Past loss of earnings

The following PI & Clinical Negligence practice note provides comprehensive and up to date legal information covering:

  • Past loss of earnings
  • Common issues
  • Calculating the net loss of earnings
  • 13-week approach
  • Alternative approach
  • Salary increases and promotion
  • Claimant’s tax and national insurance
  • Employee benefits
  • Sick pay
  • Self-employed claimants
  • More...

Past loss of earnings

Common issues

Claims for loss of earnings are common in personal injury claims and are often the largest head of damages. For guidance on future loss of earnings, see Practice Note: Future loss of earnings—personal injury claims.

While many are straightforward, typical complications include:

  1. financial complexity eg in a claim for loss of profits by a member of a partnership

  2. uncertainty eg in a claim where the claimant’s career path was uncertain or earnings were variable

  3. evidential difficulty eg in the case of undeclared earnings

Calculating the net loss of earnings

13-week approach

For claimants in steady work, the pre-accident net earnings are normally calculated by reference to the average over the last three months or 13 weeks preceding the accident.

The figures can be calculated from the claimant’s wage slips, although the claimant’s employer will generally provide the information. In the event of dispute as to the level of pay, bank statements should be obtained as evidence of wages especially if payment is normally made by BACS.

The claim should normally be for earnings net of tax and national insurance contributions. However, the court may award loss of earnings free of tax if a claimant is not required to pay tax.

Alternative approach

Calculating the average earnings based on the 13-week period before the accident is not always appropriate. It may, for example, not give a fair indication if

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