Your Guide to Claiming Loss of Earnings after an Injury….
If you are Claiming for Loss of earnings following a personal injury, it is important that you are aware how the courts will approach this and find out what you can and can’t claim.
Generally speaking any loss of earnings will start from the time of the accident and continue until the time you return to work or, if you are retired on ill health grounds, up until the time you would have retired in the absence of your accident.
It follows, if you have losses running into the future then you are also entitled to look to claim back any future loss of earnings to compensate for any long-term or permanent disability.
It’s also worth noting that you may also be able to claim compensation for loss of earnings (up to a certain limit) if you have had to take time off work to care for a family member who has been injured in an accident.
What Losses Can I Claim?
To claim loss of earnings, you will need to demonstrate you have lost money or not been able to work as a consequence of your injury.
Losses may include your normal net lost wages, lost benefits, and lost opportunities.
To claim compensation it will be necessary to demonstrate to the Court and the other side, through evidence, that you have suffered a loss of earnings with supporting documentation.
This documentation could include pay stubs, correspondence from your employer, tax returns, and financial records.
A loss of earnings claim can arise out of any personal injury claim such as a minor or major Road Traffic accident, a medical negligence claim or any serious accident.
You injuries don’t necessarily need to be serious to justify a claim for loss of earnings. Even if you return to work straight away without any time off you could still be eligible for compensation if the accident has prevented you from fulfilling your usual duties or ability to work resulting in a loss in earning capacity.
In practice your solicitor will need to make enquiries to establish if there is sufficient evidence to pursue matters in this respect.
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Past loss of Earnings – Can I Claim?
If the accident you suffered has prevented you from working, you may well be able to cl
The whole idea of the compensation system is to put the injured person in the same position they would have been in if the accident hadn’t occurred. It follows that if the accident has resulted in lost earnings (and any other losses reasonably and necessarily incurred) then then the Defendant, in simple terms, is obliged to make good the short fall.
The question of past loss of earnings is usually straightforward to prove provided the independent medical expert(s) evidence in relation to the claim confirms the personal injury has resulted in you being unfit for work. It is then necessary to show that, as a matter of fact, those earnings would have continued into the future in the absence of the injury.
Accidents which involve serious injuries leading to an absence from work on a long term basis usually means there is serious financial pressure for the Claimant to make ends meet.
Loss of earnings quickly mount up and it is crucial in these circumstances for personal injury lawyers to urgently gather together all the paperwork they need so they can prove loss and obtain an immediate interim award from the insurer.
Past Loss of Earnings if You are Employed?
If you are employed it may be that you are entitled to sickness pay for sometime after the accident and your contract of employment will set out your employer’s obligations in this respect.
There is no legal obligation for employers to keep paying their employees who are unable to work through injury unless the employer decides to offer such benefits.
At the least an injured employee would generally be entitled to be in receipt of SSP or Statutory Sick Pay and this can be supplemented, depending upon the terms of the employment contract, by sick pay from the employer.
Whatever the position it is advisable to keep the employer fully advised of the situation so the injured party can be monitored and plans can be made about returning to work if this is a realistic proposition.
The Importance of Your Employers Outlay?
It’s vital your personal injury lawyer establishes in writing whether there is a contractual requirement for you to recover any sick pay you received during your absence from the Defendant.
This sort of contractual arrangement is common for many employees including those who work in the NHS and Council as well as those working in private practice.
If your claim is finalised without including the outlay owing to the Claimant’s employer then rather worryingly you may well be personally responsible to pay back any shortfall to your employer. Don’t worry too much as this is something your solicitor should check out on your behalf before reaching any final settlement.
An experienced personal injury lawyer will of course be able to help you navigate all areas relating to the quantification of your loss of earnings claim and no doubt will gather together all the documents, bank statements and wage slips required to establish your usual income and prove loss.
Past Loss of Earnings for Self Employed Workers?
If you are self-employed, your loss of earnings claim will include the loss of earnings, or profits, since the accident.
This is not nearly as easy to calculate when compared to an employee who has a set wage that doesn’t fluctuate but your solicitors will prove helpful by gathering together the evidence required to substantiate the claim.
- The starting point to prove loss will be to obtain your business accounts and tax returns for the 3 years before the accident and relevant bank statements.
- Your accountant should be able to assist in collating a careful record of the information required as well as providing an insight in relation to the loss of profits of the business.
- In very general terms, the more financial information and paperwork you can present the better the compensation amount.
- When claiming for a loss of earnings as a self-employed person it is necessary to prove that you have suffered an actual loss of earnings and not just simply a reduction in your company’s turnover.
- It’s not entirely unusual for a self-employed Claimant to have to pay someone to cover their position whilst they are convalescing. The costs involved can be calculated easily although whether they are readily agreed by the other side is another matter.
- Any losses in income need to be as a result of the inability of the Claimant to work as opposed to other factors such as a downturn in orders or business.
In summary a self-employed Claimant must be able to provide a whole array of paperwork before being in a position to substantiate a claim for loss of income.
It stands to reason that for new businesses without a proper history of trading, the challenge to show a loss of income can be fraught with difficulty and requires long and careful analysis by your legal adviser.
In the absence of a regular wage your personal injury lawyer will need to work fast to gather together all the information that there is to see, as far as possible, whether your claim for past earnings can be quantified.
As a starting point all relevant bank statements at around the time the accident happened and medical records need to be obtained and once this evidence has been compiled a request to the defendant’s insurers should follow for an early interim payment.
In practice insurers will only agree to make an interim payment if they are satisfied that the defendant was responsible for the accident and that the evidence submitted in support of the interim payment supports the net loss claimed.
If the insurer is not prepared to make an interim payment in circumstances where this is unreasonable then the personal injury solicitor needs to be ready to make a formal application to the Court with a view to obtaining a formal order to require the defendant to make the payment.
Past Losses for the Unemployed?
It’s generally very difficult to bring a loss of earnings claim in circumstances where the Claimant was out of work at the time of the accident. The situation is made even more problematical if the Claimant has had long periods off work without any gainful employment.
In this situation it will be for your solicitor to consider investigating investigate what the chances were of the Claimant obtaining employment in the absence of the accident.
This can be achieved by asking family, friends and/or prospective employers to provide a witness statement detailing what they expected the Claimant to be doing but for the accident. There have been occasions where we have acted for individuals who had received a formal written job offer before the accident in question. This is good evidence and can be used to support an ongoing loss of earnings even if the job had not actually started.
Much will depend upon whether the court accepts whether the evidence is sufficient to demonstrate the Claimant would have obtained employment had the accident not happened.
What about Bonus Payments, Promotions, Overtime and other variations in Pay?
We start here by referring again to the basic principle outlined above which is the compensation amounts are designed to place the Claimant in the same position they would have been in had the accident not happened.
It follows the Claimant, subject to proving appropriate evidence in support, can seek to recover compensation which reflects a loss of a bonus, a promotion, overtime and any other benefits or increases in usual earnings that would have happened but for the accident.
The burden of proof for personal injury claims is on the “balance of probabilities” which is a much lower standard than “beyond reasonable doubt” which applies to criminal matters. It is therefore necessary for the Claimant to show that any losses would have come to fruition in the absence of the accident and more likely than not, that is 51% (or more) in line with the civil burden of proof.
In practice Claimant solicitors will sometimes obtain witness statements from contemporaries of their client’s or from senior personnel to comment in relation to the prospects of promotion and or bonus payments etc to prove the loss involved.
Claiming Future Loss of Earnings
If the accident you have suffered has lead to a premature medical retirement from your job or a reduction in your pre-accident wages then you will be looking to make a claim for future loss of earnings.
The amount of future compensation you are entitled to will be based upon the difference in earnings between your current and future salaries.
If you are seeking to claim future loss of earnings then it will be necessary for the relevant independent medical experts who are instructed by your solicitor to provide an opinion in relation to your claim to comment about your injuries and whether you are capable of returning to work.
If there is uncertainty surrounding you ability to return to work then the medical evidence will also outline what your working life expectancy is and the likelihood of you returning to work.
Residual Earning Capacity
It is not uncommon for those sustaining serious injuries in an accident to be unable to return to their former employment as a consequence of their injuries.
In circumstances such as these it will be necessary to explore, through medical evidence, whether it is possible there Claimant has a residual earning capacity.
If there is some form of future employment that is viable then any anticipated earnings will need to be offset against the earnings claim.
This can clearly have the effect of reducing the amount of the claim and for this reason the defendant’s insurers will often seek to argue that the Claimant is capable of finding alternative employment in some capacity even where this is wholly unrealistic!
Residual Earning Capacity and Mitigating Your Loss of Earnings
It’s important to recognise that the Claimant is under a duty to mitigate their loss throughout the duration of the claim.
This means that it is necessary to take reasonable steps to minimise, whereever possible, the amount of loss suffered.
In the context of the loss of earnings claim, if the Claimant is unable to return to their pre-accident employment but is capable of undertaking some form of gainful employment then it is important that every effort is made to obtain alternative employment.
The Claimant therefore needs to be able to show that a concerted effort has been made to apply for alternative positions as soon as possible. The applications need to be saved so evidence can be submitted to the Court to show that all necessary action has been made to secure alternative employment.
By taking action to find alternative employment (even if the search is unsuccessful) the Claimant will be able to contest any argument brought by the Defendant that there was a failure to mitigate the loss.
If the Defendant is successful in asserting the Claimant has failed to keep losses to a minimum then the Court may well intervene by reducing the loss of earnings claim accordingly and any other relevant heads of loss.
How are Future Loss of Earnings Calculated in a Personal Injury Claim?
The courts have developed a specific approach for calculating lump sums for future loss which attempts to take into account life contingencies.
This involves establishing the “multiplicand” which is the Claimant’s net annual loss.
The Courts will then look at the period in which the Claimant’s loss is anticipated to last and then make a suitable reduction to this period using the Ogden actuarial tables.
The Ogden tables take into account a number of factors such as age, gender, life expectancy and accelerated receipt (that is a reduction to to take into account the fact the Claimant will receive a lump sum well in advance of the anticipated future loss which can be invested for a return).
What’s a “Smith and Manchester Award” and Do I Qualify for this?
Smith and Manchester awards originate from a case of the same name where the Court was invited to award compensation on the grounds the Claimant’s future capacity to earn had been adversely affected by the injuries.
If your injuries are serious enough to place you at a disadvantage if you were thrown onto the the open labour market looking for another job then it follows your future earning capacity may well have been reduced.
How does the Court Approach Smith & Manchester Damages?
There are two key questions to be addressed:
- Is there a real risk (ie/ not a small or fanciful risk) of the Claimant having to look for another job before reaching retirement age?
- If in the future the Claimant was to find themselves on the open labour market would the accident related injuries put them at a disadvantage when looking for a new job? Would they need to take a lower paid job or would they struggle to find alternative employment at all?
When tackling these questions there are a number of considerations that the Court may be invited to consider:
- The Claimant’s age and working history;
- Type of employment, length of employment and nature of the work being carried out;
- The Claimant’s employment stability and risk of the Claimant being thrown onto the open labour market;
- The nature and extent of the injuries and how they impact the Claimant’s ability to perform their duties.
How Much Compensation can be awarded under “Smith & Manchester Damages?”
UK law demonstrates that the Courts tend to award anything between 6 months and 5 years loss of net earnings so the award can be a substantial amount.
The exact amount will vary according to the particular circumstances of the claim and the risk the Claimant will be thrown onto the open labour market coupled with the level of any ongoing accident related disability.
Loss of Congenial Employment for a Personal Injury Claim
This head of loss is to compensate the Claimant whose life changing injuries prevent them from carrying out their chosen career which they trained for, enjoyed and derived satisfaction from.
It is an important head of loss and needs to be taken into account in every claim and it may well be justified in addition to Smith and Manchester damages and as well as the loss of earnings claim.
Examples of claims where loss of congenial employment have been submitted cover all areas of working life including claims brought by footballers, soldiers, firefighters, policeman, ballet dancers, care workers, musicians – the list goes on and on.
It’s clear that wherever a Claimant’s chosen career has been curtailed as a consequence of the injuries sustained your solicitor needs to consider making a claim for congenial employment.
How Much are Awards for Loss of Congenial Employment?
The compensation awards for loss of congenial employment can vary widely and each claim will need to be considered on a case by case basis.
Looking back at relevant case law the measure of damages for loss of congenial employment can run from £1,000 to around the £7,000 mark.
However, Courts are prepared in certain circumstances to award much higher amounts.
For instance, there was a case back in 2007 (Appleton -V-El Safty) where an award of £25,000 for loss of congenial employment was made to a professional footballer. The Claimant at the time was playing for West Bromwich Albion having formerly been a player in the premiership for Manchester United.
The Judge overseeing the case gave an insight as to why the award was so high by saying: to play professional football at the highest level is many a school boy’s dream.
In general terms the Courts appear to be prepared to award higher amounts for those Claimants whose injuries have forced them to change their pre-accident careers which required lengthy vocational training or a high number of entry qualifications.
As demonstrated above, it seems the largest awards altogether involve those who have been unable to continue pursuing a life long dream or passion where the Claimant possessed exceptional talent which required dedication, effort and ongoing training.
Case law suggests people whose careers in the creative arts such as musicians, actors, dancers and the like can be compensated relatively well for loss of congenial employment and perhaps this isn’t surprising.
Proving Your Loss of Earnings Claim?
Establishing your claim typically involves presenting pay slips, tax returns, and medical records. These documents should also be bolstered by expert reports from medical or vocational professionals.
If the lost earnings claim is a modest one which has only resulted in lost earnings over a period of some weeks then all that should be required is your pay slips for the 3 months before the accident and the pay slips which cover the period of your absence.
Your solicitor will then be able to work out your average net loss of earnings during the pre-accident period and then claim for the net loss, that is after tax and national insurance contributions, identified during the accident related absence.
It’s common practice for the solicitor to request the wage details from the Client’s employer in the first instance and at the same time invite the employer to provide details of any contractual liability which imposes a legal duty on the client to repay any sick pay received.
The defendant’s solicitors will as a matter of course request sight of the relevant part of the Client’s employment contract so they can be satisfied of the requirement to repay the sick pay.
Compensation For Loss of Pension
If the injuries sustained in the accident result in a loss of pension or pension contributions then it is possible to make a claim to reflect this loss.
This claim will cover both the loss of any current pension payments as well as the loss of the pension you could have reasonably expected to receive in the future.
In addition to bringing a claim for the loss of your pension you can also look to recover:
- The loss of any benefits that are linked to your pension contributions
- The loss of any potential future earnings that are linked to your pension
- The loss of any potential future promotions or bonuses that are linked to your pension
To calculate these figures it may be necessary to instruct a specialist pensions actuary so that expert evidence can be submitted to the Court together with all the supporting calculations relating to your personal injury claim.
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To find out answers to your questions and discuss your claim call us now on 0800 652 0586 or complete our online claim form.
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FAQ Loss Of Earnings Claims
When Can You Claim for Loss of Earnings?
If you are injured in an accident which was someone else’s fault and your injuries prevented you from working it is possible to submit such a claim to recover loss of earnings.
There may be occasions where you are able to return to work but cannot fulfill your ordinary duties leading to a loss of earnings. In these circumstances and subject to liability you will be able to present a loss of earnings claim to the Defendant for the net amount you have lost.
How do You assess Loss of Earnings?
In simple terms it is a question of first working out the Claimant’s net annual earnings and this forms what is known as the “multiplicand” along with any other lost income.
This figure is then multiplied by the “multiplier” which is the number of years of loss running into the future.
What is a Schedule of Loss for Personal Injury Claims?
A schedule of loss is a formal document which is usually drafted and prepared by your solicitor and this sets out all the financial losses incurred arising out of the personal injury claim.
The schedule will include any loss of earnings (past and future) together with medical expenses and treatment costs – in essence each and every item of quantifiable financial loss.
Your solicitor will send the draft schedule of loss to you so you can carefully check that everything is in order and that nothing has been left out. Once you are satisfied the schedule is an accurate and complete record you will be asked to sign and date the schedule alongside a “statement of truth” so that it is capable of being served on the other side and filed at court.
Schedules are often updated during the course of the proceedings but need to be comprehensive at the time of signing.
Can the Self Employed Claim Loss of Earnings?
Self-employed individuals can claim loss of earnings arising from a personal injury claim. This may include lost profits, loss of business as well as a loss of earning capacity but in all instances evidence will need to be produced to support any losses.
Are Loss of Earnings Taxable in Personal Injury Claims?
Your loss of earnings will be presented by your solicitor to the other side net of tax so the amount claimed will be your “take home” pay.
This means if the loss of earnings calculation is agreed there are no deductions for tax or national insurance contributions which then have to be made to the tax office.
Will My Loss of Earnings Claim need to be Supported by Medical Evidence?
In short, yes.
In the absence of supporting medical evidence, any loss of past or future earnings is not going to be sustainable.
It will be for your solicitor to ensure that you attend the necessary medical appointments so the medical evidence addresses all the relevant issues.
All being well the Court will be satisfied that any lost income which is claimed arise out of the personal injury.
In practice this means that any medical experts involved in more serious personal injury claims that include loss of earnings will need to review and comment upon all medical records such as hospital notes, GP records, x-rays and test results.
Can I bring a No Win No fee Loss of Earnings Claim?
If you have been injured in an accident that was cause by another party’s negligence which has resulted in a loss of earnings then we would like to hear from you.
There is every chance that you will be able to make a claim for compensation and we would be delighted to help you on a No Win No Fee basis.
It is a very common situation for people to lose earnings, as well as other financial losses, when suffering an accident.
We are very well placed to be able to advise you about all aspects of your claim; from assessing liability to establishing all the various heads of loss that you can claim in compensation.
Claiming Compensation for Your Personal Injury Claim
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