5 Minute Read

When someone is injured because of an accident or negligent medical treatment, the impact is rarely limited to the injury itself. Many people are forced to take time off work while they recover, which can result in a loss of income.

Compensation in personal injury and medical negligence claims is designed to place the injured person, as far as possible, back in the financial position they would have been in had the incident not occurred. For many, this means recovering loss of earnings as part of their compensation.

What is loss of earnings in the context of litigation?

Loss of earnings refers to income you were unable to earn because your injury prevented you from working.

This typically arises when someone needs time away from work to recover from their injuries or attend medical treatment.

Loss of earnings may include:

• Salary or wages you did not receive during your absence
• Reduced income if you returned to work on fewer hours
• Lost overtime, commission or bonuses
• Other work-related financial losses linked to the injury

The aim is to compensate you for the actual financial impact the injury has had on your working life.

What kinds of claims can include loss of earnings?

Loss of earnings can arise in many types of legal claim where an injury has affected your ability to work.

Common examples include:

• Road traffic accidents where injuries prevent someone from working for a period of time
• Accidents at work, such as falls, machinery incidents or lifting injuries
• Public liability accidents, for example slips or trips in shops or other public places
• Medical negligence claims, where negligent treatment leads to additional illness or complications that keep someone away from work

Even injuries that might initially appear minor can result in weeks or months away from employment. In more serious cases, the financial impact can last much longer.

How is loss of earnings calculated in England & Wales?

Loss of earnings is normally calculated using financial evidence that shows what you would have earned if the injury had not happened.

Depending on your employment circumstances, this evidence may include:

• Payslips
• P60s
• Employment contracts
• Employer confirmation of time off work
• Tax returns
• Bank statements

Your solicitor or a consultant forensic accountant will compare your normal earnings with the income you actually received during the period you were unable to work. The difference can then be claimed as part of your compensation.

Does compensation include overtime, bonuses or commission?

Yes, in many cases it can.

If overtime, bonuses or commission formed a regular part of your income, they may be included when calculating your loss of earnings.

For example, if you normally worked overtime each week or relied on commission as part of your pay structure, the financial loss caused by missing those opportunities may be recoverable.

The key factor is whether there is evidence showing that the income would likely have been earned had the injury not occurred.

What if you received sick pay?

Some employees receive statutory sick pay or company sick pay while they are unable to work.

Receiving sick pay does not necessarily prevent a claim for loss of earnings.

In many cases, compensation may cover the difference between your normal earnings and the amount you received while off work.

On occasion, the compensation may include the value of the sick pay so that an employer can be refunded.

Can self-employed people and company directors claim for loss of earnings?

Self-employed individuals can also claim loss of earnings, although the calculation can sometimes be more complex.

Instead of payslips, evidence may include:

• Tax returns
• Business accounts
• Invoices
• Accountant records
• Bank statements

The aim is to show how the injury affected the income your business would normally have generated during that period.

For example, if you had to cancel contracts, delay projects or temporarily close your business due to an injury, those financial losses may be considered when calculating compensation.

Can you claim for future loss of earnings?

In more serious cases, future loss of earnings may also be included in a compensation claim. This can arise when an injury has long term or permanent effects that impact your ability to work.

For example:

• You may be unable to return to your previous job
• You may need to move to lower paid work
• You may only be able to work reduced hours
• Your career progression may be affected

In these situations, medical evidence and employment information are used to assess the likely financial impact on your future working life. Consultant forensic accountants and occupational therapists are often instructed to provide expert reports regarding future losses.

Future loss of earnings can form a significant part of compensation where injuries are life changing.

Askews Solicitors are Middlesbrough & Redcar-based experts in compensation for no-fault injuries

Our experienced solicitors at Askews can advise you on your legal options and help you understand what losses may be recoverable in your case. This includes loss of earnings, and other forms of compensation.

For clear, practical advice, Contact Us today to discuss your situation.

Or visit Personal Injury Claims or Medical Negligence Claims to learn more about our services.

This content is for informational purposes only and is not intended as legal advice.