Calculating Loss of Earnings in Personal Injury Claims – Part 1

Suffering a serious injury can often lead to a substantial period of time away from work and a significant loss of income. Should this be the case any loss could be recovered as part of a successful personal injury compensation claim.

A claim for loss of earnings forms part of a claim for special damages which is a term for the ‘out of pocket’ expenses incurred or arising as a direct result of an accident.  In addition to special damages, a personal injury claim will consist of a demand for ‘general damages’ which is the label given to the monetary value of pain, suffering and loss of quality of life arising from the injuries.

A claim for loss of earnings is broken down into two parts: past loss of earnings; and future loss of earnings.

Below is a brief outline of how past loss of earnings are calculated in personal injury cases in Ireland.  Our next article will describe how future loss of earnings are assessed.

Basis of Compensation – Net After Tax Income

Firstly, it is important to note that compensation for injuries suffered in litigation, including that part relating to loss of earnings, is treated as capital (ie not income) and is exempt from capital gains tax in the hands of the claimant pursuant to section 613 of the Taxes Consolidation Act 1997.  In keeping with the rule that a plaintiff is only entitled to be compensated for actual loss suffered, Courts in Ireland award loss of earnings on a net after tax and social charge (or Universal Social Charge) basis.  This can result in confusion for some plaintiffs, particularly those who are self-employed, because detailed taxation advice may be required to assess tax on past ‘lost’ income even though no tax is payable on the award at all.

If the plaintiff is resident in another jurisdiction whereby tax on that part of an award relating to loss of income is taxable there, s/he may be compensated based on gross income before tax however this would be extremely unusual and expert evidence from that jurisdiction to show that tax would arise on the award would be required.

Past Loss of Earnings – Where a claimant is Employed

When a claimant is employed, a claim for loss of earnings covers not only basic wages but also any loss of overtime, bonus or shift allowance. Usually, a court will first assess a claimant’s net average yearly income for at least 6 months prior to the accident in order to calculate the average salary.  In a straight forward claim the average monthly wage is multiplied by the period of absence (measured in months) and the resulting figure is deemed to be the value of a past loss of earnings claim.

In circumstances where using the above formula represents under-compensation – due to the availability of large amounts of overtime during a period of absence or an unusually high volume of sales, for example – comparative earnings of suitable work colleagues during the period of absence could be used in place of a claimant’s average earnings for a period prior to the accident. However persuasive evidence would need to be presented to the defendant and the Court, should it be necessary, that it is necessary to depart from the usual rule in a particular case.

Past Loss of Earnings – Where a claimant is Self-Employed

Calculating loss of earnings is slightly more complicated for someone who is self-employed.  Unlike most employees, self-employed individuals have no guaranteed income and the amount earned generally fluctuates from year to year.  Courts in Ireland are extremely reluctant to depart from what is represented in historic accounts and records and this can present difficulties, particularly for self-employed individuals involved in a specialised business with little to no available comparator information, who would have experienced a surge in growth had they been able to work during the period of absence.

As a general rule, a self-employed claimant’s past loss of income for any particular year will be calculated by deducting income received in one year (or part thereof) of absence from an average of the annual income that person or business made over a period of between three and five years prior to the accident.

If the assessment of loss of income on the foregoing basis would result in an artificially low (or high from the defendant’s point of view) value for past loss of earnings, persuasive evidence would need to be produced to the Court to use an alternative method.

If assessment of loss of earnings on any basis is impossible for any case (beit an expert or indeed a judge) a line of case law exists which would permit a Court to award a ‘top up’ of ‘general damages’ having regard to the fairness of the particular case.  However, in such a situation expert evidence as to what should/ could be the modified formula for assessing loss of earnings would still be required.

How to claim for Loss of Earnings

If you wish to claim loss of earnings in a personal injury action, make sure your Injuries Board application makes this clear by ticking the relevant box on Form A. Ensure also that you also furnish enough documentation to support your claim, including your past payslips (if employed) and prior year tax returns (where self-employed).

If an Authorisation has issued from the Injuries Board in respect of your claim which must now be processed through the Courts, again make sure to include a claim for loss of earnings in your Personal Injury Civil Bill or Summons.

Failing to include such a claim for loss of earnings in a Personal Injury Civil Bill or Summons could mean that aspect of your claim is denied. A solicitor could assist you with preparing your application to the Injuries Board and drafting court documents, if necessary, to ensure your claim for loss of earnings is adequately identified at the very outset.

Amorys Solicitors has a wealth of experience in recovering loss of income in serious injury compensation claims and liaising with forensic accountants and tax professionals where appropriate.

To begin a personal injury compensation claim or obtain further advice with no obligation contact Deirdre Farrell or your usual contact at Amorys Solicitors by telephone on 01 213 59 40, or email

Disclaimer: the information provided in this article is for general information purposes only and is not intended to be legal advice or relied upon as such.  Specific detailed advice is required in every situation.


Award to Employee for Personal Injuries Suffered as a result of Bullying and Harassment overturned by the Court of Appeal

A Special Needs Assistant was awarded a record sum of €255,276 for personal injuries due to bullying and harassment by the Principal of St. Anne’s National School by the High Court. This decision was overturned by the Court of Appeal [2015 IECA287].

The Special Needs Assistant, Ms. Ruffley had worked in the school for a number of years. She claimed she was being bullied by the Principal due to the way in which a disciplinary process was carried out, and resulting in a severe disciplinary sanction. An incident had occurred when Ms. Ruffley was looking after a special needs child and was accused of locking the sensory room they were in. This was against the rules of the school and is a breach of the child protection policy. However, Ms. Ruffley provided evidence this was a common practice by some of the Special Needs Assistants in the school as some of the pupils had a tendency to run out of the room. There was then an incident where Ms. Ruffley reported a pupil could perform a certain task which was found to be incorrect. The school accused the Special Needs Assistant of “falsifying” this information. No proper investigation was conducted by the Board of Management of the school into the complaints and ultimately the Board of Management imposed a severe disciplinary sanction of a final written warning for 18 months on Ms Ruffley.

The Court of Appeal accepted that the investigation and disciplinary process was botched by the school.

The Court of Appeal applied the definition of workplace bullying in the Industrial Relations Act 1990 (Code of Practice) order 2002 SI 17/2002 to the claim:

“Workplace bullying is repeated inappropriate behaviour, direct or indirect, whether verbal, physical or otherwise, conducted by one or more persons against another or others, at the place of work and/ or in the course of employment, which could reasonably be regarded as undermining the individual’s right to dignity at work. An isolated incident of the behaviour described in this definition may be an affront to dignity at work but, as a once off incident, it is not considered to be bullying”.

Using the definition of workplace bullying, the Court of Appeal found the personal injury of the Special Needs Assistant was caused by her workplace treatment but the incidents involved of a botched investigation and disciplinary process by the school did not amount to an affront to the dignity of Ms. Ruffley. This ruling gives reassurance to employers that they are entitled to pursue investigations and disciplinary processes against employees as long as this does not amount to an affront to the employees Dignity at Work and follows other Court rulings. There are other options for employees in this situation. Advice should be taken at an early stage regarding any investigation and disciplinary process involving an employee in particular if there is serious misconduct. This is to ensure that a proper investigation, disciplinary process and fair procedures are carried out. The sanction given must be reasonable and not excessive.


If you have any comments on the above or would like any further information please contact Davnet O’Driscoll at tel 01-213 59 40


Record Award for Mother who Suffered Nervous Shock

The High Court made a record award to a mother whose only son was killed in a road traffic accident. In Purcell –v- Long [2015] IEHC385 €225,000 was awarded as general damages for pain and suffering to date and into the future which is a substantial increase in compensation previously awarded by the Courts for nervous shock/psychiatric injury.


The mother was informed of the death of her son and said she never recovered from the shock. She suffered an acute stress reaction, became profoundly depressed and suicidal as a result and never recovered from this. The mother had previously suffered moderate depression and had periods of time on medication. The Defendant’s doctor said the mother had a recurring depressive disorder and she was a vulnerable person at the time of the accident. He was also of the view that the mother would have remained prone to depressive episodes regardless of the loss of her son.
The decision

Mr. Justice Barr found that the mother suffered severe nervous shock as a result of the death of her son, and severe depression as a result. Her previous psychiatric history had rendered her vulnerable to further injury when she received the distressing news of the death of her only son. He accepted that the mother will require heavy medication, will not be fit for employment and will suffer from depression into the future. She was awarded damages of €125,000 to date, and €100,000 damages for the future.

As the mother was a vulnerable person at the time of the injury, the Defendant is responsible for the extent of the injury inflicted on her under the “eggshell skull rule” in law.

This is a summary of a recent legal development and comprehensive legal advice should be obtained if an injury has occurred. If you have a personal injury or medical negligence claim and have any question, please contact