Loss of Earning Capacity vs. Lost Income: What You Need to Know

When someone is injured in an accident, understanding how compensation works is essential.

At Morgan Clifford Legal Services, Compensation Lawyers in Aspley, we often see clients confused by the terms “lost income” 和 “loss of earning capacity.”

While they may sound similar, they are very different in the eyes of the law, and each can significantly impact the amount of compensation you may be entitled to.

Lost Income: Compensation for Wages You Have Actually Missed

Lost income refers to the wages or salary you were unable to earn as a direct result of your injury. This is often the first type of financial loss considered in a compensation claim.

How Lost Income Works

• If you were unable to work for several weeks or months due to an injury, you can claim compensation for the actual income lost during that period.
• Lost income includes your regular salary or wages, overtime, and sometimes bonuses or commissions that would have been earned.
• To claim lost income, evidence such as pay slips, tax returns, or employment records is typically required.

Loss of Earning Capacity: Compensation for Future Potential Losses

Loss of earning capacity, on the other hand, refers to the reduction in your ability to earn income in the future because of your injury.

This is not limited to the time you are off work; it accounts for the long-term impact your injury has on your career or employment opportunities.

How Loss of Earning Capacity Works

• It considers how your injury has affected your ability to work at the same level, in the same job, or in the same industry.
• Factors such as permanent disability, reduced physical or cognitive ability, early retirement, or the need to switch to a lower-paying job are included.
• Expert evidence is usually required from vocational specialists, economists, or medical professionals to assess the likely future earnings you have lost due to the injury.

Why Both Are Important in Compensation Claims

Many people mistakenly focus only on the income lost during the initial recovery period. While recovering wages is important, the long-term impact of reduced earning potential is often far greater.

For serious or permanent injuries, failing to claim loss of earning capacity can result in significant under-compensation.

It ensures you are fairly compensated for the lifelong impact the injury has on your ability to provide for yourself and your family.

Legal Considerations

Calculating both lost income and loss of earning capacity can be complex. Some important legal considerations include:

• Accurate Documentation: Keeping detailed records of employment, income, and medical reports is essential.
• Expert Evidence: Loss of earning capacity often requires vocational and economic experts to provide an independent assessment.
• Timing of Claim: It’s important to lodge your claim while your injury is still being treated and assessed. Waiting too long can make it harder to establish ongoing limitations.
• Combining Claims: Many compensation claims include both lost income and loss of earning capacity. Proper legal guidance ensures that all potential losses are included in your claim.

How Morgan Clifford Legal Services Can Help

At Morgan Clifford Legal Services, our compensation lawyers in Toowong guide clients through every step of claiming lost income and loss of earning capacity. We:

• Assess the full impact of your injury on both current and future earning potential.
• Work with medical, vocational, and economic experts to prepare strong evidence.
• Calculate realistic and fair compensation to cover your financial losses.
• Negotiate with insurers or represent clients in court if needed.

Our goal is to ensure that you receive full and fair compensation, giving you financial security during recovery and for the years ahead.

The Difference Between Lost Income and Loss of Earning Capacity

Understanding the difference between lost income 和 loss of earning capacity is essential for anyone seeking compensation after an injury.

Lost income covers wages you were unable to earn, while loss of earning capacity accounts for the long-term effect your injury has on your ability to earn.

Both are vital components of a fair and comprehensive claim.

If you or a loved one has been injured and want to ensure your financial losses are properly calculated, contact Morgan Clifford Legal Services in Toowong.

Our experienced compensation lawyers can guide you through the process, maximise your claim, and protect your rights.