A sharp set of EAT rulings this week offers timely reminders for HR, legal and in-house teams: wasted-costs threats remain high-risk, fair procedure still rules even in clear capability cases, and tribunals continue to scrutinise documentation, reasoning and process at every stage. Here’s what HR needs to know.
Lessons for HR, in-house counsel and legal teams: when to threaten wasted costs and when not to
Use WCO threats sparingly and only where you have a strong factual and legal foundation. The bar is high; tribunals will not award WCOs lightly.[MORE]
Ensure that any such threat is backed by a clear, compelling case that the opposing representative’s conduct was more than merely unwise or inefficient.
Check particularisation and jurisdiction early
One of the fatal defects in Gurney v Randall was that the age discrimination claim lacked proper detail, meaning it could not be meaningfully judged. Early scrutiny of claimants’ pleadings and whether jurisdiction exists is critical — and weak claims should be challenged promptly.
Communicate costs risks and advice clearly
If you represent a party (or act alongside counsel), ensure that clients are fully advised of the costs risks, settlement rationale, and procedural pitfalls in writing. If tribunals conclude that a representative failed to explain cost warnings or settlement logic, that can worsen the case for a WCO.
Don’t wait until last minute to withdraw weak claims
Late withdrawal of claims, especially at preliminary hearings, can look opportunistic and increase costs. If a claim is unstable from the outset, consider pruning early rather than abandoning at the eleventh hour.
Respect tribunal discretion
Even when an opposing representative’s conduct has flaws, tipping conduct over into the threshold required for wasted costs is a tall order. The tribunal’s factual view, its assessment of context, and its discretion are highly resistant to appellate interference.
Practical action steps
Review your internal policy on when your organisation will issue or respond to WCO threats; typically reserve them for clear-cut cases.
Ensure your in-house team or external counsel documents advice to clients about costs risks and settlement rationale.
In litigation, early assess whether claims are properly particularised; if not, challenge or require clarification at the outset.
Monitor whether opposing counsel withdraws claims late or changes positions with no advance notice — these can strengthen a WCO case but must be handled carefully.
Before appealing a tribunal costs decision, consider whether you can show a clear error of discretion (rare) or a legal misdirection.
The bottom line
Gurney v Randall [2025] EAT 154 is a potent reminder: wasted costs orders are not a tactical stick for routine use. Even suboptimal representation or procedural errors do not automatically justify sanctions.
For HR, legal and compliance teams, the lesson is clear: think twice before threatening or supporting a WCO claim — build a compelling, factually grounded case, communicate clearly, challenge weak claims early, and respect the tribunal’s wide discretion in costs decisions.
Fair process still rules: lessons from Zen Internet Ltd v Stobart [2025] EAT 153
Introduction: A recent Employment Appeal Tribunal (EAT) ruling in Zen Internet Ltd v Mr Paul Stobart [2025] EAT 153 is a sharp reminder for HR leaders that procedural fairness is non-negotiable — even when performance issues appear genuine.
The case shows how an employer can identify a legitimate capability concern yet still lose at tribunal if the process falls short.
Background
Mr Stobart, the former CEO of Zen Internet Ltd, was dismissed in March 2023 for performance-related reasons. Capability was accepted as a potentially fair reason for dismissal, but the Employment Tribunal (ET) found the company’s process was flawed and therefore the dismissal unfair.
While the ET accepted that a fair process might still have led to dismissal “a little over two months after the 17 March 2023 Board meeting and certainly by no later than 31 May 2023”, it ruled that Zen’s procedural failures were serious enough to make the dismissal unfair.
On appeal, the EAT (handed down 27 October 2025) dismissed Zen’s challenge to the tribunal’s finding of procedural unfairness but allowed the appeal in part — setting aside the ET’s Polkey finding (its assumption about when a fair dismissal would have occurred) because the tribunal had not given adequate reasons for reaching that date. The case was remitted to the ET for that limited issue to be reconsidered. Read the full judgment on GOV.UK
Key lessons for HR managers
1. Capability dismissals demand rigor in process
Even when an employee’s performance genuinely falls below expectations, HR must ensure the process — investigation, warnings, reviews, opportunity to improve, and appeal — meets fairness standards. The EAT confirmed that Zen’s procedural shortcomings were sufficient to render the dismissal unfair.
2. Fair procedure is not optional
The EAT reiterated that it’s not enough to show a fair reason for dismissal. Employers must follow a fair procedure throughout. The tribunal found Zen’s performance-management process and termination decision too hasty and inadequately documented.
For HR, that means:
Designing clear, time-bound Performance Improvement Plans (PIPs);
Recording performance reviews and feedback sessions;
Ensuring the employee has a genuine chance to respond and improve;
Providing an appeal route before final dismissal.
3. Document everything — and engage
Detailed, contemporaneous records are the best protection. Tribunals look for evidence that concerns were raised, support was offered, and the employee’s responses were considered. Absent or vague notes can sink an otherwise strong case.
4. Understand the Polkey principle
The ET initially found that, even with a fair process, dismissal would likely have followed within two months. The EAT agreed that a Polkey reduction might be appropriate in principle but ruled that the ET’s reasoning on why and when was inadequate. Takeaway: tribunals must explain why and when a fair dismissal would have occurred. HR should ensure internal timelines and documentation clearly show what steps would have been taken had the process been run correctly.
5. Process failures still cost money
Although the employer partially succeeded on appeal, the dismissal remains procedurally unfair until the remitted issue is resolved. Compensation risk therefore persists. The case underlines how procedural missteps can trigger costly litigation even where performance issues are clear.
6. Train and govern
Line managers and HR partners need consistent training on capability procedures. Ensure policies explicitly set out:
performance-review stages,
documentation standards,
escalation points, and
employee rights of representation and appeal.
7. Embed a culture of procedural fairness
Beyond compliance, fair process builds credibility. Employees are more likely to accept outcomes — even dismissals — when they can see the process was transparent, evidence-based, and respectful.
Practical action points for HR teams
Audit recent capability dismissals to confirm process fairness.
Update PIP and dismissal procedures to reflect EAT expectations.
Train managers on documenting performance and conducting fair reviews.
Implement a pre-dismissal checklist: evidence of underperformance, opportunity to improve, communication, and appeal rights.
Monitor outcomes of capability cases for consistency and bias risk.
The bottom line
The Zen Internet v Stobart decision reinforces a simple truth:
Procedural fairness is as critical as substantive reason.
Zen Internet’s case shows how even senior-executive capability dismissals can unravel if due process is skipped. The EAT’s partial remittal doesn’t soften the warning — it simply highlights that tribunals expect both sound reasoning and a transparent, well-documented process.
For HR leaders, the message is clear: treat fair procedure not as a formality but as an operational safeguard. It’s the difference between a defensible decision and an unfair dismissal claim.
This article was created with insights from Lex HR - your always-on HR legal assistant. Lex HR helps HR professionals navigate complex employment law with confidence, providing real-time, reliable advice tailored to your needs. Try it free today and see how much easier compliance can be.
