Change to Discount Rate for Personal Injury Damages

Occasionally, employment tribunals award personal injury damages in discrimination and detriment cases.

If an (ex-) employee has a serious long term medical condition and is being awarded a sum of money for long-term loss of earnings, a ‘discount rate’ is applied to reflect the fact that the employee receives several years’ loss of earnings up front (and thus can be expected to earn money on the lump sum by investing it.)

The discount rate has been set at 2.5% for over 15 years, during which time interest rates and gilt returns have plummeted. The government has today, announced, it is being reduced to minus 0.75%. This will have the effect of increasing awards for long-term loss of earnings for personal injury in discrimination and detriment cases.