Does TAC cover wages?
The TAC will pay income benefits following an accident in which you suffered an injury, if your ability to work has been impacted.
Whether that means you are not able to work at all or you are able to work some hours, but not what you were doing prior to the accident.
For the first 18 months after the accident, the TAC will pay loss of earnings benefits
Loss of earnings benefits are fortnightly payments made to a person who has suffered a loss of earnings in the first 18 months post accident (or alternatively, 18 months after an injury first becomes apparent).
From 18 months to 3 years, they will pay loss of earning capacity benefits
This is the different between what you were earning before the accident and what your capacity is to earn a wage post accident.
So if your post accident earnings are lower than what they were before the accident, the TAC can make income payments to you.
After three years, the TAC will cease making payment for loss of earnings
There is however one instance in which they will continue to pay loss of earnings and that is if you have been assessed as having a 50% or greater whole person impairment rating.
Being assessed as having a 50% whole person impairment rating is not common at all and is a very significant impairment rating.
This assessment (or if you have multiple injuries, assessments) usually occur if you pursue an impairment benefit claim where your whole person impairment rating is used to calculate your entitlements to lump sum compensation.
Not compensated for all of your lost wages
Unfortunately, after an accident and while in receipt of income payments from the TAC, you will not be compensated for 100% of your lost wages.
There will be a gap between your pre injury income and what the TAC will pay you.
Unfortunately, there is nothing that you can do about this because that is what the legislation says that the TAC are to pay to injured people who have a restriction in their ability to work.
Common law claim and lost wages
If you pursue a common law claim, wish you can read about here, you may be entitled to be compensated for loss of earnings.
So if your ability to work has been impacted and there is a gap between what the TAC were paying you by way of income payments, this can form part of your claim for loss of earnings under a common law claim.
If your ability to work into the future is likely to be impacted and this is supported by medical material, then you can also be compensated for this.
So here’s a basic example.
Say that had you not been injured you may have earned $100,000 a year with a probably yearly increase of 3% up until retirement age, but now you can only work at about 50% of your pre accident capacity at best.
In this instance then the gap between what you are likely to be able to earn now and what you were likely to be able to earn pre accident is what you can be compensated for.
However keep in mind that you will not be compensated dollar for dollar. So if you calculate your total loss of earnings to the date of retirement as $800,000, this is not the figure that you’ll be entitled to receive.
The loss of earnings payment you receive will need to be reduced as it takes into account the fact that you are receiving all of your lost income in one lump sum, rather than over many years.
It also takes into account something called vicissitudes.
The vicissitudes deduction is to take into account the risk that (in the circumstances that you did not sustain the work injury) earnings would not have continued until the assumed retirement age. For example, an intervening event such as illness or death may have meant you ceased work earlier that retirement age.
There will also a be claim for a modest amount claimable for the difference between net amounts received in weekly payments, versus the gross amount repayable (or deductible) to the insurer when a matter resolved. The matter of Fox v Wood allows you to claim the additional tax paid on the refundable payments.
If your ability to work has been impacted then the TAC will cover lost wages cost.
However they will not cover 100% of your lost wages and in most cases will only pay for up to 3 years post accident.
In a limited number of cases they will pay beyond three years if you have been assessed as having a 50% whole person impairment rating which is not very common at all.
If you pursue a common law claim for damages then you can potentially compensated for lost wages both to the date of settlement and potentially into the future all the way to retirement age.