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The hidden costs of accidents


National costs are calculated by the rate of working days lost, cost of work-related injuries and illness, and the annual fines charged to businesses for negligence and unlawful practice. The tighter regulations, new sentencing guidelines and subsequent higher fines, have subsequently added to such costs. And added to the pressure, for those in business, to successfully meet their H&S obligations.

Counting the Cost

Your employees are less likely to have work accidents and ill health if you have good controls in place. But things can and do go wrong. And it’s not just the big accidents that will cost you money. There will be many less serious ones each one of which cost you money too – often, more than the immediate costs. The real cost of a minor cut is much more than the sticking plaster.

Have you considered the cost of that person being away from their job, even for a short time? Or the impact on their co-workers and team members?

What if there was a serious accident involving a key worker – would your organisation be able to cope? And what about the costs if your company was prosecuted e.g. the effect on your business reputation and the resulting relationship with customers and suppliers?

On top of the financial costs of such incidents, there is also the stress of having to deal with them – for both the management team and the morale of the company workforce.

The smaller your business, the bigger the impact will be if you have a serious incident. It could put you out of business!

Identifying the Hidden Costs

Workplace accidents and ill-health can have a dramatic impact on your company finances. In addition to the serious injuries or damage you need to think about when calculating total loss, it’s important to consider how the following may impact on your costs:

  • Lost time
  • Extra wages and overtime payments
  • Sick pay
  • Production delays
  • Fines
  • Loss of contracts
  • Legal costs
  • Damage to products, plant, buildings, tools, equipment
  • Clearing the site
  • Investigation time
  • Excess on any claim

The amount of these additional costs varies between businesses and the types of incident, but could be a number of times more than you originally accounted for. So you may want to consider some, or all, of these costs as important inclusions when you’re next arranging your protective business cover.

How to reduce these costs?

A poor health and safety record may mean increased insurance premiums – even a refusal of future policy cover. So it makes sense to tackle these issues by preventing accidents and ill health in the workplace in the first place! Saving on the costs of these incidents is an investment in the future of your business.

Here is a simple 5 step plan to help you identify actual costs of a possible incident:

  1. Find out what could cause harm
  2. Identify who might be harmed – including your employees, visitors or members of the public
  3. Decide what you should do to prevent anything happening to them
  4. Take action in a planned way, recording what you have done
  5. Check these actions are still working from time to time

For each cost area consider all the costs involving:

  • people
  • premises
  • plant, equipment and substances
  • procedures

Our Risk assessments will help you do this. See “Risk Assessment – guide to” in the HS A-Z Guidance.

Measuring the Costs

Encourage your employees to report all incidents. The more information you know, the more accurate your costing will be.

Record the facts and associated costs as soon as possible after an incident happens, while you are investigating what went wrong.

The HSE have produced a handy Incident Cost Calculator to help you do this. The form allows you to record many of the main costs relating to work accidents and ill health.

Some costs on the form may not be relevant, or only known at a later date. Others you may need to estimate. Click here to download the HSE Incident Cost Calculator.

How sure are you that your business is totally compliant with current law?

Take the HS Self-assessment for a clearer idea of where your organisation is as regards Health and Safety. Once you have identified the gap between where you are and where you should be, you will be better able to decide what actions you need to take in order to close the gap.

Look out for next month’s HS News when we will be discussing further ways to reduce risks and thereby help you cut your costs.

Important Update: Manslaughter Definitive Guideline

The Sentencing Council’s new guidelines for sentencing in manslaughter convictions come into force in courts this week (1st November).

These guidelines set out how offenders convicted of manslaughter, should be sentenced in England and Wales.

This marks the first time that comprehensive guidelines have been drawn up for these very serious and difficult cases, which could range from an unintended death resulting from an assault, to a workplace fatality caused by a negligent employer.

The serious nature of manslaughter, combined with the great variation in cases, and the fact that cases do not come before individual judges very frequently, means the introduction of guidelines will be particularly useful in promoting consistency in sentencing and transparency in terms of how sentencing decisions are reached.

While, overall, the guideline is unlikely to change sentence levels it is expected that in some gross negligence cases sentences will increase. This could be in situations where, for example, an employer’s long-standing and serious disregard for the safety of employees, motivated by cost-cutting, has led to someone being killed. Current sentencing practice in these sorts of cases is lower in the context of overall sentence levels for manslaughter than for other types.

Sentencing Council member Lord Justice Holroyde said:

“Manslaughter offences vary hugely – some cases are not far from being an accident, while others may be just short of murder. While no sentence can make up for the loss of life, this guideline will help ensure sentencing that properly reflects the culpability of the offender and the unique facts of each case.”