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Mitigation of Loss
Rad Kohanzad appeared for the Appellant in MacAusland Design Ltd v Ms A Portosi [2026] EAT 51, an appeal concerning the calculation of compensation for unfair dismissal and the duty to mitigate loss. The employer argued that the Employment Tribunal had failed to reduce the claimant’s past loss of earnings to reflect an alternative job opportunity she had not pursued. The claimant cross-appealed, arguing that the tribunal had wrongly assessed her personal circumstances, including her caring responsibilities in Italy. The Employment Appeal Tribunal (EAT) dismissed both the appeal and the cross-appeal.
Background: unfair dismissal and mitigation of loss
The Employment Tribunal had already found that Ms Portosi was unfairly dismissed. Neither party challenged that finding in the EAT. The dispute concerned the remedy: how much compensation she should receive for her financial losses after dismissal.
Ms Portosi was dismissed on 30 September 2020. During the pandemic, she applied for jobs in the UK and Italy, undertook temporary work in Italy and, from 1 August 2021, took a fixed-term role with an Italian public-sector employer, ASUGI. She explained that she had promised to remain in that role for at least a year and wanted to stay in Italy to support her mother following her father’s death.
In August 2021, an architect, Amos Goldreich, contacted her about possible project architect or freelance work in the UK. The potential salary for a project architect was up to £39,000 a year. Ms Portosi did not pursue the opportunity.
At the remedy hearing in July 2022, the tribunal awarded compensation for past loss of earnings, deducting income from her alternative employment. For future loss, it calculated a smaller weekly shortfall based on what she might have earned had she pursued the Goldreich opportunity. MacAusland Design appealed the way the tribunal had treated the opportunity when calculating past losses. Ms Portosi cross-appealed the finding that she had acted unreasonably by not pursuing it.
The legal test: who must prove a failure to mitigate loss?
Under section 123(4) of the Employment Rights Act 1996, the question is whether the employee took reasonable steps to mitigate their loss. The established principles summarised in Cooper Contracting Ltd v Lindsey (UKEAT/0184/15/JOJ) make an important distinction: the employer must prove that the employee acted unreasonably in failing to mitigate their loss. The employee does not have to prove that they acted reasonably.
The tribunal must assess the circumstances as a whole, including the employee’s views and wishes. It should not apply an excessively demanding standard to someone who has lost their job. An available or potentially better-paid job may be relevant evidence, but its existence does not automatically establish an unreasonable failure to mitigate.
The assessment also involves considering what steps the employee should have taken, when those steps would probably have produced alternative income, and how that income would affect the compensation calculation. In Hakim v The Scottish Trade Unions Congress (UKEATS/0047/19/SS), the EAT recognised that tribunals should avoid false precision when estimating when alternative employment would have been obtained.
Why the employer's appeal failed
MacAusland Design argued that the tribunal’s finding that Ms Portosi had acted unreasonably by not pursuing the Goldreich opportunity in August 2021 meant that her past losses should have been reduced from that point. It argued that the tribunal had applied its mitigation finding inconsistently when calculating past and future loss.
The EAT rejected that reading of the tribunal’s reasons. Read as a whole, the tribunal had not found that alternative earnings would have been available to Ms Portosi from August 2021. It had taken account of her new role in Italy and her assurance that she would remain with ASUGI for at least a year. The tribunal’s reasoning was that the failure to mitigate crystallised in 2022, after that year had passed.
The EAT acknowledged that one passage in the tribunal’s reasons—stating that the employer had not shown a failure to mitigate—was difficult to reconcile with other findings. But it held that this did not undermine the decision when read in context. The tribunal had not erred in calculating past losses without applying the proposed reduction from August 2021.
Why the claimant's cross-appeal also failed
Ms Portosi argued that the tribunal had treated her decision as a matter of “personal choice” without giving proper weight to her circumstances. She was living in Italy, caring for her mother and had recently accepted a fixed-term role. She also argued that the tribunal’s conclusion was perverse: in her view, no reasonable tribunal could have found that she should have pursued the UK opportunity.
The EAT rejected both arguments. It found that the tribunal had considered her personal circumstances and had not treated them as irrelevant merely because it described her decision as a personal choice. Those circumstances had to be weighed, but they did not automatically prevent the tribunal from finding that she should have explored other employment opportunities.
The tribunal was entitled to distinguish between being unable to pursue a job and choosing not to pursue it. It could conclude that Ms Portosi should have explored the opportunity during her first year with ASUGI, even if she did not intend to leave that role immediately. That would have put her in a position to take up alternative work after that period.
The EAT also rejected the perversity challenge. The question was not whether another tribunal might have given different weight to her circumstances, but whether the decision was one no reasonable tribunal could reach. That high threshold was not met.
What this decision means for unfair dismissal compensation
The decision applies established principles on mitigation of loss to a specific factual situation. It does not establish that an employee must always pursue a better-paid job, abandon existing employment or relocate to reduce their loss. Instead, the tribunal must assess whether the employee acted unreasonably in their particular circumstances and when any failure to mitigate would actually have affected their earnings.
Three practical points follow:
The employer bears the burden of proof. It must show that the employee acted unreasonably in failing to mitigate loss; the employee does not have to prove that every decision was reasonable.
The timing of alternative income matters. A potential vacancy does not necessarily mean that an employee could have started earning more from the date it was mentioned. The tribunal must assess when alternative earnings would realistically have arisen.
Personal circumstances are relevant but not automatically decisive. Caring responsibilities, location and commitments to a new employer must be considered, but they do not necessarily make it reasonable to stop exploring other opportunities.
For an EAT appeal, the key question is whether the tribunal applied the correct legal test, took account of the relevant circumstances and reached a conclusion open to it on the evidence. Disagreement with the tribunal’s assessment of reasonableness or the weight given to particular facts will not, by itself, establish an error of law.
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Case details
Case: MacAusland Design Ltd v Ms A Portosi
Neutral citation: [2026] EAT 51
Case number: 2022-000827-DXA
Judgment date: 10 March 2026
Judge: Judge Keith
Hearing date: 10 March 2026
Appellant: MacAusland Design Ltd
Respondent and cross-appellant: Ms A Portosi
Counsel for the employer: Rad Kohanzad, instructed by Croner Group Limited
Counsel for the claimant: Patrick Tomison, instructed by Thompsons Solicitors
Outcome: Employer’s appeal dismissed; claimant’s cross-appeal dismissed.
Official judgment: Read the full EAT judgment (PDF)
