When determining personal injury damages, the court may award compensation to cover more than just the immediate cost of your medical care and services so as to try and help you return to your pre-accident lifestyle. Successful claims can also remediate for any loss to your future earning capacity resulting from another party’s negligence.
Under the Civil Liability Act, 2002 (NSW), an individual who has successfully proven negligence in a compensation claim is entitled to damages commensurate with the severity of the injury and harm sustained which would also include damages should the injury prevent them from working or limits their earning potential.
It typically applies to any individual who is employed, seeking employment, or planning to re-enter the workforce but can no longer do so, or can only work in a reduced capacity. The court will assess the reduction in the earning capacity for the purpose of providing compensation for future economic loss.
Even if the injured person is not incurring financial losses at the time of the hearing, the court is still required to assess their potential loss of earning capacity. In Malec v Hutton, the High Court held that even if there is only a 1% risk of suffering future loss, that risk must still be considered when calculating future economic loss.
To determine an appropriate award, the court examines factors such as:
The nature of the injuries sustained
The impact that those injuries will have on the person’s ability to undertake their typical employment duties
The ability to participate in a profession or vocation that matches their employment history, qualifications and skillset.
The length of time remaining in their working life.
The court may award damages either as a weekly payment or as an actuarial lump sum compensation, depending on the nature of the claim and the jurisdiction in which the claim is brought, the court may award future economic loss either by way of a weekly payment or as a lump sum. The Civil Liability Act makes provisions for all types of personal injury claims, including:
The calculation of future economic loss is not as simple as multiplying an individual’s average weekly earnings by the remaining years of their working life. For example, if a person earned $1,000 per week and had 10 years left to work, the court does not simply award $520,000 in economic loss damages.
Because the injured person often receives the future economic loss damages by way of a lump sum upfront, the courts will utilise discount tables to determine the present-day value of that loss. The total amount awarded is then also reduced by 15% to reflect life’s uncertainties or “contingencies”.
Sometimes, instead of relying upon these actuarial calculations, the court may decide that a lump sum of, for example, $100,000 or $200,000, would more appropriately compensate the individual, based on the impact of their injuries and their likelihood of future employment.
Addressing the diminution in earning capacity is a highly specialised area of law. Do not leave it to chance — Brydens Lawyers boasts over 50 years of experience in winning successful personal injury and compensation claims, earning our clients the maximum level of damages they are entitled to.
With offices across Sydney, regional NSW and Canberra, you are never far away from accessing expert guidance. Strict time limits apply to prosecute personal injury claims. To book FREE* LEGAL ADVICE or schedule a consultation, do not hesitate to call us at 1800 848 848 or contact us online.
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