A psychological injury can affect your ability to earn an income long after the initial incident. If conditions such as depression, anxiety or post-traumatic stress disorder prevent you from returning to your previous role, you may be entitled to compensation for future financial losses. Assessing these losses involves examining your career prospects, medical evidence, remaining work capacity and expected earnings over time.
Establishing the Extent of Your Lost Earning Capacity
The assessment begins by determining how significantly your psychological injury has affected your earning capacity. Unlike lost wages, which concern income already missed, lost earning capacity considers your reduced ability to earn money in the future.
A reported case involving successful compensation for psychological injury concerned a worker whose career ended following prolonged workplace trauma. Such circumstances demonstrate why assessing the severity of psychological symptoms alongside their practical impact on employment is essential. Medical assessments, employment records and evidence of workplace difficulties help establish whether your reduced earning capacity is likely to continue.
Estimating Your Income Without the Injury
Your expected earnings had the injury not occurred provide the starting point for calculating future economic loss. Employment contracts, payslips, tax returns and previous salary increases help establish what you would reasonably have earned throughout your remaining career.
Potential promotions, professional qualifications and established career progression may also influence the estimate. However, projected increases must be supported by evidence rather than assumptions. Your employment history, industry wage trends and documented opportunities help determine a realistic income trajectory, including periods when you might reasonably have been unemployed or working reduced hours.
Assessing Your Remaining Ability to Work
Your current employment status does not necessarily reflect your long-term earning capacity. Even if you can return to work, psychological symptoms may prevent you from maintaining your previous hours, responsibilities or income.
Psychiatric assessments and treating practitioners’ reports help establish your functional limitations, including difficulties with concentration, decision-making, workplace interactions and stress management. A vocational assessment may then identify suitable occupations based on your qualifications, experience and medical restrictions. Your prospects of securing and maintaining alternative employment, together with your likely recovery, influence how much income you may reasonably earn after the injury.
Calculating the Expected Future Income Difference
Once your projected pre-injury earnings and remaining earning capacity are established, the difference provides the basis for calculating future economic loss.
Suppose you would reasonably have earned $1,500 weekly without the injury, but your psychological condition limits your earning capacity to $900. The initial projected loss would be $600 per week. The assessment then considers how long that shortfall is expected to continue, your likely remaining working years and any recoverable lost employer superannuation contributions. Where precise forecasts are impossible, a court may consider a broader assessment supported by the available evidence.
Adjusting the Calculation for Future Uncertainties
Future income projections cannot assume that your employment circumstances would have remained unchanged. Assessments therefore account for contingencies, including possible unemployment, illness, career interruptions and other events that might have affected your earnings regardless of the psychological injury.
Where future losses are awarded as a lump sum, a discount rate accounts for receiving money now that would otherwise have been earned over several years. In New South Wales, the prescribed rate is generally 5%. Statutory earnings limits and claim-specific rules may also apply. For workplace psychological injuries, eligibility requirements and restrictions on recoverable economic loss depend on the governing legislation, including when your injury was notified.
A Reliable Assessment Depends on Realistic Evidence
Lost future income after mental injury is assessed by comparing your probable earnings without the injury against your realistic future earning capacity, then adjusting for uncertainty and applicable legal limits. Strong medical evidence, documented employment prospects and credible income projections help establish the financial consequences of your condition. The resulting compensation assessment should reflect the actual impact on your working future rather than an unsupported estimate of earnings you might have received.
