Claims for Loss of Servitium

Where someone is seriously injured due to someone else's fault, such as a motor vehicle accident or work accident, they could be entitled to significant compensation.

Similarly, an employer may be entitled to make a claim for loss of servitium. This refers to the employee/employer relationship where there is a loss of services due to injuries caused to their worker by another person’s negligence.

A common example is where an injured person is self-employed, and their company also suffers significant loss of revenue as a result of the injured person’s inability to work due to the negligence.

Although the injured person is self-employed, their company is considered a separate legal entity with its own rights and obligations. Therefore, the injured person should also be commencing a claim on behalf of the Company.

If the Company does not commence its own claim, there may be significant risk of forfeiting the amount of compensation that the injured person may be entitled to, on behalf of the Company.

Liability Required

Of course, to be successful, the employer must be able to prove on the balance of probabilities that the employer’s loss arises out of the negligence of another person’s fault, not their own or their employees.

Employment Relationship

A claim for loss of servitium lies in the employee/employer relationship. However, that is not to say that an employment contract is a required element of the action. Rather, it is sufficient if the employer has a reasonable expectation that the employee will perform the services.

A loss of servitium claim can extend to directors, managing directors and other employees who effectively control the employee.

The courts have expressed reluctance to extend the cause of action to independent contractors or subcontractors because of the different relationship compared to that of employment.

Potential Amount of Claim

The assessment of damages for loss of servitium is limited to the losses flowing directly from the interference with the employer’s right to the services of the employee. It does not include all consequences flowing from the negligence.

The damages recoverable are limited to those expenses incurred in replacing the labour of the injured employees (less the savings of the wages that do not have to be paid to the injured employees). Any statutory payments made with respect to sick pay or medical expenses for the injured employee are not recoverable.

The employer may be able to claim the expenses associated with employing a substitute. These may include expenses relating to recruiting the new employee, training them, upskilling them to the injured employee’s level and the like.

In assessing any future or ongoing loss, the Court will consider whether, on the balance of probabilities, the injured employee would have continued to perform those services for the foreseeable future.

Only in certain circumstances, may the employer claim loss of revenue or profits. Only where the employee is considered “irreplaceable”, the employer may be successful in this claim. However, where the employer may pursue this claim, it may invite an argument that the employer failed to mitigate the loss by selling the business.

Statutory Restrictions

In Queensland, an employer’s ability to pursue a claim for loss of servitium is subject to significant statutory restriction.

In claims where either the Civil Liability Act 2003 or the Workers Compensation and Rehabilitation Act 2003 apply, Courts are prevented from awarding damages for loss of servitium unless general damages (pain and suffering) exceed the minimum amount under regulation.

This will depend on when the negligence occurred and the severity of the injuries suffered.

How we can help

The Compensation Team at Wallace & Wallace Lawyers are experienced in all aspects of Compensation Law.

If you are dissatisfied with your current representation, our experts can also offer a second opinion.

If you, or someone you know has been injured in a motor vehicle accident, at work, or due to someone else’s fault, or you want a second opinion, call us now on (07) 4963 2000 or contact us via our online contact form for practical legal advice on how you should proceed.