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Employment Tribunal Rules Zen Internet Unfairly Dismissed Former CEO

Tuesday, May 28th, 2024 (7:49 am) - Score 5,040
zen internet uk isp

A ruling by the Employment Tribunal has found that Rochdale-based UK broadband ISP Zen Internet acted “unfairly” when they dismissed former CEO, Paul Stobart, in March 2023. The move was followed by Zen’s original CEO and Founder, Richard Tang, being re-appointed as CEO after stepping aside in 2018.

Just to recap. Stobart was promoted from the position of Chairman to CEO in August 2018 (here), which occurred shortly after the introduction of a new business plan that ambitiously aimed for the venerable ISP to become a £100m business within 3 years and a £250m one within 10 years.

NOTE: Zen’s most recent financial results show that the company delivered a turnover of £100.5m in the year to 30th September 2022 (up from £91.3m a year earlier) and an operating profit of £20.7m (up from a loss of £1.1m).

Nevertheless, there was a dash of surprise when, during March 2023 (here), the ISP suddenly announced that Stobart would retire at the end of that same month – after 5 years in the position – and swap the role of CEO back to Richard Tang. At the time, this all seemed very amicable, with Zen heaping praise on the then outgoing CEO. But behind closed doors, there was a fair bit of drama.

Following his dismissal on 31st March 2023, Stobart is said to have presented a claim form to the Tribunal on 21st June 2023 – this was following a period of early conciliation from 11th April to 23rd May 2023. The former CEO raised a single complaint of unfair dismissal contrary to Part X Employment Rights Act 1996.

Overall, there was a great deal of evidence for the judge to consider, and we don’t plan to dive into the drama that it covers, which will be familiar to anybody who has run a modest sized business. But according to the judgement of an Employment Tribunal, Stobart ended up being “unfairly dismissed” because Zen, after raising some “potentially fair” concerns with his performance and the company’s “profitability” (i.e. not meeting expectations), ultimately “failed to follow a fair procedure“.

Judge’s Conclusion

Accordingly, my finding in this case is that Mr Stobart as claimant was unfairly dismissed by the respondent Zen Internet Limited in that although the potentially fair reason of capability was correctly raised by the respondent, they rendered the dismissal unfair by failing to follow a fair procedure.

However, the dismissal would have been fairly dismissed by no later than 31 May 2023 had a fair process been applied by reason of the claimant’s capability arising from his poor performance.

The full judgement is well worth a read because it’s not often that we get to see such a detailed insight into the internal dramas of a key UK broadband ISP, particularly when it comes to the most senior levels of management. However, the remedy for this will ultimately still need to be considered at a separate hearing on a date to be confirmed in the Manchester Employment Tribunal. Zen Internet has declined to comment.

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Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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Comments
18 Responses
  1. Avatar photo Depak says:

    Didn’t the Zen press statement say he retired?

    1. Avatar photo Sam P says:

      Yup, welcome to business.

  2. Avatar photo Anon says:

    @Mark – The accounts are not what they seem. If you look at the detail the step change from 21 to 22 appears to be related to a mysterious £24m payment “following the conclusion of a negotiation with an entity that is not a related party”, without that the loss would have gone up.

    If you look back Zen seem to be surviving by selling things; their old HQ in Rochdale & IP addresses helping out in other years.

    1. Avatar photo Colin Sneddon says:

      Tidying things up is to be expected – the sale of the entity allowed the debt to be reduced, and the revolving debt facility to be reduced too. This makes sense with the cost of debt increasing (relative to when it was put in place).

      Selling IP4 address ranges also makes sense….who knows if future prices will be lower or higher.

      Volumes are growing.

      I’ve only had a really quick look – I think they’re only a little behind the 3 year growth targets.

  3. Avatar photo MissTuned says:

    Given this, and what looks like a fire sale of IP addresses for no clear reason a few months ago (which required very long-term loyal clients to be renumbered), I’m not sure all is well with Zen.

    They don’t seem clear as to what they want to be – are they a high-end A&A-style ISP, or are they aiming at the EE sector of the market? They lean very heavily on recommendations and awards from Which, but how much does that matter any more? Meanwhile, while the connection (at least for me) is still fine, customer service is declining fast.

    1. Avatar photo Ivor says:

      not sure customer service has been that good for a while – I had a shambolic experience several years ago

      Given that Zen went all in on a Huawei core network to reduce reliance on BT Wholesale, I wonder if they’ve also got to feel the costs – voluntarily or otherwise – of switching to a more US/UK gov “approved” vendor

    2. Avatar photo Anon says:

      @ivor – That had nothing so do with BTW. Zen have been running a Cisco / Juniper based core for many years…

    3. Avatar photo greggles says:

      They also seem to have pulled out of some areas, which I assume is cost management.

      I was registered with tem for cityfibre FTTP, and they notified me FTTP was coming about 2 years back (so clearly they had planned coverage of the area), but then the notificiations stopped, I assumed this was due to corrections as the cityfibre rollout was years away from being available to order, however when FTTP was finally available, I have since discovered Zen dont cover the FEX, this is even more weird when you consider a year or two back they told this site they were planning to cover 100% of cityfibre areas.

      IDnet who use Zen backhaul do cover my area, so its possible to use cityfibre national for just some areas, but Zen have pulled out. They appear to be behaving in a way that is anti risk, like they are shaking or something.

    4. Avatar photo Anonymous says:

      @greggles Its going to depend where the FEX is. Zen don’t have any infrastructure in towns other than the exchange, and have no way of getting to a FEX if its too far away, and Cityfibres fibre doesn’t pass via the exchange.

      There were talks of using BT OR services (EAD or similar) to connect but that was dropped because it was way too expensive.

    5. Avatar photo Ivor says:

      anon – I am referring to “plexus”. Certainly Zen think it’s a “core network” in their article about it.

    6. Avatar photo greggles says:

      Anonymous they have themselves connected to neighbouring areas, but not only that it seems they have decided to not use cityfibre national whilst idnet who also use zen backhaul do use cityfibre backhaul to cover the missing areas. I detailed all this in the comment you replied to, of course they have a way. They have simply decided to not do it.

      AAISP, acquiss, IDNet and other isps all cover the FEX via cityfibre national.
      Zen covers the neighbouring areas via their own network. But not this particular area, but they had previous plans to cover every cityfibre area and they even had previous plans to cover this area.

      The neighbouring areas I talk about are all in the same city.

      So as to remind you they had plans, then they dropped them, smaller ISPs than them cover the area, understood now?

    7. Avatar photo Anonymous says:

      @greggles – Things are not quite as simple as you make out.

      While IDNet do use Zen’s backhaul for BTOR services, I’m not sure Zen wholesale CF services across their infrastructure. Probably the only way for IDNet to pick up CF is via the national product. They are likely not using the national product to ‘fill in the gaps’.

      As for Zen’s offerings, there is a few things. You are assuming that CF allow both local handover and national handover at the same time. CFs processes are very strict, and do not allow wiggle room so this may not be the case. The other thing is costs. Local handover will be significantly cheaper than the national handover. This is the entire reason that Zen built their backhaul in the first place was to reduce their costs (considering profitability is a main part of why they booted out their CEO, maybe national handover doesn’t cost in)

      They originally had plans to connect to every FEX in their footprint, but as I previously mentioned, the ones slightly outside their reach were vastly more expensive due to having to use Openreach’s products.

    8. Avatar photo Anon says:

      @ivor – Plexus was years ago now and was a capacity driven core network upgrade, nothing to do with BTW. The next generation which replaced Plexus, a few years ago now too, was Cisco and Juniper based. How do I know? Hint: some of us worked there and built those networks…

    9. Avatar photo Ivor says:

      But do you actually know, though?

      “Named Project Plexus, Zen’s major network investment will see its number of Points of Presence (PoPs) in BT exchanges rise from 270 to over 400 in the next few months, and expand Zen’s robust, cost-effective on-net reach to well over 500,000 postcodes, covering nearly every corner of the UK.”

      that is quite literally about cutting BT Wholesale out of the picture. Given that you seem to be wrong about plexus’s purpose – do excuse me if I don’t pay much attention to the rest of what you’ve said (especially as you won’t put a name to it)

    10. Avatar photo Different Anon. says:

      @Ivor – Plexus was the name given to a few things in Zen, the new core and the adding of unbundled exchanges. Huawei was only ever used in the core and for BNG. The article about Plexus on Zen’s site is from early 2019, yet by then the work was underway to replace it and move to Juniper & Cisco. The only Huawei left is a small number of BNGs now.

      And to the other questions about CityFibre national, you can have both and there are ISPs with both, but Zen have made a choice to be local only on their side. So Zen are only where they have decided to connect locally to Zen.

  4. Avatar photo Graham says:

    I wonder how Richard has got on since taking back over as CEO meeting the objectives he set for Paul …. Were they even realistic ?

  5. Avatar photo James Smith says:

    Sad end. Poor, naive poor performance management from Zen; seduced by an outsider with big ideas, but really weak sector understanding and execution. Hope they can stabilise. Service is definitely down – always something Zen stood for at the top of its list.

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