AON Training Ltd & Anor v Dore

Where an employee mitigates loss after dismissal by starting a business, compensation under both the Disability Discrimination Act 1995 and the Employment Rights Act 1996 should ordinarily be assessed by calculating lost remuneration, adding reasonably incurred mitigation costs, and deducting earnings from the new business. The tribunal must first be satisfied that this form of mitigation was reasonable. Interest on business borrowing cannot simply be substituted for that assessment, especially where the borrowing terms, dates and actual interest incurred have not been established. Adequate reasons and findings are required so that the parties and an appellate court can understand how compensation was calculated.

AON Training Ltd and Alan O'Neill appealed against the Employment Appeal Tribunal's decision substantially upholding an Employment Tribunal remedies award to Ian Dore following findings of disability discrimination and unfair dismissal. The Employment Tribunal awarded compensation including interest on money borrowed to establish a new building and refurbishing business. The Employment Appeal Tribunal altered liability for some elements but dismissed the challenge to the quantification of loss.

The appeal to the Court of Appeal concerned interest on the borrowing for the period after dismissal and a further period of future loss. The central issues were whether those sums were permissible compensatory losses and whether the Employment Tribunal had given adequate reasons and made sufficient findings.

1. Appeal allowed and disputed compensation set aside. The disputed awards, including interest on those items, could not stand. The matter was remitted to the Employment Tribunal, with the choice between the same or a fresh tribunal left to the Regional Chairman.
2. Where an employee starts a business to mitigate dismissal-related loss, the conventional approach is to calculate lost remuneration, add reasonably incurred mitigation costs, and deduct earnings from the new business. This assumes that mitigation in that form was reasonable: Gardiner-Hill v Roland Berger Technics Ltd [1982] IRLR 498.
3. The Employment Tribunal was entitled to infer that establishing a business was reasonable in the circumstances. It nevertheless had to identify the remuneration lost and take account of receipts from the new business. It could not simply treat interest on borrowing for the new business as the total compensation.
4. The evidential deficiencies were material. There was no adequate evidence of the borrowing terms, dates, tranches or actual interest incurred. The calculation therefore appeared to rest on a generalised assessment rather than established loss. The reasons did not enable the appellants to understand the basis of the conclusion, applying the guidance discussed in English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409.
5. Costs in the Court of Appeal were made conditional on the outcome of the remitter or any settlement.

• Court of Appeal (Civil Division): [2005] EWCA Civ 411 allowed the appeal on the disputed compensation items, set aside the corresponding parts of the Employment Appeal Tribunal's order and the Employment Tribunal's decision, and remitted the matter to the Employment Tribunal.
• Employment Appeal Tribunal: substantially upheld the Employment Tribunal's remedies decision, but ordered AON alone to pay certain specified sums and left AON and Alan O'Neill jointly and severally liable for the remaining compensation.
• Employment Tribunal: awarded Ian Dore compensation of £24,074.43 plus interest following findings of disability discrimination and unfair dismissal.