Financial redress: Loss of earnings and "own time"
Customers may have used their own leisure time or work time to sort out problems caused by our mistakes. This is regrettable. While we appreciate that people’s time is valuable to them, it is not our policy to compensate for the notional or hypothetical cost of “own time”. This applies to all our customers including employees, sole traders and directors of small limited companies, as well as professional agents and tax advisers in connection with their own affairs.
For reimbursement to be made there must be clear evidence of actual loss of earnings. For example, it is not enough for a complainant to say “I normally charge my time out at £25 an hour and I spent 3 hours resolving this problem therefore I want £75 compensation”. You would want to see proof that the time would otherwise have been actually charged to a customer, i.e. that custom was lost. Even in that situation, if the work was simply postponed rather than permanently lost, it may be difficult to establish a genuine loss.
This aspect is difficult to apply. You will need to consider all the facts and circumstances and sometimes make fine balancing judgements. Clear evidence of lost earnings is not always easy to provide. That does not mean that people’s time is not valuable or that earnings were not lost, but we can only reimburse where there is demonstrable proof of loss of income or profits. To do otherwise would mean reimbursing for hypothetical, notional, speculative or potential losses which is not our policy.
When compensating for lost earnings, bear in mind that hourly rates can cover a number of activities. Focus on what the net earnings would be and reimburse accordingly. You should therefore deduct income tax where the claimant is liable to tax. It is unlikely to be possible to reach a precise figure, so use reasonable estimates - see example below.
- An employed customer lost earnings through having to take half a day’s unpaid leave to deal with matters arising solely from our mistake. So long as this was the only way of resolving matters, reimbursement can be made for the net pay lost for that half day. He produces payslips that show his net earnings average at around £120 per day. You therefore pay him £60. (The same person using holiday leave to sort out the problem would not lose earnings.)
- A self-employed customer had to hire someone to run the business for a day so the customer could attend to the unnecessary work caused by our mistake. The cost of hiring the help could be reimbursed.
In some cases where evidence of loss of earnings is not available, but it is clear our mistake has had a significant adverse impact on the customer, it may be appropriate to make a suitable worry and distress payment - see CRG6100.