Loss of earnings for self-employed business owners after an injury

When a self-employed business owner cannot work after an accident or injury, the financial effect may appear only later. An order is completed late, a replacement has to be paid or a customer withdraws. The result is therefore not always visible in one bank statement.

Section 1325 ABGB expressly refers to lost earnings and, where the injured person becomes unable to earn, future lost earnings. For self-employed people, personal work must be separated from the business result. Revenue, profit, saved costs and payments already received are not interchangeable.

This article explains how to prepare a self-employed business owner’s loss of earnings in a comprehensible way. It focuses on specific orders, personal work, replacement staff, accounting records and the distinction from general business fluctuations.

Section 1293 ABGB also covers profit that a person could have expected in the ordinary course of events. A fall in business revenue is therefore not automatically recoverable after an injury. It must be possible to explain the probable economic development without the harmful event.

Section 1295(1) ABGB provides the general basis for compensation for unlawfully and culpably caused loss. The injury, the responsible conduct, the professional restriction, the financial disadvantage and their connection must fit together. The amount cannot be derived from the claim that the business simply earned less.

In a sole proprietorship, personal work and business results may be closely connected. In a company, it is more important to distinguish whether the managing person’s absence caused a personal loss of earnings or initially changed the company’s result. These levels should not be merged in one figure.

Start by describing your normal work. Which tasks do you perform personally? Do you acquire orders, advise customers, work on construction sites, deliver services or manage the entire operation? The more concrete the description, the easier it is to assess the effect of an injury.

For each period, record what actually stopped. You may have been unable to work at all, or only certain tasks or hours may have been affected. A return with reduced capacity can also explain a loss of earnings if the affected work could not be delegated on equal terms.

The entire business revenue must not simply be treated as personal earnings. The expected result must be distinguished from business costs, saved expenditure and work performed by other people. The question is which loss can be attributed to your own earning activity.

For an agreed order, the contract, offer, description, schedule and previous communication are useful. They show what had to be delivered, when it was due and what economic contribution it was expected to make. A revenue list alone usually does not explain this connection.

Revenue and profit are different. If an order was lost because of the injury, costs that would not have arisen without completion may have to be deducted. Additional material, staff or subcontractor costs and a delayed completion can change the result. Each item should remain visible in the calculation.

For recurring work, earlier orders and receipts may provide a comparison. A one-off project requires a more specific account of the agreement and its likely performance. The further a forecast extends into the future, the more carefully its assumptions and uncertainty should be explained.

A replacement can limit the loss but also create additional expenditure. Record which tasks were taken over, when the replacement started and what was paid. The key questions are whether the work was required because of the event and whether the cost was economically reasonable. The Supreme Court summarises this for self-employed people by recognising loss of earnings, replacement costs or a combination of both as possible forms of loss.

Section 1304 ABGB requires contributory responsibility to be considered in assessing loss. In business practice, this does not mean that every conceivable measure must be taken. It calls for a comprehensible assessment of whether orders could be postponed, shared internally or secured through reasonable replacement work.

Replacement work does not automatically remove the loss. It may partly compensate for the personal absence while affecting margin, quality, capacity or customer relationships. Set out the expected contribution, replacement costs and remaining loss separately.

The timing of the injury and the business decline is an important indication but may not be enough on its own. A clear connection is needed between medical restriction, the specific work and the financial consequence. Medical records should explain the limits, while business records should show the effect on orders and workflow.

Several causes may affect a self-employed business at the same time. Season, weather, market conditions, supply problems, employee absences, cancellations or an earlier planned decline should be separated from the injury-related part. A comparison across suitable periods is often more useful than one month from the previous year.

Explain when the loss appears later. An order may continue initially and only lead to a loss because of late delivery, a contractual penalty or a customer cancellation. The timeline should show when each decision was made and why.

For personal work, calendars, order lists, schedules, time records and a description of the restriction are useful. For the business, collect offers, contracts, invoices, receipts, accounting records and relevant tax documents. Replacement work should be recorded with its period, service and payment.

Arrange the data by clear periods: before the event, absence, replacement, return and later development. Each period should show the result expected without the event, what actually occurred and which costs or replacement payments must be deducted.

The damage documentation check helps organise the records. For the first questions about loss and evidence, you can also use the claim check. The damage documents checklist supports the preparation of the file.

In a sole proprietorship, personal absence and business consequences may be closely connected. A GmbH or another company is a separate legal entity. A fall in its result therefore cannot automatically be treated as the managing person’s personal loss of earnings.

The chain must also be concrete where employees are involved. Did they need overtime, was an external specialist instructed or were orders completed late? Record additional costs separately from the income prevented or retained as a result.

In jointly run businesses or collaborations, determine who was economically entitled to the order and profit and who performed the work. Written agreements, billing arrangements and the actual division of tasks may matter more than the business name used publicly.

Under section 1489 ABGB, a compensation claim generally becomes time-barred three years after knowledge of the loss and the person responsible. A continuing or later-recognised loss of earnings can raise timing questions. Record when the first concrete loss, its possible cause and the responsible person became known.

Prepare a short timeline and a separate loss schedule. Link every item to an order, period, amount, cost deduction and record. Keep open assumptions in an internal working note instead of putting them into an apparently precise total.

The topic pages on professional damage and loss of earnings and evidence, negotiation and limitation provide further orientation. Where there is also a personal injury, the page on personal injury and recovery costs may also be relevant.

New articles and legal information from the firm are available through BRANDaktuellen Rechtsnews. Subscribe to the newsletter.