his employment ended before the “debt” had been written off.

The repayment obligation did not start reducing until Mr Watts had completed 12 months’ service, after which it reduced by 1/18th for each completed month. Redundancy was the only express exception to the repayment obligations. Mr Watts resigned after eight months to take up a new role paying £30,000. Geeks pursued him for the full £8,108. The County Court found in favour of Geeks.  Mr Watts appealed to the Court of Appeal.

The Court of Appeal allowed the appeal and held that the repayment provisions were an unenforceable restraint of trade. The Court rejected the argument that a repayment clause cannot amount to a restraint of trade simply because it does not expressly prevent the employee from working elsewhere. A contractual provision which creates a significant financial disincentive to leaving employment can still engage restraint of trade principles.

The Court assumed that Geeks had a legitimate interest in maintaining a stable and trained workforce. However, the clause went further than was reasonably necessary to protect that interest. It applied in almost all circumstances in which employment ended, other than redundancy. It was not limited to cases where Mr Watts resigned to work for a competitor, or where the employer had not yet obtained any benefit from the training. The Court was also concerned by the practical effect of the clause on a relatively low-paid trainee, observing that it risked turning his early employment, retrospectively, into something close to an unpaid internship.

This decision does not mean that all training repayment clauses are unenforceable. Employers may still have a legitimate interest in recovering or protecting investment in training, particularly where the training is expensive, external, transferable and genuinely enhances the employee’s marketability.

However, employers should review any training clawback provisions carefully. Repayment obligations should be proportionate, linked to identifiable training costs, and reduce over time in a way that reflects the benefit received by the employer. Clauses should also be tailored to the circumstances in which repayment is justified. A clause that bites regardless of how employment ends, including dismissal, ill-health departure, resignation for personal reasons or other non-competitive exits, is more vulnerable to challenge.

Particular care should be taken where the employee is junior or low-paid, or where the repayment sum is large enough to operate as a real barrier to leaving. Employers should avoid describing ordinary onboarding, mentoring or productive early employment as a recoverable “training debt” unless there is a proper basis for doing so.

This case concerned approximately 1,250 Rail, Maritime and Transport (“RMT”) members. Their previous employer, Virgin Trains East Coast, made a pay offer directly to employees, including RMT members, which had not been agreed by the union. RMT members were advised that they could opt out of the award but were warned that it would not improve.  The employees brought claims under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992, arguing that the direct offer had the prohibited result that their pay would not be determined by collective agreement and that the employer’s sole or main purpose in making the offers had been to achieve that result.

The Employment Tribunal found that there had been a breach of section 145B. It held that the pay offer constituted an “offer” for the purposes of the legislation and that, if accepted, it would have had the prohibited result that the employees’ pay would not be determined through collective bargaining.

The Tribunal also found that, at the time the offer was made, there remained a realistic possibility that the relevant pay terms would have been agreed through the collective bargaining process. It concluded that the employer’s purpose in making the direct offer was to secure that result, rather than continuing with the agreed collective bargaining arrangements.  The Tribunal ordered payment of £3,907 to each of approximately 1,250 claimants.

The employer appealed.

The EAT dismissed the appeal. The Tribunal had held, following the Supreme Court’s interpretation in Kostal UK Ltd v Dunkley and others (which clarified when direct offers to unionised employees can breach section 145B), that there was a realistic possibility that the relevant pay terms would have been determined through collective bargaining. The bargaining arrangements in this case were flexible and unstructured, and materially different from the more formal arrangements considered in Kostal. They had not been exhausted.

The EAT also upheld the Tribunal’s finding that the employer had the prohibited purpose required under section 145B. The employer had taken a business decision that it did not wish to continue using the agreed collective bargaining procedures. The Tribunal was entitled to focus on that decision, rather than on the employer’s underlying commercial reasons for wanting to move away from collective bargaining.

This is an important reminder for employers with recognised unions. Making direct offers to employees where collective bargaining is still ongoing, or where there remains a realistic prospect of agreement through collective bargaining, carries significant legal risk.  The total award amount in this case amounted to around £4,883,750.

Employers should not assume that bargaining has been exhausted simply because negotiations have become protracted, difficult or commercially inconvenient. Before making any direct offer, employers should carefully assess and document the status of collective bargaining, the steps already taken, whether the agreed process has genuinely reached an end, and why there is no realistic possibility of agreement through that process.

The financial consequences can be significant because compensation is payable per unlawful offer. This risk may become even more relevant as wider trade union reforms under the Employment Rights Act 2025 increase the prominence of collective rights and union engagement. For a detailed overview of the Act, including the reforms already in force, upcoming implementation dates and ongoing Government developments, see our regularly updated guide: A new ‘ERA’: Everything you need to know about the Employment Rights Act 2025.

Mr Waithaka brought claims against Barclays Execution Services Ltd, including direct race discrimination, victimisation and harassment. His complaints spanned a period from January 2020 to April 2023. Prior to full hearing, the Employment Tribunal dismissed part of his claim on the basis that it had been brought outside the three-month limitation period and that it was not just and equitable to extend time.

There had also been a substantial delay of around 15 months between the preliminary hearing and the provision of written reasons. Mr Waithaka appealed, arguing amongst other things that the Tribunal had wrongly concluded that his argument about conduct extending over a period had no reasonable prospect of success.

The EAT allowed the appeal on the limitation issue. It held that the Tribunal had been wrong to conclude that the claimant’s argument that the alleged discrimination formed part of “conduct extending over a period” had no reasonable prospect of success. The EAT found that the Tribunal had considered irrelevant matters and had failed properly to evaluate the claimant’s case, which warranted a full evidential hearing.

The EAT dismissed the separate Article 6 argument relating to delay. Applying Bangs v Connex South Eastern Ltd (which confirmed that delay in issuing a Tribunal’s decision will not, on its own, invalidate that decision unless it causes a serious procedural unfairness), the EAT held that the delay did not amount to a freestanding serious procedural error, although the delay was regrettable.

Employers should be cautious before assuming that historic discrimination complaints can be safely disposed of on limitation grounds, particularly where the claimant alleges linked events, repeated conduct or a broader pattern of discriminatory treatment.

Where a claimant relies on alleged systemic issues, repeated incidents or a course of conduct, a Tribunal may need to hear fuller evidence before determining whether the claim is out of time. Applications to strike out or dismiss discrimination complaints on limitation grounds should therefore be assessed carefully, particularly where the claimant has pleaded a continuing course of conduct or relies on internal material said to support a wider pattern.

For employers, the practical point is to ensure that discrimination complaints, grievances, investigation outcomes and internal reviews are well documented. Where an employer seeks to argue that allegations are isolated and out of time, the contemporaneous evidence will often be critical.

Mr Chandrashekarappa brought an unlawful deductions claim relating to a “kitty bonus” introduced by Wipro. When the bonus was introduced, he was told that the entitlement would be up to 1% of revenues from “new logo invoicing” over the first 12 months, based on approval from the relevant Sector Lead.

The Sector Lead approved a proposal that Mr Chandrashekarappa should receive the full 1% bonus in respect of a contract with John Lewis Partnership. However, after that approval had been given, Wipro argued that further approval from higher up the management chain was required and sought to apply a cap of $150,000 to the bonus. The Employment Tribunal accepted Wipro’s position that no legal entitlement had arisen at the point of the Sector Lead’s approval. Mr Chandrashekarappa appealed.

The EAT allowed the appeal. It held that the Tribunal had erred in treating the Sector Lead’s later view that further approval was required as determinative. On the correct analysis, Wipro had communicated terms under which the bonus would be awarded, and those terms had been satisfied. It was not open to Wipro to later impose additional approval requirements or apply a cap after the original conditions had been met.

The EAT was clear that an employer cannot “move the goalposts” once the relevant entitlement has crystallised. Although bonus schemes may include discretionary elements, employers must still operate them consistently with the terms communicated to employees and with ordinary contractual principles.

This case is a useful warning for employers operating bonus, commission or incentive arrangements. Labelling a bonus as discretionary will not always give the employer complete freedom if the employee has been told the basis on which the bonus will be earned, and the employee has satisfied those conditions.

Employers should ensure that bonus terms are clear from the outset, including any approval requirements, caps, conditions precedent, discretion to reduce or withhold payment, and the point at which entitlement crystallises. If senior approval is required, that should be expressly stated before the employee performs the relevant work or achieves the relevant target.

Employers should also avoid informal communications that could be read as confirming entitlement where further approvals or caps are intended to apply. HR, Finance and line managers should be aligned on the terms of incentive schemes before communicating them to employees. Where bonus arrangements are bespoke or high-value, careful drafting and clear audit trails are essential.