Every employer has had the thought. Someone is not delivering, everyone can see it, and the outcome feels obvious. Do you really have to sit through meetings and letters to reach a conclusion everybody already knows?
Zen Internet, a broadband provider with hundreds of staff, took that view about its own chief executive. The tribunal and the Employment Appeal Tribunal both said no. The answer is a warning and, in one respect, a comfort.
In short:
- Zen dismissed its CEO for capability. The tribunal accepted that was a genuine and potentially fair reason.
- The dismissal was still unfair, because Zen skipped its own procedure: no formal fact finding, no notice of the concerns, no meeting to respond, no appeal.
- Zen argued that a man that senior did not need the usual process. The EAT rejected that.
- Compensation was reduced under the Polkey principle, and on appeal the EAT held the reduction should be assessed from when the concerns first arose, not from the dismissal decision.
- The lesson: a fair reason is only half the test. The other half is what you can show you did.
What happened
Paul Stobart became chief executive of Zen Internet on 1 October 2018, brought in partly to deliver the profitability set out in a five year plan he had drawn up himself. The profits did not follow. After a profit in the 2019 financial year, the company recorded losses from 2020 through to 2023.
Concerns about his performance came to a head in late February 2023. The board met on 17 March 2023 and decided to dismiss him. He was dismissed on 23 March, with his employment ending on 31 March.
No formal procedure happened at any point. No structured fact finding, no letter setting out the problem, no meeting where he could answer it, no right of appeal. He brought an unfair dismissal claim in the Manchester employment tribunal.
What the tribunals decided
The reason was fine. Capability, in plain English not being able to do the job to the standard required, is a potentially fair reason to dismiss. The tribunal accepted that this was genuinely why Zen dismissed him.
The dismissal was still unfair. Zen had its own written procedure, which mirrored the Acas Code of Practice on disciplinary and grievance procedures. It required the company to establish the facts formally, tell the employee what the problem was, hold meetings so he could put his case, decide, and offer an appeal. None of that happened. You can read the tribunal's judgment in full.
Seniority did not excuse it. On appeal, Zen argued that for someone that senior, going through a process would have been futile. The EAT accepted there is no absolute rule that particular steps must always be taken in a capability case, and that exceptional cases exist where a shortened process is fair. This was not one of them. Seniority alone does not let you skip the basics. The appeal against the finding of unfairness was dismissed.
The part about money, and why it moved
When a dismissal is procedurally unfair but the person would probably have been dismissed anyway, compensation can be cut. That is the Polkey principle, named after a 1987 House of Lords case, Polkey v A E Dayton Services Ltd.
The tribunal found that if Zen had acted fairly, Mr Stobart would still have been fairly dismissed by no later than 31 May 2023. Compensation was calculated on that short window instead of his full losses.
Zen appealed that calculation and won. The EAT, in Zen Internet Ltd v Stobart [2025] EAT 153, held that the tribunal had wrongly confined itself to the period from the 17 March board meeting, ignoring the earlier period from late February when the concerns had already crystallised. Had a fair process started when the problem was first identified, it would have concluded sooner. The compensation question went back to the tribunal to be reconsidered.
That is a technical point with a very practical edge: the clock for "what would have happened anyway" starts when the concerns arose, not when you finally acted on them.
What this means if you employ people
A fair reason does not save you. Zen was right about the substance and still lost on unfairness, with the legal costs, management time and public judgment that come with it.
Your own policy is the standard you are held to. Zen's procedure mirrored the Acas Code, and its failure to follow its own rules is what made the dismissal unfair. A policy you do not follow is worse than useful.
"It was obvious" is not a defence, at any level of seniority. If the most senior person in a company is entitled to a process, so is everyone else.
The process is not elaborate. Establish the facts, tell the person the problem in writing, meet so they can respond, decide, confirm it, offer an appeal. Weeks, not seasons.
And it gets more expensive from here. From 1 October 2026 the time limit for bringing a claim doubles to 6 months, and from January 2027 the qualifying period for unfair dismissal drops to 6 months' service while the cap on compensatory awards is removed.
What to do this week
- If you are unhappy with someone's performance right now, put it in writing to them today, plainly and kindly. That single dated document changes your position.
- Read your own disciplinary and capability procedure. If you would not actually follow it, either follow it or change it.
- Write down your minimum steps and give them to anyone who manages people.
- Check your last dismissal against those steps. If you skipped some, you got away with it. That is different from it being fine.
This article explains UK employment law in plain English. It is general information, not legal advice. For advice on your specific situation, speak to a solicitor.