Payment For Loss of Earnings

I have recently been awarded damages for loss of earnings due to my employer’s negligence. These have been reduced by an amount for Income Tax and National Insurance, is this correct?

1st August 2009

Yes, the court takes into account the gross salary that you would have received had you continued to work for your employer during your period away from work.

A long-standing court case has set the precedent that the award should be reduced to what you would have received net of statutory deductions such as tax and National Insurance. This ensures that you do not ‘profit’ from the award.

However certain awards such as payments made in respect of loss of limbs or sight are not taxable, thus you are compensated in full for disabilities you will have suffered.

By Jo Nockels

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