Zen Internet loses unfair dismissal appeal case with former CEO
- Reference: 1761727512
- News link: https://www.theregister.co.uk/2025/10/29/zen_internet_unfair_dismissal/
- Source link:
[1]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 [2]agreed [PDF], although it noted this was more down to Zen not following its own procedures than anything else.
[3]
There was then the inevitable [4]appeal [PDF]. The judgment, published on October 27, upheld the finding of unfair dismissal against Zen.
[5]
[6]
Stobart, a former Sage executive, was [7]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.
[8]
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.
[9]
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." ®
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[1] https://www.zen.co.uk/blog/posts/zen-blog/2023/04/17/richard-tang-returns-as-zen-chief-executive/
[2] https://assets.publishing.service.gov.uk/media/663e338ebd01f5ed32793948/Mr_P_Stobart_v_Zen_Internet_Ltd_-_2406939_2023_-_Judgment.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aQHzyF3L8mit-q54wJiJbwAAAQo&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://assets.publishing.service.gov.uk/media/68ff525b49d08dd781b48350/Zen_Internet_Ltd_v_Mr_Paul_Stobart__2025__EAT_153.pdf
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aQHzyF3L8mit-q54wJiJbwAAAQo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aQHzyF3L8mit-q54wJiJbwAAAQo&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://pressreleases.responsesource.com/news/94600/zen-appoints-former-sage-executive-paul-stobart-and-unveils-ambitious/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aQHzyF3L8mit-q54wJiJbwAAAQo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aQHzyF3L8mit-q54wJiJbwAAAQo&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://whitepapers.theregister.com/
Be wary of assigning malice when carelessness and incompetence could accomplish the same result.
Not that that looks much better for the people at the top.
Since we're talking about CEO's and Board Chairs, can we not have both Malice and Incompetence in play?
Malicious Incompetence? Or Incompetent Maliciousness...
Pointless growth attempt
That level of growth was just not going to happen, so a pointless approach & hire.
Would have needed a big ad spend & deep discounts to get appreciable numbers of new customers - a costly gamble given small profits.
.. as a Zen customer I would also add that the customer service levels are not as good as they were (& that is not just my experience, a quick online search showed others mentioning it) so maybe improve that first before going for growth* & at least word of mouth recommendations may improve (I no longer recommend them like I used to).
Not following your own procedures is just stupid - they are there for a reason, to protect both sides in cases like this. It would have been a longer process, but would have been more "water tight" - an especially bad move when you are a company with low profits & it is an extra expense. As an aside yet more proof that a new CEO is not a magic bullet (& just sort out the basics before getting grandiose ideas)
* Yes, I'm unfortunately aware that growth often goes hand in hand with worse customer service, but to get away with that approach you really need to be one of the big players in the field to start with & able to afford the incentive of cheap prices to compensate for poor service (& Zen are not).
Bad at capitalism
I'm evidently a massive failure when it comes to the very essence of capitalism because I'd rather a company did their job well, paid their people fairly, and made a little profit than that they make a massive profit at the expense of their employees and customers.
See kiddies look how much money would have been saved if they had just followed procedure. No lawyers bills, no compensation payout.
But No, there's always some muppet at the top who things the rules don't apply to them...