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A service engineer who had become 100 % incapacitated due to an accident at work claimed that the compensation for loss of future income under the employer's occupational injury insurance should be determined on the basis of an individual assessment according to the rules of the Damages Act.
The accident occurred when a compressed air alarm was triggered around 20 centimetres from his ear and he suffered persistent and severe tinnitus. As a result of the occupational injury, he became 100 % disabled, and the question that the Supreme Court had to decide was whether it is possible to claim individual compensation for future loss of income, or whether future loss of income must be determined in the ordinary way in accordance with the regulations on standardised compensation under the Occupational Injury Insurance Act.
The main rule in occupational injury cases is that compensation must be calculated in accordance with the regulations on standardised compensation. However, the clear starting point in Norwegian tort law is that the injured party is entitled to «full compensation». In this specific case, a standardised compensation calculation would result in lower compensation than «full compensation» compared with if an individual and specific assessment of the injured party's future loss of income had been made.
One of the reasons why an individual assessment of future income loss under the rules of the Injury Compensation Act resulted in a far higher claim for compensation compared with future income loss compensation under the standardised rules is that the two sets of rules are based on different capitalisation rates. Future income loss compensation according to the regulation on standardised compensation is based on 6 % capitalisation rate. However, individual calculation of compensation is based on 2.5 % capitalisation rate.
The difference in capitalisation rate results in major differences in the calculation of future income loss. This is particularly true in cases with a long future loss period.
Another important reason why an individual assessment of future loss of income under the Injury Compensation Act resulted in a much higher compensation claim compared to future loss of income compensation under the standardised rules was that the injured party had an income of more than 10 times the National Insurance basic amount (G) before the work accident. 10 G is the ceiling in the standardised compensation calculation, so income before the accident that exceeds this is not compensated under the standardised rules.
The Supreme Court ruled that the term «full compensation» is more of a legal concept than an economic concept, since there are still many uncertainties when calculating compensation in the future. In the preparatory work for the occupational injury regulations, the goal of full compensation was not considered to be an obstacle to a certain degree of standardisation. The Norwegian Parliament has adopted regulations on standardised compensation despite the fact that such a standardisation scheme could result in some people being undercompensated. Neither the fact that there are now more people earning more than 10 G than when the regulations on standardised compensation were adopted in 1990, nor the fact that the capitalisation rate has been sharply reduced in recent years, meant that the regulations could be set aside. The Supreme Court found that in a system of standardised compensation there will always be cases of undercompensation. The injured party's claim for individually calculated compensation for his future loss of income was therefore not upheld.
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Maja Agnes Simonsen
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