Temporary and permanent incapacity compensation

Temporary and permanent incapacity: legal principles and assessment

A bodily injury may cause loss of earnings during treatment or a lasting reduction in earning capacity. Compensation is assessed by considering medical findings alongside the person’s work, income, daily activities, liability and causation. This article explains the main concepts used in the assessment and why each case requires individual analysis.

Legal basis and purpose

A claim for pecuniary loss caused by incapacity is often examined under the law of tort. Depending on the event, contract, employment, social-security or special liability rules may also apply. The purpose is not punishment but compensation for proven economic loss.

Article 54 of the Turkish Code of Obligations identifies the following heads of bodily-injury loss:

Treatment expenses.

Loss of earnings.

Loss caused by reduced or lost earning capacity.

Loss caused by impairment of economic prospects.

The same injury may have different economic effects on different people. A medical percentage is relevant, but loss of earnings or the economic effect of additional effort cannot always be found by mechanically applying that percentage to income. Terms such as disability, impairment and loss of earning capacity should be tied to the legislation and head of loss in question.

Temporary and permanent incapacity

The economic effect of injury may be confined to the treatment and recovery period or may continue permanently. The two periods are assessed using different evidence.

Temporary incapacity: the assessment asks to what extent the person could continue working or performing ordinary activities during recovery and what economic loss followed. A 100 per cent loss of capacity, regardless of occupation, cannot be assumed in every case.

Permanent incapacity: once the medical condition has stabilised, the lasting functional impairment is assessed against the person’s occupation, earnings and daily life. A medical-board percentage is not, by itself, the amount of compensation.

Determining the medical impairment

The report should come from an authorised, appropriately qualified board, set out the clinical findings and apply the rules relevant to the date and type of claim. A higher medical percentage may affect the economic loss, but does not determine compensation on its own.

Practice refers to instruments in force at different times. The applicable instrument cannot be selected from the chronology below alone; the event date, purpose of the report, type of loss and transitional rules must be considered together.

The Social Insurance Health Procedures Regulation is among the instruments encountered for periods before 11 October 2008.

After 11 October 2008, practice also referred to the Regulation on Determining Loss of Working and Occupational Earning Capacity.

The Regulation on Disability Assessment Procedures is another instrument that may be relevant depending on the period and type of claim.

The former Regulation on Disability Criteria, Classification and Medical-Board Reports is also encountered in historical assessments.

The Regulation on Disability Assessment for Adults, published on 20 February 2019, governs the adult assessment framework.

For children, the Regulation on Special Needs Assessment for Children, published on the same date, must be considered separately.

A report should do more than state a percentage: it should explain diagnoses, findings, recovery and functional restrictions in a reviewable form. The occupational, legal and economic effect requires a separate assessment.

Key elements in the assessment

Compensation is not determined by a single percentage or formula. The loss period, income, medical evidence, economic effect, liability and earlier payments must be considered together.

1. Earnings Level: The victim's monthly earnings are used as the basis for calculating the loss of income.

Actual earnings: payroll records, tax returns, bank records and comparable-pay evidence may all be relevant. If an official record is said not to reflect reality, that must be shown by specific evidence rather than simply disregarding the document.

No current earnings: the minimum wage is not automatically treated as income in every case. For domestic work, care, retirement or unemployment, the economic contribution affected by the injury must be identified.

Income such as rent, interest or dividends must be examined to see whether the injury affected it. Earnings dependent on active work or management are not treated in the same way as wholly passive income.

Regular additional payments may be included to the extent that they were actually earned and could reasonably have continued. No single documentary period governs every case; the nature and regularity of the payment must be evidenced.

2. Age and Life Expectancy: The estimated life expectancy of the victim is determined based on the age of the victim on the date of the tort. This period is an important parameter in determining the amount of compensation.

Active and later life periods: a single working or retirement age is not applied automatically to everyone. Occupation, actual work, age, health and the loss claimed are relevant; any economic contribution after retirement must be established separately.

Children: medical and functional effects may be assessed from the accident date, but future occupational earnings and the economic effect of additional effort in daily life must be distinguished. Any projected income should be justified by age, education and case-specific evidence.

Medical percentage: the percentage for lasting functional impairment is an important input. The report should show the governing instrument, supporting findings and how the permanent condition was distinguished from the temporary period.

Liability and fault: contributory fault may reduce compensation. Not every basis of liability, however, is fault-based; keeper liability, joint and several liability and insurance cover have their own conditions. The claimant’s right against a liable party must be distinguished from allocation between defendants.

Calculation methods and current issues

SGK assessments, private insurance calculations and damages awarded by a court may serve different legal purposes. That distinction matters: different methods are not necessarily erroneous. The report must answer the correct legal question and disclose its assumptions.

Main approaches

1. Progressive Annuity Method: It is a method frequently requested by victims and widely used in practice.

Past and future periods: past loss is calculated from known data where possible. For future loss, assumptions about earnings growth, discounting, lifespan and work should be stated. Ten per cent growth and ten per cent discounting have been used in some judicial calculations; they are not an immutable statutory formula for every case.

The strength of this approach is that it separates the known period from the projected future and makes the steps visible. It should not be assumed to favour either side; the realism of the data must be tested.

Its limitation is that fixed growth and discount assumptions may not reflect long-term economic reality. The report should therefore explain sensitivity, data sources and the reason for the chosen period.

2. Fixed-Term Annuity Formula with Payment per Period-Technical Interest Method (1.65/1.8 Ratio):

Technical-interest approach: a discount rate may be used to find the present value of future loss. Rates such as 1.65 or 1.8 per cent are examples from historical practice, not automatic rules for every current claim.

The Constitutional Court’s judgment E.2019/40, K.2020/40 of 17 July 2020 annulled particular references to the general conditions in Article 90 of the Road Traffic Act. It should not be generalised as invalidating every schedule and calculation rule at once; the wording annulled, effective date and later legislation must be read together.

It therefore cannot be stated categorically, from the 2020 judgment alone, that a particular technical rate must or can never be used. The event date, defendant, governing legislation and current authorities must be assessed.

Claims that one method always produces a fixed percentage more compensation, or necessarily causes unjust enrichment, are unreliable. The result varies with earnings, duration, rates and other inputs. Compensation should address actual loss without duplicate recovery.

3. Average Earnings and Fixed Rent Method (with 10% Increase and Discount Value):

Average-earnings and fixed-annuity methods also appear in earlier practice. Describing a historical method does not make it directly applicable to a current claim; the chosen method requires legal and evidential justification.

Other points requiring attention

Life tables: tables such as PMF-1931 and TRH-2010 have been used at different times. The choice should be justified by the claim, event date and governing legal approach. A table estimates survival; it does not predict an individual life with certainty.

Lump-sum payment: paying today for loss that would accrue over time may require a present-value calculation. It cannot be assumed that a lump sum necessarily fails to protect the claimant or imposes a disproportionate burden; the payment form must be assessed under the law and case evidence.

Institutional differences: an SGK benefit assessment, an insurer’s calculation of policy cover and a court’s damages award are not the same exercise. A report should identify the legal relationship addressed and whether other payments are deductible.

Expert evidence: the expert performs work within their technical field; the applicable law and final assessment belong to the court. There is no general rule that the expert must be a lawyer or that a non-lawyer specialist is necessarily inadequate. The report must remain within its remit and be clear and reviewable.

Practical problems and possible improvements

Incomplete medical evidence, earnings information or calculation assumptions can materially affect the result. The issue is not simply whether a national table exists: the source used must be current, relevant and verifiable.

Important Problems and Solution Suggestions:

Consistency: where institutions use the same term for different purposes, the distinction should be explained. Reports should be comparable and judgments should identify their concrete legal basis.

Specialist courts or training programmes are policy proposals; they do not mean that Türkiye currently has a separate “personal injury court” for every incapacity dispute. Within the present system, the respective roles of judge and expert should still be kept clear.

Data infrastructure: regularly updated mortality, labour and earnings data can improve transparency. The report should identify the source, period and sample, and explain why the statistic is suitable for the claim.

Payment form: periodic payments, a fund or an annuity model may be proposed, but a policy proposal does not give every claimant a present right to choose such a method. Available options depend on current law and the decision made.

Actual loss and deductions: the assessment should avoid both under-compensation and recovery of the same loss twice. A particular interest rate or method does not, by itself, establish unjust enrichment; the actual loss and payments must be compared.

Discounting: a present-value rate cannot be selected merely by naming an institution. Its legal basis, economic meaning, period and consistency with the other assumptions should be explained. A reference to SEDDK, the Central Bank or TurkStat does not itself create a binding tariff.

Assessment

Temporary or permanent incapacity compensation requires sound medical evidence, reliable earnings data and transparent assumptions. No percentage, table or formula determines the answer on its own. A reviewable, case-specific assessment considers the event date, basis of liability, head of loss, insurance and social-security payments together.