Loss of Income After Injury in WA (Economic Loss & Future Earnings Guide)

If your injury in Western Australia was caused by someone else’s negligence, you may be able to claim loss of income, including future earning capacity, in a personal injury claim.

This guide focuses on loss of income (economic loss). For step-by-step guidance on starting a claim, see our Personal Injury Claim Process.

Loss of income claims are often where insurers push back hardest, particularly when future earning capacity is involved. Understanding your options early can be critical before any offer is accepted.

Because loss of income claims often involve complex evidence and disputed future earning capacity, many injured people choose to get legal advice before accepting any offer. Foyle Legal can assess your situation on an obligation-free basis and explain how loss of income is usually approached in WA claims.

What is considered loss of income in a Personal Injury Claim?

In a Western Australian personal injury claim, loss of income (often called economic loss) arises where a person is injured due to the negligence of another, and as a result suffers a loss of ability to work or a reduction in their earning capacity.

Loss of income is not limited to base pay. Depending on the evidence, it can include overtime, penalties, allowances, commissions/bonuses, and employer superannuation contributions (where they were likely to have been earned).

When claiming loss of income, some common claims are:

Lost Wages (past economic loss)

The most common claim. An employee is injured and cannot work, or their work capacity reduces.

Loss wages example:

Shirley works as a Physical Education Teacher. A table collapses at a restaurant and she fractures her leg. She is unable to work for two months, then returns on partial hours for one month. Shirley claims two months of wages plus the difference between what she earned in the third month and what she would have earned but for the accident.

Loss of opportunity

Often more difficult because you must prove the opportunity was real and likely, not speculative. This can arise where a person was between jobs, had a firm offer subject to a medical, or was likely to be promoted.

Loss of opportunity example:

Jacob is offered a FIFO job subject to a pre-employment medical. He is then injured in a motor vehicle accident and cannot pass the medical due to accident injuries. Jacob may claim what he would likely have earned during the missed period. In WA, that negligence claim is usually managed through the Insurance Commission of Western Australia (ICWA).

Loss of business profits / self-employed loss

In some circumstances, a claim can be made for reduced profits. These claims can be complex because profit can change for reasons unrelated to injury (market conditions, staff changes, seasonal variation, etc.).

Can I claim loss of wages?

Loss of wages can be claimed in a compensation claim arising from negligence. Before compensation can be claimed, personal injury law requires the person bringing the claim to prove that their injury occurred due to someone else’s negligence and that the negligence caused the wage loss.

In practice, the key issues are usually:

Causation

Did the injury cause the inability to work (or reduced capacity)?

Proof of loss

What would you have earned, and what did you actually earn?

Reasonableness

Were you genuinely unfit (or partially unfit) during the period claimed?

How do I claim loss of income?

Documentary evidence is required to prove that income has been lost. Depending on the circumstances, this can be complicated—especially where work is casual, seasonal, FIFO, commission-based, or self-employed.

Generally speaking, the person bringing the claim must show:

• they suffered a loss of earning capacity as a result of the accident, and
• income has in fact been lost (or is likely to be lost in the future).

Some common evidence used in loss of income claims includes:

Tax returns / notices of assessment: Useful for establishing historical earnings, particularly where payslips are missing. Returns can still require interpretation (for example, where deductions, salary packaging, or business structures are involved).

Payslips and payroll summaries: Often the clearest evidence for employees, especially where they show overtime, penalties, and allowances.

Contract of employment / award / enterprise agreement: Helpful to confirm base rate, allowances (housing, remote, site), overtime rules, and whether super is paid on certain components.

Employer records: Rosters, timesheets, leave records, and return-to-work plans can demonstrate what work was missed and what the worker actually did (or could not do).

Loss of income is usually proved through a combination of employment records and medical evidence—for example, employer leave records showing time off work and treating doctor evidence confirming incapacity during that period.

How do you calculate loss of income?

Loss of income is generally calculated by comparing:

• What you would have earned but for the injury, against
• What you actually earned (if anything) during the same period.

Most claims involve two phases:

Period of total incapacity

Usually calculated using your pre-injury earnings (including regular overtime/allowances where supported).

Period of total incapacity example:

Julia worked as a nurse earning $1,500 gross per week on average. After a car accident causing neck and arm symptoms, her doctor certifies her unfit for work because nursing requires frequent lifting. Julia proves total incapacity using employer leave records and medical evidence.

Periods of partial incapacity

Usually calculated as the difference between pre-injury earning capacity and what the person is capable of earning in suitable work (having regard to training, education and experience).

Periods of partial incapacity example:

Julia returns to work on 4-hour shifts for one month, earning $750 gross per week. She claims the shortfall between what she would have earned and what she actually earned, supported by payslips and medical evidence of partial incapacity.

Superannuation

In many cases, super is also claimed on top of lost wages. For many employees, the Super Guarantee rate is 12% from 1 July 2025 (subject to eligibility rules and ordinary time earnings).

(All figures are illustrative only. The correct calculation depends on the evidence, the worker’s pay structure, and the relevant periods.)

How is future loss income calculated in personal injury claims?

In WA, future loss of income is usually assessed by estimating your loss of earning capacity and converting that future loss into a lump sum using discounting and multipliers.

Claims for future economic loss (future loss of income) are generally based on loss of earning capacity—what the person could have earned in the future but for the accident, compared with what they can earn now with their injuries.

Future loss analysis usually involves:

• establishing likely future earnings trajectory (including likely pay progression),
• identifying post-injury capacity and realistic employment options,
• considering contingencies (illness, unemployment risk, pre-existing conditions, industry changes), and
• converting future weekly/annual loss into a lump sum using discounting.

In WA, the present value of future loss is quantified using a statutory discount rate. If no rate is fixed by Order, the default discount rate is 6% under s 5 of the Law Reform (Miscellaneous Provisions) Act 1941 (WA).

Illustrative approach (not a definitive formula):

• identify a weekly net loss (or range),
• apply an appropriate multiplier (from discount tables used in practice),
• then apply a contingency discount where justified.

A claim for earnings compensation may be calculated as follows:

Establish earning capacity before and after the injury

Establish the earning capacity of the person before and after their injuries.

Calculation example:

John worked as a boilermaker prior to his injury. John’s employer gives pay increases of 2.5% a year which are reflected in John’s payslip records. John’s current payslips show he is earning $2,000.00 a week. John currently works in the mines, he is 55 years of age. John sustains injuries when another employee drops a large pot onto his head resulting in neck and back injuries.

Consider other factors that may alter earning capacity

Consider other factors that may alter earning capacity: E.g. John has worked in heavy labour for his whole life. Two years prior to the accident John went to his doctor complaining of problems in his shoulders. John is diagnosed with a rotator cuff tear and his treating surgeon says he should not do heavy manual work. John feels he has no choice and continues working a boilermaker up to the date of the accident.

Consider medical evidence

Consider medical evidence: E.g. The medical treatment reports in John’s case are of the view that John had a pre-existing condition that would make John’s work difficult. They would however acknowledge that John managed to continue with the work. The reports indicate John will be unable to return to any work for which he has education training and experience. The medical reports would either conclude that despite John’s efforts, and his accident injuries he would have to retire early, or for the accident injuries John would have been able to continue working to retirement age.

In the above case, John would pursue a negligence claim for the work injury against his employer (there are special requirements for this – see Foyle Legal’s workers’ compensation claim in WA). His employer would most likely be liable for the acts of the other employee.

Calculate earnings to retirement age

John would claim from the date of the accident to retirement age (usually age 67). An example of the math calculation used would be:

• What are the Earnings at the time of the accident: In John’s case this would be $2,000.00 a week;
• What would John be earning as his present earnings at the time of claiming but for the accident: John may be claiming 2 years after the injury. Year 1: $2000.00 x 1.025 = $2,050. Year 2: $2,050 x 1.025 = $2,101.25;
• Consider any other potential upsides such as promotion: In this situation, we do not know that John has any such opportunities so no consideration is given;
• Use the above assumptions to Calculate a reasonable rate for the claim: John will earn different amounts of money at different points in time. A reasonable amount may be $2,300.00;
• Assess potential downsides including contingencies: John has a pre-existing condition. There is likely to be a mix of medical evidence as to how this will effect John’s life and work capacity in the future.

Apply multipliers to calculate future economic loss

Figure out multiplier for economic loss: The court and personal injury lawyers use ‘multipliers’. In personal injury litigation, discount tables (containing multipliers) are used to determine the lump sum value of a future loss of earnings. John is 55 years of age. The 6% multipliers are used in Western Australia as at 18 June 2022 (date of writing). There is 12 years to retirement. The 12 year multiplier is 450.5.

Adjust for contingencies and reduced capacity

In John’s case, he is claiming loss of income regarding future earnings. He may choose to claim at $2300.00 per week gross or $1,689 net per week. In this case the calculation should be $1,689 x 450.5 = $760,894.50.

It would probably be reasonable for John to make a reduction for contingencies including not being able to work as a boilermaker in the future, the possibility of needing to retire early and his earning capacity being reduced in any event due to his pre-accident conditions.

If you’ve received an offer and you’re unsure whether it properly covers future earning capacity, Foyle Legal can explain your options before you decide.

How do you show a loss of earnings?

Historical earning capacity can usually be established by reference to taxation returns, payslips or a contract of employment. In some circumstances, the injured person will not have access to these documents to support their personal injury claim. Sometimes other documents such as bank records can be used to show a history of net payments into a person’s bank account.

In some situations, the circumstances of life make it difficult to show earnings. This often happens when a person receives payment in cash for work they perform. In these circumstances, there are limited options available. In some circumstances, the person paying for the work may be willing to provide a witness statement, but often they are worried about the taxation consequences of doing so.

How do I claim a loss of income from a car accident?

In Western Australia, car accident compensation can usually only be claimed in circumstances where your injury occurs due to someone else’s negligence. The Insurance Commission of Western Australia is the CTP insurer of the other party (negligent party) and if a person wishes to seek compensation then the Insurance Commission will usually consider negligence and whether the injured person is entitled to claim compensation.

The circumstances surrounding claims for loss of income in a car accident claim can be many and varied. If you notify the Insurance Commission that you wish to claim economic loss, and you are an employee, then they are likely to ask your employer to complete an employer’s Confirmation of Loss of Salary form.

In a road accident claim, interim payments of compensation are not usually made, but the Insurance Commission of Western Australia is usually prepared to consider an advance payment of weekly wages when a claimant completes a Request for Advance Payment.

Claimants should consider that compensation is usually paid by the Insurance Commission as one lump sum. This means that in order to get the best possible outcome documentary evidence should be produced and provided to the Insurance Commission before any offers of settlement are made. In the absence of this information, the Insurance Commission may be unwilling to allow any amounts for loss of income.

How do I calculate past & future economic loss in an injury compensation claim?

Claims for past loss are usually linked to claims for future loss. For instance, if a person suffered serious injuries in a work injury or road accident, and their work was physically demanding then the claim for past economic loss is likely to be a claim for total incapacity (no retained earning capacity) from the date of the accident to the date of settlement or trial.

It would then follow that the claim for future economic loss would be for total incapacity until retirement age.

In personal injury, there is usually more contention in a claim for the future economic loss rather than a claim for past economic loss. This is because putting aside issues such as whether the injury caused the loss or whether the person is in fact incapacitated, past economic loss is a matter of fact. Future economic loss is based on earning capacity and there is usually seen as being a range of different possibilities based on past behaviour and medical evidence.

The best way to support a larger claim for economic loss is to have evidence about a person’s past work (such as pay slips and tax returns). Evidence about aptitude and willingness for work can be introduced by lay witnesses such as co-workers. Evidence about capacity for work and linking capacity to work to the accident is usually the domain of medical evidence, so supportive medical reports should be obtained.

Self-Employed Loss of Earnings Claim

Claims by self-employed people regarding economic loss are usually more difficult than claims by employees. The income and expenses associated with the business are often highly variable. Taxation returns often do not present the whole picture. It is often the case that expert advice from an expert witness (such as an accountant) may assist the parties in assessing the extent of the compensation claim for loss of income.

If you have a self-employed loss of income claim, it is best to consult an experienced workers compensation lawyer with vast personal injury claim experience for advice.

If you’re self-employed and your income has dropped after an accident, Foyle Legal can explain what evidence is usually used to support a loss of earnings claim in WA.

Time Limits in Personal Injury Claims

Injured people should be aware that there are time limits for commencing legal proceedings in personal injury claims. Personal injury lawyers and law firms can help to provide you with advice specific to your situation.

Section 14 of the Limitation Act 2005 relevantly states:

An action for damages relating to a personal injury to a person cannot be commenced if 3 years have elapsed since the cause of action accrued.

The effect of this provision is that you will be statute barred from commencing legal proceedings in the event that you do not commence legal proceedings in a court of law before the limitation date.

If you’re unsure about your limitation date, Foyle Legal can check the dates and explain your options to protect your right to claim.

Foyle Legal Advice in motor vehicle accident and personal injury claims

Foyle Legal practices in the area of personal injury law and can help with personal injury matters on a no win no fee basis. Foyle Legal’s law firm is now coming into its 10th year and we pride ourselves on helping people with the legal and claims processes.

At Foyle Legal your first attendance is obligation free, and a personal injury lawyer will listen to you, assess your claim and if there is enough information will be able to advise you about what you are entitled to and how much your claim is worth.

FAQs – Loss of Income Claims in WA

Can I claim loss of income if I return to work on reduced hours

Yes. You may claim the difference between what you would have earned and what you actually earned during periods of partial incapacity.

Does loss of income include overtime and allowances?

It can, where the evidence shows they were regularly earned and likely would have continued but for the injury.

What evidence is usually needed to prove loss of income?

Common evidence includes payslips, tax returns, employer records, and medical reports confirming incapacity.

How is future loss of income calculated in WA?

Future economic loss is based on loss of earning capacity and usually converted into a lump sum using discounting and multipliers.

Please refer to the latest ATO ruling on personal injury claim taxation while negotiating your future loss of income.

Can self-employed people claim loss of income?

Yes, but these claims are often more complex and may require accounting evidence.

What is the time limit for starting a personal injury claim in WA?

Generally, court proceedings must be commenced within three years from when the cause of action accrued.

Reviewed by Christian Foyle, Director of Foyle Legal. Updated January 2026.