When considering why it is important to manage health and safety in an organisation, there are three main reasons; and they are from a moral, legal and financial point of view.
Morally, no organisation would ever want to see people hurt or even killed during the course of their duties. It is not acceptable that an employee, volunteer or visitor could hurt themselves as a result of an organisation’s activities. Every organisation has a ‘duty of care’ for all employees and visitors during their time in an organisation’s premises. This includes general safeguarding such as providing suitable walkways, fire emergency procedures, provision of first aid and suitable welfare facilities.
From a legal perspective, the punishment for breaching health and safety law can be severe, and could result in an unlimited fine or up to two years imprisonment. There have also been some very high compensation awards for health and safety cases in the civil courts and fines in excess of a million pounds in the criminal courts. In fact, throughout 2018/19, £54.5 million worth of fines were issued to dutyholders that were found liable to committing health and safety offences – £150,000, was the average fine per case.
When considering the financial implications; it is worth noting that any accident or incidence of ill-health caused will result in direct costs to your organisation. These are costs that directly relate to an accident, and may either be insured or uninsured.
Insured direct costs include:
- Claims on employers and public liability insurance;
- Damage to buildings, equipment or vehicles; or
- Any attributable production and/or general business loss.
Uninsured direct costs include:
- Fines resulting from prosecution by the enforcement authority;
- Sick pay;
- Some damage to product, equipment, vehicles or process not directly attributable to the accident (e.g. caused by replacement staff);
- Increases in insurance premiums resulting from the accident;
- Any compensation not covered by the insurance policy due to an excess agreed between the employer and the insurance company; or
- Legal representation following any compensation claim.
In addition to the direct costs, you will also need to be aware of the indirect or hidden costs associated with an incidence.
Because as a recent study undertaken by the Health and Safety Executive (HSE) identified, that indirect costs or hidden costs could be 36 times greater than direct costs of an accident, highlighting that the direct costs of an accident or disease represents just the tip of the iceberg when compared to the overall costs.
Indirect costs are costs that may not directly be caused by an individual accident but instead may come about from a series of accidents. Again, these costs may either be insured or uninsured.
Insured indirect costs include:
- A cumulative business loss;
- Product or process liability claims; or
- Recruitment of certain replacement staff.
Uninsured indirect costs include:
- Loss of goodwill and a poor corporate image;
- Accident investigation time and any subsequent remedial action required;
- Production delays;
- Extra overtime payments;
- Lost time for other employees, such as a First Aider, who attend to the needs of the injured person;
- The recruitment and training of most replacement staff;
- Additional administration time incurred;
- First aid provision and training; or
- Lower employee morale possibly leading to reduced productivity.
What is important to note is that some of these items, such as business loss, are likely to be either too expensive to insure or simply uninsurable. Meaning that it is important that you mitigate any health and safety risks throughout your organisation where possible, to ensure that you do not have to face the reality of fines or prosecution.
The ideal starting point to identifying your current health and safety position is to firstly undertake an audit to see how compliant your organisation is, and then supporting this with a gap analysis that will appraise your safety management systems with a view to developing a strong health and safety culture within your business.
How Pennington Choices can help…
At Pennington Choices, we have over 15 years’ of experience providing occupational health and safety services to clients of all different sizes across a range of sectors and disciplines. Our expert and qualified Health and Safety Consultants can assist you with our Health and Safety Health Check and Gap Analysis services to ensure that you are complying with The Management of Health and Safety at Work Regulations 1999.
How can I get in touch to find out more?
If you would like to find out more about our Health and Safety Health Check service or our Gap Analysis service, you can get in touch with our experts today. This can be done either via email or by calling 0800 883 0334.Back to blog