Calculation of lost wages

In the case where the car accident victim was dead or left with residual disability, their left family or themselves have a legal right to claim their lost wages as compensation to the at-fault party. Getting the lost wages at once means getting the total amount of money which the victim would get it divided in the future if he was not dead. According to the Japanese Law and custom it's necessary to calculate the lost wages based on your actual wages, and also necessary to deduct interim interests from the calculated amount. In traffic accident cases in Japan, we use Leibniz Coefficient in calculation of interim interests. In this article, we take a closer look at how to calculate the lost wages and how to use Leibniz Coefficient.

Why is it necessary to deduct interim interests?

We raise one typical example. Let’s think a 13 years old boy was hit by a car and he unfortunately died. In this case, according to the past precedents, the Japanese court thinks he would work from 18 years old to 67 years old which is for 49 years. So his left family has a legal right to claim his lost wages for 49 years. If being more specific, they should deduct the dead boy’s living cost for 49 years from the total amount. Aside from the living cost, interim interests should be also deducted. For example, If you save one million dollars in your bank account for 10 years, you will get interests for 10 years. Money makes profit as time goes. So, if you get the dead family member’s lost wages now, interim should be deducted so that you cannot gain profit. For the  calculation of the interim interests, Leibnitz coefficient is used in car accident cases in Japan.   

How to calculate lost wages?

Let’s calculate the above dead boy’s lost wages.

-Point1: Actual wage or Average wage

The victim’s actual wage is referred to when calculating lost wages. So, if you are a foreigner, your real wages in your country are used for the calculation. When the victim doesn’t work, for example, they are children, students, or housewives, the average wages for all the ages are generally used for the calculation. However, in this case, it’s necessary to prove the victim has enough possibility to get the average wages in the future if they had no problem with working.

Getting back to the dead boy, he was not in working-age when he was dead. So, we have to use the average wages list. Tokyo district court uses the average wage of all the industry, gender, ages, and education when it comes to the calculation of lost wages of kids.

According to the table above, JPY4,892,300 is his lost wages per year. From this amount, we should deduct his living cost, which is generally 50% of the wage one year.
4,892,300*50%
So, his lost wages per year will be 2,446,150. We can obtain the lost wages for 49 years by multiplying the Leibnitz coefficient below.

-Point 2: Leibnitz coefficient

As we explained in the above, the interim interest should be deducted from the total amount of lost wages. The Leibnitz coefficient is a number used to deduct it in car accident cases in Japan. The following table shows the Leibnitz coefficients corresponding to the available working periods.

The boy's potential working period was 49 years, so let's find the number of 49 in the table. Since 18.1687 is the Leibnitz coefficient number for 49 years of the working period, multiply the number with his lost wages per year.

2,446,150*18.1687=44,443,365

So his lost wages is total of JPY44,443,365. So his left family can have a legal right to claim the amount as his lost wages.