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How To Calculate Loss Of Earnings

The law believes that anyone who has been injured as a result of another person’s negligence is entitled to be compensated for their pain, suffering and loss of amenity, and that any financial losses stemming from the accident must be made good. When bringing a personal injury claim, you must quantify those losses as best you can, and claim them as damages. Virtually all types of injury can render a victim unable to work for a time, so many personal injury damages claims will include a claim for loss of earnings to some degree. As with all aspects of personal injury claims, the burden is on the Claimant to prove, on the balance of probabilities, that their lost earnings resulted from the accident or negligence. As forensic accountants we are frequently contacted to assist with calculating loss of earnings in such claims.

At Frenkels Forensics, we are regularly instructed by Claimant and Defendant legal practitioners to assist with assessing loss of earnings and loss of pension in personal injury and clinical negligence claims.

How We Calculate Loss Of Earnings

Loss of earnings claims can comprise a claim for past earnings and future earnings. When considering how to calculate loss of earnings, we consider the impact the Claimant’s accident has already had on their earnings, and any likely ongoing effects.

• Past Earnings

Sometimes, a loss of earnings claim can be quite straightforward. If, for example, you work set hours, earn a consistent salary and were absent from work for a short time, your loss of earnings claim might be fairly easy to quantify. . Even in cases where the Claimant earns a consistent monthly salary, other issues must be considered. If, for example, you were entitled to sick pay whilst off work, that will need to be taken into account, as will any benefits or tax refunds you received.

However, matters are rarely that straightforward especially for self employed Claimants. We will need to consider accounting and tax records for the period pre- and post-injury as well as the underlying book-keeping records. Cases can be particularly complex when the Claimant operates as a limited company or partnership, with additional issues such as loss of capital value to be considered too.

• Future Earnings

Some injuries render Claimants unable to work for a considerable period of time. Clearly, severe injuries such as those to the brain often result in long term or permanent absence, but even minor injuries can, on occasion, incapacitate the Claimant for a long time. If, for example, a tradesperson cannot use their hand, they may be precluded from carrying out the tasks required of them, and so unable to return to work until they are fully recovered.

Future earnings calculations are somewhat more difficult to quantify than those for past earnings. We must seek to accurately predict the net earnings the Claimant would and will likely earn into the future.. To do so, we often need to refer to extensive evidence, including that of medical experts as to how likely the Claimant is to be able to resume their normal work and when that is likely to be. If their injuries are severe enough that they are unlikely to ever return to work, the loss of earnings claims can span the rest of the Claimant’s working life and be substantial.

When instructed on behalf of Defendants we will carefully scrutinise the claim as presented, and ensure that it is prepared consistently, accurately and is correct from a tax and mathematical perspective. We will also consider the wider evidence available, not just the Claimant’s tax and accounting records but also the wider economic conditions which may have impacted the Claimant’s earnings in any event.

Tools We Use To Calculate Loss Of Earnings

Loss of earnings claims can be incredibly complex, but we have a plethora of tools at our disposal to assist us in preparing them. By combining our considerable forensic accountancy skills and experience with cutting-edge technology, we are able to deal with the most complex of cases, and prepare reports which are clear, cogent and set out the key points relating to the claim, to ultimately assist the Court in determining the Claimant’s losses.

Our own ‘Frenkels Calculator’ is an industry leader in loss of earnings software, enabling us to produce and compare unlimited loss of earnings scenarios quickly and accurately. This helps us to add real value to their cases in a proportionate, cost-effective way.

To discover more, please call us on 0330 118 8200 or Make An Online Enquiry.

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