It is sometimes the case that an injury to a young person has the effect of delaying their entry into employment.
For example, a claimant who is 18 and about to go to university, or start an apprenticeship, may suffer a severe injury which may take a year to heal sufficiently to allow them to resume their studies.
Thus, the claimant’s entry into university has been delayed by that year and similarly their entry into employment has been delayed by that year.
How should this ‘lost’ year of employment be compensated?
On behalf of the defendant it will no doubt be said that either that the claimant’s employment prospects at the time of their injury were too uncertain to be able to say that the claimant has suffered any quantifiable loss or, perhaps more likely, that any loss of earnings are a past loss and should be limited to the amount that the claimant would have earned in their first year of employment.
In the latter case, the contention would be that the claimant’s injuries caused them to lose their first year of employment and therefore the appropriate measure of compensation is the amount of the claimant’s Year 1 earnings net of income tax and national insurance, which might be in the region of say £20,000.00 net.
This approach has the virtue of simplicity and is also relatively cheap for the defendant’s insurer.
The reality, however, is that but for their injury the claimant probably would have enjoyed a career spanning 47 years (assuming that the claimant would have graduated at age 21, entered employment shortly thereafter and worked until the current state pension age of 68), but as a consequence of their injury their career will now span only 46 years (assuming that they graduate at age 22, enter employment shortly thereafter and work until the current state pension age of 68).
Accordingly, what the claimant has lost is not their Year 1 earnings, which have merely been delayed not lost, but their earnings in Year 47, which being at the end of their career are likely to be significantly higher, perhaps in the region of £50,000.00 net of tax and national insurance.
Being a future loss, allowance will have to be made for accelerated receipt, but the amount recovered for the claimant is still likely to be significantly greater than their Year 1 earnings. For example, Year 47 earnings of £50,000.00 net x 0.7950 to allow for 46 years accelerated receipt = Future loss of earnings of £39,750.00
Obviously, each case will turn on its own facts, but in any occupation where the claimant is likely to achieve career progression and/or an incremental increase in pay due to experience and number of years in employment, the approach suggested above is likely to significantly enhance the value of the claimant’s claim.
In a similar way, a one-year delay in entering employment may also give rise to a loss of pension contributions, potentially resulting in an additional modest but distinct head of loss.
Further, in the event that the claimant’s recovery is incomplete and as a consequence the claimant is disabled within the meaning of the Disability Discrimination Act 1995, the suggested approach can be pursued in addition to a multiplicand x multiplier approach to future loss of earnings.