The cost of health & safety at work: employer breakdown

For employers, implementing health and safety initiatives is an important part of running a business. If regulatory standards aren’t adhered to properly, it can end up being costly and will contribute towards some crippling developments as far as the internal economics of a business is concerned. This is why many employers will look to sites such as https://www.icwgroup.com/workers-compensation/safety-risk-management/ to see how they can introduce a proactive safety program.

The associated costs can be categorised into two sets, namely ‘human costs’ and ‘financial costs’.

Human costs deal with the financial impact an illness or injury has on an individual, whereas financial costs concern the business and its subsequent costs as a result of an employee’s illness or injury.

In the UK, estimates suggest that annually between 2015 and 2016, 622,000 workers suffered injuries at work, and 528,000 workers suffered a new case of ill health which they attribute to their working conditions. If this trend continues rising annually, then the financial costs to businesses could be a real cause for concern.

Together with Nifty Lifts, suppliers of access platforms to workplaces that implement stringent health and safety procedures, we run through the costs of health and safety mishaps, so too the measures businesses put in place to avoid them in the future to help save money.

Saving money on absence costs

The likelihood of employees needing to take sick leave can be reduced by the proper implementation of health and safety standards and procedures. This would also help in the reduction of both the ‘direct’ and ‘indirect’ incurred financial costs to a business.

Direct costs

If a business encourages good health and safety practices in the workplace, direct costs could be reduced in the following areas:

  • Paying of absent employee salaries.
  • The overtime costs incurred when available employees need to cover the work of an absent employee.
  • Additional losses to profits due to the loss of output incurred by absent employees.

Indirect costs

In addition to a business’ direct costs, businesses face further losses when health and safety procedures aren’t followed correctly, including:

  • The time it takes for a new employee to learn a new role and become productive in the place of an absent employee.
  • The diminished quality of a product or service when experienced employees are absent.
  • A potential loss of business, continuity or reputation due to an inadequate number of staff.
  • The recruitment of temporary staff or contracted agency workers.
  • Providing training and support to staff unskilled in a particular job-role.

The insurance illusion

Many employers are of the belief that if health and safety procedures aren’t implemented effectively, their insurance policies will be able to cover the costs of incurred through employee injuries or sickness. This often isn’t the case.

Many insurance policies require certain health and safety measures established in the workplace. A common example is having an appointed member of staff in charge of first aid. In some policies this member of staff needs to be trained. Fortunately, certified First aid training courses located in North york can help in this regard. If you don’t have proof this person exists or has dealt with a first aid incident then your insurance policy may turn its back on you.

Employers have a duty of care towards the people they employ and so employers subsequently need to have Employer Liability Compulsory Insurance. In doing so, they will reduce insurance premiums, leading to more money in the bank in the long term. However, only a small number of incidents are covered by an employer’s insurance, which means that uninsured costs can often outweigh insured costs – something which comes straight off the businesses ‘bottom-line’ profits.

Costs that are incurred as a result of poor health and safety procedures, that aren’t covered by Employer Liability Compulsory Insurance, would include:

  • Sick pay
  • Lost time
  • The damage or loss of raw materials and products
  • Plant and equipment repairs
  • Temporary labour and overtime costs
  • Delays to production
  • Insurance investigation time
  • Fines
  • Business contract losses
  • Legal costs
  • The loss of business reputation

For any business, the establishment of whether their health and safety procedure is more likely to incur financial losses covered by insured costs is important, so too whether these costs are covered by an insurance policy. Failure to provide reliable health and safety procedures that prevent illness and injury could lead to a spike in the insurance premiums or difficulty when trying to obtain future insurance cover.

The cost of illness or injury

In total, the financial costs and human costs hitting the UK between 2014 and 2015 were set at 14.1bn. 9.3bn of this overall cost came from workplace illnesses, amounting to 17,600 per case, and 4.8bn was as a result of injury claims – an equivalent cost of 1.6m per fatal injury and 7,400 per non-fatal injury.

8bn of this overall figure was attributed to human costs incurred by individuals who either fell ill or were injured in the workplace, while 2.8bn was incurred by employers in financial costs. A further 3.3bn was incurred by the government and the taxpayer through contributions to workplace ill-health and injury.

Employees can be left with many different costs when it comes to employee illnesses and injuries, whether they be physical or mental. In order to better help their employees with this, many companies have chosen to install an onsite clinic at the workplace and more information about this can be found at https://blog.edenhealth.com/onsite-clinic. However, unfortunately, there are times when not even an onsite clinic can help and this is when a fatal injury occurs. This could have cost a business 106,544 in payouts, whereas non-fatal injuries are typically substantially lower at 1,232 per case. Additionally, employees who are absent for more than seven days, could cost a business up to 8,219.

Although employers often effect and address their health and safety procedures, more often than not, they aren’t sustained and utilised by employees throughout an organisation on a daily basis. The costs incurred by employers when employees fall ill or get injured, set a precedent for health and safety strategies that are counter-productive in that they effectively negate the accumulative costs of situations that arise when the health and safety of employees gets compromised.

Ken
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