Court of Appeal rules training repayment clause unenforceable
The Court of Appeal has provided important guidance on the enforceability of training repayment clauses in employment contracts.
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Case Study
The Employment Appeal Tribunal (EAT) considered whether withdrawing a job offer before the employee’s start date could amount to a breach of contract, even where the offer was described as “conditional”.
In Kankanalapalli v Loesche Energy Systems Ltd, the claimant was offered a role as Project Manager. The offer included standard terms such as salary, working hours and start date, along with a £3,000 relocation contribution. It was stated to be conditional on satisfactory references, right to work checks and completion of a six-month probationary period.
The claimant accepted the offer, completed onboarding documentation and made significant relocation arrangements with his wife, including booking international travel and securing long-term accommodation. However, the offer was withdrawn approximately one week before his start date.
Key issues included:
Case Study
The Employment Tribunal initially found that no binding contract existed, concluding that the conditional nature of the offer meant employment had not yet been formed. However, the Employment Appeal Tribunal disagreed and overturned this decision.
The EAT held that a binding contract had been created once the offer was accepted. It drew an important distinction between conditions precedent (which prevent a contract forming) and conditions subsequent (which allow termination of an already formed contract if not satisfied).
In this case, the conditions were found to be subsequent rather than precedent, meaning the contract existed once accepted, subject to termination if conditions were later not met.
The EAT also considered what notice period applied, as the offer letter was silent on termination. Taking into account the seniority of the role and the relocation requirement, it concluded that a reasonable notice period of three months should be implied.
The employer was therefore liable for breach of contract, with damages awarded accordingly.
This decision is a clear reminder that labelling a job offer as “conditional” does not automatically prevent a contract from being formed once it is accepted. In practice, the legal effect depends on how those conditions are framed and whether they are intended to delay formation of the contract or simply regulate its continuation.
Employers should take a careful and structured approach to offer letters and onboarding arrangements:
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