Loss of Capacity to Earn Income in Personal Injury Claims

Most people understand that you can claim a wage loss, or loss of income in a personal injury claim, but are unaware that some claims can attract damages for a loss of capacity to earn income, which can be separate and distinct from a loss of income. In Canada, personal injury law recognizes the impact of such losses and provides options for compensation.

What Is a Loss Of Capacity to Earn Income?

Loss of capacity to earn income refers to the diminished ability of an individual to earn a livelihood or income as a result of a personal injury. This loss can have long-term or even permanent consequences, affecting an individual’s ability to perform their job, pursue career advancements, or engage in any gainful employment.

Our highest court has held that a plaintiff is entitled to be put in the same position he or she would have been in but for the accident as far as money can do that. An award for loss of earning capacity is based upon the recognition that a plaintiff’s capacity to earn income is an asset that has been taken away.

Once impairment of a plaintiff’s earning capacity as an asset has been established, that impairment must be valued. The valuation may involve a comparison of the likely future of the plaintiff if the accident had not happened with the plaintiff’s likely future after the accident has happened.

Because it is an impairment that is being redressed, even a plaintiff who is apparently going to be able to earn as much as they could have earned if not injured, or who, with retraining, on the balance of probabilities will be able to do so, is entitled to some compensation for the impairment. They are entitled to it because for the rest of their life, some occupations will be closed to them, and it is impossible to say that over their working life, the impairment will not harm their income-earning ability.

Does Every Permanent Injury Result In A Loss Of Capacity?

Does every permanent injury result in a claim for a loss of capacity? No, not every plaintiff with a permanent injury is entitled to an award for loss of capacity. In order to award damages for a loss of capacity to earn income, there needs to be a loss of a capacity to earn income, however the Courts also require a real and substantial possibility of a future event giving rise to a loss of income.

In everyday language, if the injured plaintiff is a 50-year-old person who has always worked at a desk job and suffers a shoulder injury that would impair them from working as a forest worker, there would be no claim for loss of capacity. However, if that same person suffered a spinal injury that impacted their low back and that injury prevented them from sitting at a desk working at a computer for more than a few hours, he may have a claim for loss of capacity. It is a decision that is made case by case.

Once a court decides that there is a loss of capacity, a dollar value must be placed on that loss. In most cases, that value appears to be a fraction or a multiple of one year’s average earnings. However, in catastrophic cases, the claim for loss of capacity can be very large indeed.

An Experienced Personal Injury Lawyer Can Help

Claims for loss of capacity to earn income can be difficult to prove. The experienced personal injury lawyers at Taylor & Blair LLP have been helping people injured due to the negligence of others for over 30 years. We have a large network of medical experts and specialists who can help confirm your injuries and prove they are caused by your accident to make sure you get the compensation you are entitled to.

Contact the lawyers at Taylor & Blair LLP today for a free consultation on your personal injury claim and your loss of capacity to earn income.