The costs associated with health and safety at the workplace, have a significant impact on the business. There are a multitude of ‘hidden costs of poor health & safety’ that many forget to consider.

HSE statistics reveal the human and financial ‘cost of poor health & safety’ as

Each year:

• Millions of working days are lost due to work-related illness and injury.
• Thousands of people die from occupational diseases.
• Around a million workers self-report suffering from a work-related illness.
• Several hundred thousand workers are injured at work.
• A worker is fatally injured almost every working day.

Organizations can incur further costs – such as uninsured losses and loss of reputation.

The total cost of workplace injuries amounts to billions of dollars every year. 

Direct and Indirect (Hidden) Costs

The two types of costs usually associated with workplace injuries are direct and indirect costs. 

Direct Costs / Insured Costs 

The direct costs are usually visible and more obvious. 

Direct costs of workplace injuries are also considered insured costs which are covered by workers’ compensation insurance.

Indirect Costs / Hidden Costs

Hidden costs refer to longer-term impacts on the business due to unsafe work environments, even before an accident or incident occurs. Hidden costs are usually uninsured and viewed as additional costs associated with injuries.

Some of these hidden costs are:

• Delays of projects and schedules
• Equipment damage
• Investigation of actions and implementation to correct them
• Cost of other government benefits required by injured workers
• Loss of skilled workers

It’s no secret that hidden costs are mainly emerging due to poor Health & Safety in the workplace and are far higher than direct costs. It is important to note that many estimates have described indirect costs to be much greater than direct costs. Estimates put indirect costs at 4-6 times that of direct costs.

Moreover, unlike direct costs which are usually insured, hidden costs are usually paid for by the company’s checkbook and are more likely to impact the company’s bottom line.

Here are some examples of the direct and hidden costs of injuries:

Direct Costs

• Medical bills: The average ranges from $1,000-$20,000.
• Injured employee’s lost-time wages:  about 50%-60% of wages of work time lost by the injured employee. 
• Case management expenses:  cost associated with managing the case and workers’ compensation.
• Disability settlement:  usually covered by workers’ compensation.

Hidden Costs of Poor Health & Safety

• Lost productivity: A workplace is bound to witness a loss in productivity after an injury. This usually results from a halt in the activities of the injured worker. In some cases, co-workers may have to temporarily halt their tasks to provide aid to the injured person.

• Training costs: The Company may have to train another person to perform the tasks of the injured employee if they must take time off due to their injury. The cost of training may be higher if a new hire or temporary employee is used to fill the role.

• Hiring costs: The company may have to hire another worker if the injured person is going to be away from work for an extended period.

• Incident investigation: It takes a team of people to thoroughly investigate an incident. This cost is associated with the wages of that team and the disruption of their regular duties.

• Legal fees: The severity of the injury may warrant a lawsuit. Legal expenses will be incurred irrespective of the outcome of the litigation.

• Property damage: The cost of repairing or replacing any damaged property or equipment resulting from the incident.
• Loss of Time And Resources

An accident or incident can cost a business greatly in time even months and years after the initial incident. 

Some examples of lost time include;

• Legal cases – which can take years to resolve
• Lost working days – on average; 9.1 working days are lost for injuries, 19.8 for ill health, 23.8 for stress, depression, and anxiety 
• Time spent sourcing and training cover or replacements.
• In some countries, such as the UK, individuals within the company can be given a jail sentence, removing someone from a crucial position and not to mention the negative PR.
• Delays to projects/work due to investigations or stop-work orders
• General workplace disruption
• Employee morale: A workplace injury could dampen employee morale and negatively impact employee engagement. Poor health & safety at the workplace, whether an incident has occurred as a result or not, has proven to lower levels of employee morale and ultimately, productivity. The company is likely to notice a rise in employee sick leave and a high turnover of staff. Not only are there high costs involved in turnover, but extra time and resources are spent on training and transitioning new employees.
• Damaged reputation: The severity of the workplace incident may damage the company’s reputation in the sense that it may be viewed as unsafe for poor health & safety at the workplace. This may affect the company’s potential to attract or retain workers or customers. News of an incident can quickly spread amongst the industry and can lead to a loss of customers, clients, investors, and partners. 

Not only the costs to rectify the situation be huge, but in many cases the damage is already done. Existing clients and partners are unlikely to want to associate themselves with your business and potential clients will simply look elsewhere.

A poor safety record will also make it difficult to hire quality staff who expect a certain level of care from the company they work for.

There is no doubt that injuries due to poor health & safety at the workplace can be very costly and impact a company’s bottom line. 

Alternatively, workplaces rated as good places to work have more satisfied and productive employees. Their employees, are more committed to the business’ goals and produce higher-quality products and services.

 For top-level Industrial Health safety courses, more advice or any personalized information get in touch with us 

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Tag: Health & Safety