If you have been injured in an accident that was not your fault, the physical pain is often only part of the problem. Many people find that the real worry starts when they are unable to work and their income drops. Bills still need to be paid, and financial pressure can quickly add to the stress of recovery.
This is where a loss of earnings claim can help. Under UK personal injury law, you may be able to claim compensation for the income you have lost because your injury stopped you from working or reduced your ability to earn. This article explains how loss of earnings claims work, what you can claim for, and how you can prove your losses in simple and practical terms.
What is a loss of earnings claim?
A loss of earnings claim is part of a personal injury compensation claim. It covers the money you were unable to earn because your injury forced you to take time off work or limited the work you could do.
After injuries themselves, loss of earnings is one of the most common types of loss claimed. Almost any injury can cause time off work, whether it is a minor injury that keeps you away for a few weeks or a serious injury that affects you for months or even permanently.
In many cases, the amount claimed for loss of earnings is quite modest. If you only missed a short period of work, the financial loss may be small. However, in more serious cases, loss of earnings can become a very large part of a claim, especially where your ability to work in the future has been affected.
Why loss of earnings matters so much
When you are off work because of an accident, you may not immediately feel the financial impact. You might receive sick pay, use savings, or rely on support from family. Over time, however, reduced income can create serious problems.
A loss of earnings claim is designed to put you back, financially, into the position you would have been in if the accident had not happened. It recognises that your injury has had real financial consequences and that these should be compensated.
Net earnings vs gross earnings: what can you actually claim?
One of the most important things to understand is that you can only claim for your lost net earnings, not your gross earnings.
- Gross earnings are your salary before deductions such as tax, National Insurance, and pension contributions.
- Net earnings are your take-home pay after those deductions.
Your compensation claim will be based on net earnings only. This is because, even if the accident had never happened, you would still have paid tax and National Insurance. Claiming gross earnings would leave you better off than you would normally have been, which the law does not allow.
Some deductions, such as pension contributions, are also usually removed from the loss of earnings calculation. However, in some cases, pension losses can be claimed separately.
Do you still have a claim if you received sick pay?
Many people assume they cannot claim for loss of earnings if they received sick pay. This is not true.
It is very rare for someone to receive no money at all while off work. You may have received:
- Statutory Sick Pay (SSP)
- Contractual sick pay from your employer
- State benefits
- A tax refund because you had overpaid tax earlier in the year
These payments usually reduce the amount you can claim for loss of earnings, but they do not automatically remove your right to claim. The key point is to work out what you actually lost overall.
If you are claiming against your employer, for example after an accident at work, some payments may be treated differently. This is why proper calculation is so important.
Other income you may have lost
Your loss of earnings claim does not have to be limited to your basic salary.
If you regularly earned extra income and missed out on it because of your injury, you may be able to claim for this as well. This can include:
- Overtime you would normally have worked
- Bonus payments you missed
- Commission or performance-related pay
- Other work-related income you were unable to earn
These losses must be supported by evidence, but they are often recoverable if you can show they would probably have been earned had the accident not occurred.
How loss of earnings is calculated
Calculating loss of earnings is not as simple as multiplying your daily pay by the number of days you were off work. Most claims require a more careful approach.
For straightforward cases, the usual method is to:
- Look at your earnings for at least 13 weeks (or three months) before the accident.
- Work out an average of what you were earning.
- Compare this to what you actually received during your absence.
The difference between these figures forms the basis of your loss of earnings claim.
For more complex cases, such as where overtime or variable income is involved, additional evidence may be needed. This can include comparing your earnings with those of a colleague on the same pay grade to show what you may have missed out on.
Evidence you need if you are employed
If you are employed, gathering the right evidence early on will make your claim much easier. Useful documents include:
- Payslips: At least three months before the accident, and also during your absence.
- Bank statements: To support the income shown on your payslips.
- Overtime records: If you normally worked overtime and missed out.
- Absence records: A clear note of when you were off work, including half-days and attempted returns.
- Holiday records: Any pre-booked holidays you were unable to take because of your injury.
Keeping these documents organised can make a significant difference to how smoothly your claim progresses.
Loss of earnings for the self-employed
Loss of earnings claims can be more complex if you are self-employed, work variable hours, or have an irregular income. However, self-employed people still have the right to claim.
If you are self-employed, you should try to gather:
- Your tax returns for the last three years
- Profit and loss accounts or company accounts
- Business records showing missed work, cancelled contracts, or lost opportunities
- A letter from your accountant confirming the impact of your injury on your income
It is also very important to keep a careful record of the exact days you were unable to work. This helps show how your injury directly affected your earning ability.
Future loss of earnings: when your injury has long-term effects
Some injuries do not just affect your income in the short term. If your injury continues to limit your ability to work, you may be able to claim for future loss of earnings.
These claims are based on medical and expert evidence rather than past payslips alone. The starting point is usually a medical report that explains:
- How long your recovery is likely to take
- Whether you are expected to return to work
- Whether you will be able to do the same job as before
If a return to work is not possible, the claim may be calculated up to the point you would likely have retired.
In long-term cases, additional factors may be considered, such as:
- Missed promotions
- Lost career progression
- Reduced earning capacity
- The need to change roles or work fewer hours
Expert reports, such as occupational therapy assessments, are often used to support these claims.
Practical steps to help your claim succeed
There are several practical things you can do to strengthen your loss of earnings claim:
- Keep all payslips and financial documents during your absence.
- Gather evidence of your earnings for at least 13 weeks before the accident.
- Keep a written record of every day you are unable to work.
- Note any failed attempts to return to work.
- Record missed overtime and explore how this can be evidenced.
- Keep documents relating to any benefits or insurance payments you receive.
- Think about long-term career impact if your injury has ongoing effects.
The better organised your evidence is, the easier it will be to calculate and prove your losses.
Final thoughts
Loss of earnings claims are about fairness. If you have been injured because of someone else’s negligence, you should not be left out of pocket because you were unable to work.
Whether your claim is small or substantial, understanding how loss of earnings works can help you protect your financial position during a difficult time. By keeping good records, understanding what you can claim for, and recognising the importance of net earnings, you give yourself the best possible chance of receiving the compensation you deserve.
If you are unsure about your situation, seeking legal advice early can help ensure that your loss of earnings claim is properly assessed and fully supported.