Zen Internet loses unfair dismissal appeal case with former CEO

Judges agree broadband biz didn't follow its own procedures when booting boss

UK ISP Zen Internet has lost an appeal against a ruling that it unfairly dismissed former CEO Paul Stobart.

According to Zen, Stobart retired from the business at the end of March 2023. Founder and former CEO Richard Tang took over.

However, Stobart claimed that he was unfairly dismissed. In 2024, a Manchester tribunal agreed [PDF], although it noted this was more down to Zen not following its own procedures than anything else.

There was then the inevitable appeal [PDF]. The judgment, published on October 27, upheld the finding of unfair dismissal against Zen.

Stobart, a former Sage executive, was appointed as chair at the end of 2017. The goal was to ramp up growth and make Zen a £100 million business within three years and a £250 million business within a decade.

It didn't pan out that way. Tang appointed Stobart to the role of chief executive on October 1, 2018, and Tang took Stobart's former role as chair.

The original judgment documents Zen's profitability problems and Tang's "anxiety," saying: "While the 2019 financial year secured a profit, of £669,000 before tax, losses continued from 2020 to 2023."

Eventually, Stobart was dismissed for the reason of capability – Zen's figures were nowhere near the lofty forecast.

The tribunal initially ruled Stobart was unfairly dismissed due to procedural failures, despite agreeing with the capability grounds and that proper process would have achieved the same outcome by end of May.

Zen lodged an appeal and, once again, the tribunal found that Stobart had been unfairly dismissed.

The Polkey finding was also appealed, which can reduce compensation if an employee would have been dismissed anyway. The principle doesn't make an unfair dismissal fair, but can lower damages.

The original judgment, according to the appeal judgment, confined its consideration to the period from March 17, 2023, but "ignored the period from 24 February 2023 when the concerns about capability had crystalized."

"The challenge to the Tribunal's finding on the Polkey issue is well founded and the Tribunal's conclusion on this issue is set aside."

In Zen's last accounts filed with the UK's Companies House, for the year ended September 2024, it reported a turnover of £121 million, slightly up from £110 million in 2023, but profits slid from £378,000 to £320,000.

A spokesperson at Zen Internetv told The Register:

"Zen appealed the Employment Tribunal decision on two grounds. While one ground was dismissed, the other was upheld and the case has been remitted to the Employment Tribunal for further consideration. As the matter remains ongoing, it would not be appropriate to comment further." ®