Loss of earnings is an important and often significant element of compensation in clinical negligence claims. Where negligent medical treatment causes injury, it can affect a person’s ability to work, either temporarily or permanently. Compensation for loss of earnings is intended to reflect the financial impact of that loss.

Claims for loss of earnings are fact sensitive and require careful assessment. They may involve past losses, future losses, or a combination of both, depending on the nature of the injury and its long term consequences.

What is meant by loss of earnings?

Loss of earnings refers to income that a claimant has lost as a result of injury caused by negligent medical treatment. This can include salary, wages, bonuses, overtime, and, in appropriate cases, pension contributions and employment benefits.

Loss of earnings is a head of special damage. It compensates for financial loss rather than the personal impact of the injury.

The assessment focuses on the difference between what the claimant would probably have earned but for the negligence, and what they are able to earn following the injury.

Past loss of earnings

Past loss of earnings covers income lost from the date of injury or deterioration to the date of settlement or trial. This commonly arises where a claimant is unable to work during recovery or has reduced working hours because of their injury.

In assessing past loss of earnings, consideration is given to the claimant’s employment position at the relevant time, including salary, working hours, sick pay entitlement and any benefits received.

Where sick pay or other income replacement has been received, this does not necessarily extinguish the claim. The recoverability of such sums depends on the source and terms of the payments.

Evidence such as payslips, P60s, employment contracts and medical certificates is typically required.

Self-employed claimants

Loss of earnings claims for self-employed individuals require a different approach. Income may fluctuate and may not be reflected in a fixed salary.

Assessment often involves examination of accounts, tax returns and business records over a period of time to establish likely earnings in the absence of injury. Consideration may also be given to lost business opportunities or increased business costs caused by the claimant’s reduced capacity.

These claims can be complex and often require input from accountants or forensic experts.

Future loss of earnings

Future loss of earnings arises where the injury has ongoing effects that limit the claimant’s ability to work in the future. This may include reduced working hours, inability to return to the same role, or early retirement.

In some cases, the claimant may be able to return to work but at a lower level of remuneration. In others, they may be unable to work at all.

Assessment of future loss of earnings requires consideration of medical prognosis, likely career progression, and the claimant’s working life expectancy. Expert medical and employment evidence is often required.

Loss of earning capacity

Even where a claimant returns to work and earns a similar income, there may still be a loss of earning capacity. This reflects a reduced ability to compete in the labour market or increased vulnerability to future unemployment.

Loss of earning capacity may arise where an individual can only continue working through exceptional effort, or where their injury restricts future job options.

This form of loss recognises risk rather than certainty and is assessed by reference to the claimant’s circumstances and medical evidence.

Pension loss and employment benefits

Loss of earnings may include loss of pension contributions or reduced pension accrual where injury affects employment. Employment benefits such as bonuses, overtime, or employer funded benefits may also be relevant.

These losses require careful calculation and may involve actuarial or financial evidence.

Mitigation of loss

Claimants are under a duty to take reasonable steps to mitigate their losses. This may include engaging with medical treatment, rehabilitation, or alternative employment where appropriate.

Failure to mitigate may reduce the amount recoverable. What is reasonable depends on the claimant’s medical condition and personal circumstances.

Causation and evidence

As with all heads of loss, loss of earnings must be causally linked to the negligent treatment. Losses attributable to the underlying condition rather than the negligence are not recoverable.

Medical evidence is essential in establishing whether and to what extent the injury has affected the claimant’s ability to work.

Documentary evidence is equally important in substantiating earnings and losses.

How we can help

We regularly advise clients on claims for loss of earnings arising from clinical negligence, including claims involving complex employment histories, self-employment and long term incapacity.

An initial discussion allows us to consider how the injury has affected employment, identify the types of loss that may be recoverable, and explain the evidence required.

Where appropriate, we work with medical, employment and financial experts to ensure that loss of earnings is properly assessed.

If you would like to discuss how loss of earnings may be approached in your circumstances, please contact us to arrange an initial consultation in confidence.