Escalating Cost of Health & Safety
|
You are receiving this newsletter because we received a subscription request in your name. Should you no longer wish to receive it or if you have been subscribed in error you can unsubscribe by following the instructions at the end of the newsletter.
|
IN THIS ISSUE |
|
|
ESCALATING COST OF HEALTH & SAFETY |
Recent reports indicate a significant rise in the costs associated with inadequate health and safety provision in UK businesses, with the potential for even greater increases in the near future. For example, recent figures released by the Health and Safety Commission (HSC) signify a steep rise in the number of lost working days over the past year (2001-2) when compared with previous years. Of the 40 million days lost through illness and injury, more than three quarters were work related - at least in part. In addition to the increased number of days lost, the average duration of absences has also been increasing over recent years.
One of the major growth factors is the incidence of stress related conditions, which has almost doubled over the past 10 years or so
These figures represent a massive increase over previous years, though some of the increase may be down to changes in the way the figures are compiled. Even so it makes sober reading from both human and business points of view.
Another cost concern that UK businesses need to take into account is the proposal from the Law Commission that employers, and their insurers, should be liable for the cost of treating injured workers. These proposals are included in a recent consultation paper from the Department of Health and effectively parallel the existing provision whereby the National Health Service is able to recover the cost of treating victims of road traffic accidents. Exactly how the costs are to be recovered has still to be decided though there seems to be little doubt that the proposal will be implemented in one form or another. For UK businesses, this will inevitably mean a hike in insurance premiums and those companies found to be negligent or lax in their attitude toward health and safety can expect to suffer most.
As if productivity and insurance costs are not enough, a decision early last year in the court of appeal may have significant implications for the level of fines imposed on negligent employers, particularly larger companies. In response to an appeal by a firm against a fine of £350,000, the judge said, “companies in the position of the appellant can expect to receive financial penalties on a scale of up to at least £500,000 for serious offences”. This statement is in contrast to statements made in earlier cases that fines in excess of £500,000 should be reserved for cases of major public disasters.
The appellant in this case (in which an employee was crushed in a machine) was actually successful in getting the fine reduced from £350,000 to £200,000, though this was purely on the basis of the relatively modest size of the company. However, the implication seems to be that courts will be more inclined to impose larger fines in future. Furthermore it needs to be borne in mind that, contrary to a widespread misconception, insurance policies don’t cover companies against fines or the legal costs for criminal prosecutions.
All this begs the question for every organisation of just how great is the cost of a poor health and safety regime. The Health and Safety Executive recently published a Cost Calculator as an aid to discovering the true cost of health and safety incidents. It is available on their website at:
http://www.hse.gov.uk/costs/accidentcost_calc/accident_costs_intro.asp#section2
or in the form of a free leaflet.
The value of using the calculator is that it considers many costs associated with health and safety incidents that may not be immediately apparent, for example the cost of discussions, downtime, investigations, reports, visits of inspectors etc. triggered by an incident. Although such costs may not appear as discrete entries in a set of accounts, they inevitably impact the company’s bottom line. The HSE would like to receive copies of completed forms for its own records. However, whether or not you choose to share this information, it is a useful and perhaps sobering exercise for revealing the true business cost when health and safety measures fail.
To really hammer home the point, the HSE also provides a second calculator for estimating the overall annual cost of accidents to a company. This works on a number of factors including Insurance Premiums, Size of Workforce and number and types of accidents.
If you have primary responsibility for health and safety in your organisation, then when it comes to making a bid for the necessary budget, all of the above is grist for the mill, particularly in view of the escalating cost of non-compliance with Health & Safety requirements.
See Concepts for a broader perspective on Managing Health & Safety
Back to top |
SUBSCRIBE/UNSUBSCRIBE |
You can forward this mail to colleagues and associates who may be interested, but please do not make changes.
If you have received this newsletter from a colleague and would like to receive a copy directly, you can register at our website
Alternatively, you can easily subscribe, unsubscribe or change your e-mail address by sending your name and e-mail details to
subscribe@edp-uk.com
David Skews, (CEO)
|
EDP Health Safety & Environment Consultants Ltd
Lakeside, Alexandra Park, Prescot Road, St. Helens, Merseyside, UK
Telephone: +44(0)1744 766000
Back to top |
|
