The consequences of a personal injury — whether a motor vehicle accident, slip and fall, or dog bite — reach far beyond the physical wounds, including emotional distress and financial instability. While physical pain is often the focus, the significant impact of potential loss of earning capacity on financial stability can't be overlooked in personal injury cases.
The bottom line is that injured individuals in Ontario can seek to rebuild their financial future through the pursuit of compensation. Let's discuss what this means for you.
UNDERSTANDING LOSS OF EARNING CAPACITY
Loss of earning capacity within the context of personal injury law captures the diminished ability of an individual to earn income due to sustained injuries. This can manifest in various ways, including permanent disability, reduced work hours, or the inability to perform specific job functions.
In short, it considers the income that you will reasonably lose due to your injury.
HOW TO CALCULATE LOSS OF EARNING CAPACITY
Compensation for loss of earning capacity is not a "one-size-fits-all" calculation. The focus is on the specifics of your case.
There are certain factors that must be taken into consideration in this calculation. This may include:
- Your age
- Overall health
- Educational background and skillset
- Job or profession
- Prior work history
- Experience in your field
- Your life expectancy
- Reduction in your earnings
- Advancements in your field
- Current market value and wage rates
- History of promotions or raises/employment records
- Certifications/specialties
HOW DO YOU PROVE YOUR LOSS?
This type of loss can be subjective and requires additional evidence and possibly expert testimony. Your lawyer will be able explain what is required in your specific case.
You will typically need to prove the following in order to obtain compensation for loss of earning capacity:
- The other person's negligence resulted in the accident and your injury;
- Your injury has impaired your ability to earn income in the future [severity];
- What your earning capacity would have been if the accident did not happen [pre-injury capacity]; and
- What your projected future earnings would now be due to your injury [impact on future income potential].
This provides a framework to calculate the actual monetary value of the long-term consequences of your injury.
BENNY, THE CONSTRUCTION WORKER
Benny was employed as a construction worker earning $50,000 annually at the time of his accident. The injury significantly limits his ability to perform physically demanding tasks. As a result, Benny can no longer continue working in construction.
To calculate Benny's loss of earning capacity, the following factors would be considered:
- Past Earning Capacity: Examine Benny's past earnings and career path to establish a baseline for his earning potential.
- Current Earning Capacity: Evaluate Benny's current ability to earn income, taking into account any skill development or retraining programs he may undergo to transition to a less physically demanding job.
- Expert Testimony: Consult experts to assess the impact of the injury on Benny's ability to work, including any potential for future career advancement.
- Life Expectancy: Consider Benny's life expectancy to determine the duration of the loss of earning capacity. This might involve experts and/or medical opinions.
- Inflation and Future Earnings Growth: Factor in inflation and potential future earnings growth to estimate the value of lost earnings over time.
- Mitigation Efforts: Assess whether Benny can take steps to mitigate his loss, such as pursuing alternative career paths or engaging in rehabilitation programs.
The factors would then be considered together — with the help of experts — to arrive at an estimate of the present value of Benny's loss of earning capacity. This amount could then be presented as part of the overall damages claimed in a personal injury lawsuit.
It's important to note that this is a simplified example, and the actual calculation would involve a more in-depth analysis of the specific details and circumstances of the case.
I WAS NOT EMPLOYED BEFORE THE ACCIDENT!
The value of your loss of earning capacity is actually not dependent on your actual pre-accident earnings. You can seek this compensation despite not working at the time of the accident.
The focus is on your ability to earn a living in light of your life-changing injury.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
