Salary Compensation: How To Calculate Lost Pay As Part Of Your Personal Injury Claim
Discover how to claim for both past and future compensation for loss of salary. We calculate both full and partial loss of pay. Thereafter, we discuss additional factors. For example -lost pension contribution, overtime pay, pay progression and disadvantage on the labour market.
- Salary Compensation: How To Calculate Lost Pay As Part Of Your Personal Injury Claim
What is salary compensation following personal injury?
Your accident may cause an injury which:
- Options to choose list designbeing able to work at all.
- Allows you to work with a reduced capacity.
- Initially stops you from working, but after a time you have a phased return to work with initial reduced hours.
So long as someone (other than yourself) is legally at fault for your accident – you can claim compensation for your lost pay. This salary compensation is just one aspect of the special damage of your personal injury claim.
Employed And Self Employed
You will be able to claim salary compensation as an employee or as a self-employed individual. However – the evidence necessary to support your loss can significantly differ.
Full lost income claim
If you injury is such that you are unable to work at all – your claim will be for loss of your full pay. Generally – this will be net pay (gross pay less tax and national insurance).
Partial lost salary claim
You may still be able continue working. However, your injury may prevent you from working as long hours of have no ability to do overtime you would ordinarill do.
in such instances – you can still claim compensation for lost income. However, your lost income will be the difference between reduced pay and pre-accident full pay (including overtime).
Other Financial Losses In Addition To Lost Salary
In addition to compensation for lost salary – you are entitled to claim for other financial losses and for your pain and suffering from the injury itself.
Our compensation calculator UK article calculates average settlement payouts for various different physical and psychological injuries.
What types of salary compensation are you entitled to claim?
There are three primary types of salary compensation you can claim following an accident in the UK:
Past loss of pay
Past salary compensation is the lost pay up to the date your personal injury claim settles.
Example Of Claim By A Builder
Imagine that you work as a builder and you had an accident 9 months ago resulting in you being unable to work.
Your compensation claim is reaching settlement, so your solicitor will calculate your past lost pay from the date of your absence from work to the date of the settlement of your claim
If you are an employee – your average weekly pay prior to the accident can be calculated by using 13 weeks of pay slips.
Whereas, should you be self-employed – annual accounts are required.
The exact amount of time up to the date of your settlement is calculated by your solicitor.
Example of Absence From Work Of 42 Weeks
Imagine – you are an employee and 42 weeks has passed from the date of your accident to settlement of your claim. You have been unable to work this whole period due to your injuries losing a net pay of £400 per week.
Your solicitor will simply take the number of weeks of absence and multiply by your average weekly net pay (prior to the accident). Hence – giving your past salary compensation loss.
Therefore, a weekly net loss of £400 coupled with a 42 week absence would give rise to a past salary compensation claim of £16,800 (being £400 x 42).
Future salary compensation loss
As part of your claim – your solicitor will have obtained an expert medical report.
The medical report
The medical report will set out your symptoms and the reasonableness of any absence from work. It will include a prognosis describing how your injury will affect you into the future and how long it is reasonable, given your injuries, that you should continue to remain absent from work.
Lump sum payment
Future lost income is calculated as a continuing loss from the date that your settlement is reached. It is paid on settlement of your claim as a lump sum.
if the medical expert predicted a further 2 months absence from work following settlement – you should receive the two month’s lost income. However, if a much longer period – such 8 years – was predicted you would not get the full 8 years lost salary.
Cost of retraining
If long absences from a particular job are predicted – the ability to retrain and do another job should be considered.
The cost of training and the difference in salary between the two jobs could be claimed – if the new job was less well paid.
Loss of promotion prospects
If your injury disabled you from being able to do any other job – future compensation for salary is a complicated calculation that takes into account the likelihood of promotion with pay rises in your career choice.
For example – imagine you are a teacher who could have been promoted to a deputy head or head teacher over a number of years with a resultant pay rise.
Inflation and pension contributions
Other considerations include; Inflation increases and loss in pension contributions.
Discount for early payment
A deduction would be made for early payment of a lump sum (known as the discount rate). Receiving a lump sum effectively means you are paid many years before you could have earned the money.
Therefore, you may have the advantage of investing that money and making returns you may not have been able to do had you not received an early payment.
Disadvantage on the open labour market
Imagine at the time your claim settles you have returned to work, but you are still suffering symptoms of your injury or a disability.
As you are working you have no future salary compensation loss. However – what happens if in the future you lose your job and have to look for another job?
Someone who is slightly disabled will have a disadvantage in finding a new job compared to worker who has no disability.
Your solicitor could argue that you have a “disadvantage on the open labour market”.
There is a risk that you may lose your job. It is therefore likely you will take longer to find alternative work. Also – any work found might not be paid so well due to the ongoing effect of your injury.
There are no fixed values for a disadvantage. However – it does relate to your annual salary and the risks of your career in finding a work.
No two cases are alike. Your lawyer would have to argue disadvantage on your behalf.
Example Of A Manual Labourer With An Arm Injury
For example – imagine you are a manual labourer with an arm injury claim. You would have more of a disadvantage than a solicitor with the same injury.
Clearly – an inability to do physical manual work will not hamper a solicitor as it will a labourer.
Therefore – the labourers disadvantage on the open labour market would be calculated larger than that of a solicitor with the same arm injury.
SUMMARY – Salary Compensation
Your salary compensation encompasses sums for both past and future losses. This may be full loss of pay or a partial loss of income. You will require evidence to prove your losses and may be entitled to additional compensation for disadvantage on the open labour market, pension contributions and overtime.
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You can not only ask a question and receive an online claims assessment, but also call direct or arrange a solicitor callback We are happy to discuss your salary loss compensation claim in more detail
