5. Lost Earnings
If you have suffered an injury through no fault of your own and had to take time off work, you could be entitled to make a claim for loss of earnings. The purpose of a claim for loss of earnings is to return you as closely as possible to the position you would have been in had the accident not occurred
Loss of Earnings Overview
Generally, loss of earnings is calculated based on your average take-home pay for 3 months before the accident happened, after tax and national insurance has been deducted. If you are an employee and are paid weekly or monthly, this is relatively straightforward. However, if you are self-employed it can be more difficult to accurately calculate the loss.
Employees
If you are an employee you may have received no pay, company sick pay or statutory sick pay due to your absence as a result of the accident. It is possible to make a claim for the difference between what you received during your period of absence and your usual salary. You will be required to provide evidence of your pre accident earnings for a period of around 3 months. We may sometimes ask for a longer period of wage records if there are variations in your pay such as if you have worked overtime or variable shift patterns.
Contractual Repayment of Sick Pay
If you received company sick pay whilst you were absent from work, it is possible that your employment contract contains a clause stating the sick pay should be included in your claim against the negligent party. This is relatively commonplace if you are employed by the NHS or as a teacher; civil servant etc.
If company sick pay is to be recovered, we will require a copy of the relevant clause in your contract of employment together with a calculation of the sums to be recovered. Your employer would normally provide us with the information required.
Self-employed
If you are self-employed, your income may have been affected if you have had time off work or have had to alter your business practices as a result of the accident. The documentation required to prove your lost earnings may vary depending on whether you are a sole trader, partnership or if you are a director or shareholder of a limited company.
Generally speaking, you will be required to provide profit & loss accounts and income tax returns and assessments for three years prior to the accident.
Future Lost Earnings
If you have suffered a serious injury that has prevented you from returning to work in the same role, or even from working at all, you are able to make a claim for future loss of earnings.
Your claim for future lost earnings may relate to potential future earnings being lower due to a change of job or career, or it may relate to your inability to work at all.
Future losses are calculated using an appropriate multiplier and multiplicand from a set of actuarial tables called the Ogden tables.
Claims for future lost earnings can be significant and forensic accountancy and actuarial reports may require to be instructed.
What if my pension has been affected?
If you have been absent from work for an extended period your pension contributions may have reduced or stopped, resulting in your pension being negatively affected. In the course of reviewing your claim for lost earnings, we will be able to assess whether including a claim for loss of pension or other similar benefits is appropriate.
Compensation Recovery Unit
The Compensation Recovery Unit (CRU) is a government department that recovers social security benefits and NHS costs that have been incurred as a result of any accident from which a claim for compensation arises.
The CRU, as part of the Department for Work and Pensions (DWP), works with insurance companies, solicitors and any DWP customers, to recover social security benefits paid as a result of an accident, injury or disease, if a compensation payment has been made (the Compensation Recovery Scheme).
If you have received benefits relating to lost income as a result of your injuries and go on to make a claim for lost earnings, your compensation may be reduced to account for this.
The person or organisation who pays your compensation can only reduce the compensation you are awarded for loss of past earnings if you have received one of the following benefits to meet the same need:
- Disability Working Allowance
- Employment and Support Allowance
- Incapacity Benefit
- Income Support
- Industrial Injuries Disablement Benefit
- Invalidity Pension
- Invalidity Allowance
- Jobseeker’s Allowance
- Reduced Earnings Allowance
- Severe Disablement Allowance
- Sickness Benefit
- Statutory Sick Pay paid before 6 April 1994
- Unemployability Supplement
- Unemployment Benefit
- Universal Credit
Conclusions
Claims for loss of earnings can vary widely as no two situations are the same. If you are entitled to make a claim for loss of earnings we will look at your unique circumstances and assess what is required to prove the loss.
If you have been involved in an accident that wasn’t your fault, our expert personal injury lawyers are here to help. Please contact us if you wish to discuss your claim and the ways in which we can assist you.
