AON Training Ltd & Anor v Dore

The Court of Appeal allowed the appellants' appeal in part and remitted the disputed elements of the compensatory award to the Employment Tribunal for rehearing. The court held that the Employment Tribunal had failed to give adequate reasons and necessary findings for its assessment of compensation that consisted effectively of interest on a loan used to start a business, rather than applying conventional principles for assessing loss following dismissal.

Legal principles:

• The assessment of compensation for loss following dismissal (under section 123 of the Employment Rights Act 1996) and for discrimination (under what is now section 17A(3) of the Disability Discrimination Act 1995) must follow conventional principles: identify loss of remuneration, add reasonably incurred mitigation costs, and deduct earnings from mitigation (see Gardiner-Hill v Roland Berger Technics Ltd).
• A tribunal must give adequate reasons and make necessary factual findings so an appellate court can understand the basis for its award (see English v Emery Reimbold & Strick Ltd for the importance of adequate reasons).

This is an appeal by AON Training Ltd and Mr Alan O'Neill against parts of an Employment Appeal Tribunal decision that substantially upheld an Employment Tribunal's remedies award to Mr Ian Dore following findings of unfair dismissal and disability discrimination. The Employment Tribunal had found that Mr Dore, who suffered from dyslexia, was dismissed for reasons including his disability and reliance on promises of a 10% shareholding. Liability was established at a liability hearing (decision dated 8 October 2003) and remedies were decided at a remedies hearing (hearing 16 December 2003; decision sent 29 December 2003).

(i) Nature of the application: The appellants obtained permission to appeal to the Court of Appeal (permission granted on 10 November 2004) limited to remedies. They challenged specific elements of the compensatory award, notably awards described as interest on borrowings (£7,320.22 for 113 weeks and £3,368.59 for a further 52 weeks), and contended the Employment Tribunal had failed to give adequate reasons and to apply the proper approach under the Disability Discrimination Act 1995 and the Employment Rights Act 1996.

(ii) Issues framed:

• Whether the Employment Tribunal properly quantified compensatory loss and made the necessary findings to justify treating interest on a business loan as compensation for loss of earnings.
• Whether the tribunal applied the correct legal approach required by section 17A(3) of the DDA (damages principles) and section 123 of the ERA (just and equitable compensatory award).
• Whether the tribunal gave adequate reasons to enable appellate review.

(iii) Reasoning and outcome: The Court of Appeal found the Employment Tribunal had not explained how interest on the loan equated to compensatory loss, had omitted necessary findings (such as the terms and timing of the borrowing, the remuneration lost and earnings from the new business), and had not applied the conventional method for assessing mitigation set out in Gardiner-Hill v Roland Berger Technics Ltd. The court was prepared to infer that the tribunal had implicitly accepted that it was reasonable for Mr Dore to start his own business, but the absence of factual findings and explanation meant the disputed components of the award could not stand. The Court allowed the appeal in respect of the disputed compensation items and remitted them to the Employment Tribunal for reconsideration. The Court made a conditional costs direction linked to the outcome on remitter or settlement.

Appeal allowed in respect of the disputed elements of the compensatory award and those elements (the awards treated as interest on borrowings) were set aside and remitted to the Employment Tribunal for rehearing. The Court concluded the ET had failed to give adequate reasons or make necessary findings to justify treating interest on loans as compensatory loss and had not followed the conventional approach to mitigation of loss following dismissal.

Appeal from the Employment Appeal Tribunal (appeal concerning remedies following Employment Tribunal findings of unfair dismissal and disability discrimination). Liability finding by Employment Tribunal dated 8 October 2003; remedies hearing 16 December 2003 (decision sent 29 December 2003). EAT (His Honour Judge Prophet presiding) adjusted some items of liability (EAT decision not numerically cited here). Permission to appeal to the Court of Appeal granted by Pill and Mummery LJJ on 10 November 2004. Court of Appeal neutral citation: [2005] EWCA Civ 411.