How to make sense of a loss of earnings claim

One area of law that always seems to lead to confusion is that of loss of earnings.  The process can at first look complicated and off-putting. It’s actually more straightforward than it first appears but there are some key points to consider.

What is a loss of earnings claim?

Loss of Earnings

After injuries, loss of earnings can be one of the most critical effects of an accident. In an instant, lives can be transformed. As well as coming to terms with what can be life changing injuries and the emotional consequences, victims are also faced with worries about how to support themselves and their family.  It’s not just life changing injuries either.  Lots of injuries from which you will ultimately recover can force you to stay off work for months.  As a result, loss of earnings is a common component of a personal injury claim.

Most claims are relatively small, but some can be sizeable. In these more sizeable claims, it’s not just losses already incurred that are covered, they also take into account losses which are ongoing.

Working out your lost earnings

If you want to make a claim for loss of earnings it’s important to fully work out how much income you’ve lost and how that can be proven. It’s not just about the total on your payslip or tax return.

A claim for lost earnings will be based on your ‘take-home pay’. This is the amount you would normally receive after deductions for tax and national insurance. This is known as your ‘net earnings’.  Your income before deductions is known as your ‘gross earnings’.  Loss of earnings claims are based on net earnings rather than gross because if you were to receive compensation based on the latter you would in effect be making a profit from your injury.  It becomes more complicated where other deductions such as pension contributions are concerned but a legal professional will be able to advise on individual circumstances.

Sick Pay

Most people forced off work due to injury will receive some form of sick pay. This means that working out loss of earnings is rarely about calculating your daily rate and then multiplying it by how many days you had to be absent.

As an absolute minimum you should expect to receive Statutory Sick Pay (SSP). Your employer may also pay an additional sum on top of this as part of your terms and conditions of employment. Any money you receive will be deducted from your net earnings amount as part of a claim.  If for instance you received SSP of £95.85 per week and your employer topped this up by another £100 a week a weekly amount of £195.85 would be deducted from your net earnings.

Other lost income

Lost income is rarely just about your monthly net earnings, however. There may be bonuses, commission or regular overtime to consider. These can usually be recovered as part of any claim.

Self-employed claims

If you’re self-employed, a contractor or freelance, piecing together a loss of earnings claim can be more difficult. Variable hours, working for a number of employers and erratic working history means that a claim will usually involve a more complicated procedure.  Good record keeping is key for self-employed workers particularly those who work in industries where workplace industries are more common. The more financial evidence you have in terms of tax and bank statements, the more likely you are to succeed.

The evidence you’ll need to make a claim

It’s important to start gathering evidence to support your claim as soon as possible after the accident took place.  Most cases are straightforward and require little more than providing payslips that cover 3 months or 13 weeks before the accident. This will be used to illustrate what you were earning before and after the accident. For overtime and other bonuses, it can be useful to look at the ongoing payslips of colleagues on the same pay grade. These can be used as evidence to support your claim.

Future loss of earnings

If you’re unlikely to return to work before your claim is concluded, a consideration will have to be made for future loss of earnings. This will be based on the medical evidence and the overall prognosis for recovery.  If your injuries are severe it will be necessary to work out when you were likely to retire and then make a calculation for all the months and years of income you have lost. If this is a considerable amount of time, then factors like possible promotion will be taken into account.

Things you can do to help your claim

By taking a few steps at the beginning of your claim you can help to make the process easier.

  • Keep any payslips during your period of absence. This helps with working out what your earnings were while you were off.
  • Find the payslips that illustrate what you were earning for the 13 weeks before your accident.
  • Keep a record of your life during your absence. Did you attempt to return to work? Were you forced to miss planned holidays?
  • Keep a record of any payments you receive during your absence such as a pension or state benefits. The former is unlikely to be taken into consideration, the latter might be.
  • If your absence is prolonged, write down how you expected your career to progress. Was promotion likely? Were you working towards any courses that would facilitate this? Is there a pay scale at work that you were moving up to?
  • If you have been able to return to work, how have your duties been affected? Can you still work overtime? Is promotion now less likely? These factors can all influence the size of any payout.

Making a personal injury claim needn’t be a complex or confusing process. Mark Reynolds Solicitors can help you gather evidence, build a case and make a successful claim. Why not call us or fill in the contact form for free impartial advice today?