1 The real costs of accidents and ill health at work
2 This leaflet: explains how expensive work accidents and ill health can be; provides a real-life example to show this; suggests simple methods to work out the potential costs to your firm; and offers advice on what you can do to stop them happening. In a transport company studied by the Health and Safety Executive, the costs of accidents were equivalent to one third of its annual profits. Taking action to improve health and safety standards, as well as required by law, is also good for your business. Accidents and ill health caused by work cost time and money. You cannot insure against all the costs arising from these and they can have a dramatic impact on your business. But you can stop them happening, saving you time and money.
3 A worker was using an unguarded drilling machine in a small engineering company employing 15 workers. The sleeve of his jumper caught on the rotating drill entangling his arm. Both bones in his lower arm were broken and he suffered extensive tissue and muscle injury. He spent 12 days in hospital undergoing major surgery and was off work for three months. On his return he was placed on administrative duties for five months and he was unable to operate machinery for eight months. The managing director was prosecuted following the incident. Costs to company Wages for injured worker over period = Loss of production/remedial work required = Overtime wages to cover lost production = Wages for replacement worker = Loss of time of manager/md = Legal expenses = 3000 Fines and court costs = Increase in Employers Liability Insurance premiums = 6000 Total cost to business = Another cost was that two employees not involved in the accident were made redundant to prevent the company from going out of business. For other examples see our website at Work-related ill health can cost over two times more than an accident causing injury.
4 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 these costs you money too often more than the immediate costs. The real cost of a minor cut is much more than the sticking plaster. What is the cost to you of the person being away from their job, even for a short time? And what about the people who help them out? What if there was a serious accident involving a key worker? Would your business cope? What would the effects be? How would it make you feel? Imagine the costs if your company was prosecuted. How would this affect your business reputation? And on top of the financial costs of such incidents, there is also the stress of having to deal with them. The smaller your business, the bigger the impact will be if you have a serious incident. It could put you out of business.
5 Insurance policies don t cover everything and may only pay for serious injuries or damage. All other costs will have to be met by you. The amount of these uninsured costs varies between businesses and the types of incident, but is several times more than the insurance costs. Insurance costs covering injury, ill health, damage Uninsured costs Lost time Extra wages, 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 Loss of business reputation Uninsured costs cannot be claimed. And a poor health and safety record may mean increased premiums or refusal of future insurance cover.
6 There are a number of steps you can take to reduce the chance of accidents and ill health happening in your business. STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 Find out what could cause harm. Identify who might be harmed including your employees, visitors or members of the public. Decide what you should do to prevent anything happening to them. Take action in a planned way, recording what you have done. Check these actions are still working from time to time. Ask for help if you need it from: your employees they can often come up with simple solutions to problems; local occupational health and safety groups; your insurance company; trade unions and safety representatives; Chambers of Commerce and Enterprise; Trade Associations; HSE or local authorities; local learning and skills councils. You can cut down on your costs by preventing accidents and ill health in the workplace. Saving on the costs of these incidents is an investment in the future of your business.
7 A good place to start is HSE s booklet Essentials of health and safety at work (ISBN X). This practical, easy-to-use guide will help you prevent workplace accidents and ill health and comply with the law without major disruption or expense. Other useful sources of advice on health and safety are given on the back page. Packed with good advice to put you on the right track and help you start planning for safety, its 19 chapters contain checklists, diagrams and photographs covering the whole range of workplace hazards. Having the basics at your fingertips couldn t be simpler! You can contact HSE s InfoLine on You can contact HSE Books on
8 Every incident and every business is different the only way to accurately know your costs is to measure them. But there are some quick ways to predict what accidents and ill health may be costing your business. The following methods can be used to estimate your average uninsured losses each year. These are costs which cannot be recovered. Because they are different methods you will get different answers but they all show what you could be losing. Method 1 As a rough guide, HSE found that, on average, the cost of uninsured losses is 10 times the cost of insurance premiums paid for the same period. Method 2 Norwich Union Risk Services estimates uninsured losses from accidents in smaller firms add up to 315 per employee per year. Method 3 Type of accident Causing absence from work 2097 Only requiring first aid 33 Damage to plant, equipment 141 etc but no one injured Total Average uninsured cost per accident No of accidents Total cost (average cost x no of accidents) Method 3 Another non-hse study worked out the average costs of different types of accidents. You can use these costs if you know how many of these different types of accidents you have each year (perhaps from looking in your accident book). Simply multiply the number of accidents by the average cost per accident. You may like to use the table (left) to record the information. These methods will not give the real cost of a serious accident, which will be much higher. To make a more accurate costing, use the Incident Cost Calculator.
9 This form can be completed electronically online at The website version also gives some example costs to help you, as well as help on completing the form. The website also has an interactive table which works out the costs of back pain and repetitive strain injury (RSI) based on work by the TUC. The form allows you to record many of the main costs relating to work accidents and ill health. The amount which can be recovered through your insurance depends on the terms and conditions of the policy you hold. Handy tips: Record the facts and associated costs as soon as possible after an incident happens, while you are investigating what went wrong. Some costs on the form may not be relevant, or only known at a later date. Others you may need to estimate. For each cost area consider all the costs involving: people; premises; plant, equipment and substances; procedures. Encourage your employees to report all incidents. The more information you know, the more accurate your costing will be. You can photocopy the Incident Cost Calculator form to use it more than once. The costs of accidents and ill health only have real meaning when related to your business. You should compare them to your overall operating costs, or annual turnover, or the added work or sales needed to cover them. You can then judge how significant they are.
10 The Incident Cost Calculator Date and time of incident Description of incident Name of person involved Dealing with incident (immediate action) First-aid treatment Taking injured person to hospital/home Making the area safe Putting out fires Immediate staff downtime (eg work activity stopped)..... Other Investigation of incident Staff time to report and investigate incident Meetings to discuss incident etc Time spent with HSE/local authority inspector Consultant s fees to assist company in investigation Other Getting back to business Assessing/rescheduling work activities Recovering work/production (including staff costs) Cleaning up site and disposal of waste, equipment, products etc. Bringing work up to standard (eg product reworking time/costs) Repairing any damage/faults Hiring or purchasing tools, equipment, plant, services etc.. Other
11 Business costs Salary costs of injured person while off work Salary costs of replacement workers Lost work time (people waiting to resume work, delays, reduced productivity, effects on other people s productivity etc)..... Overtime costs Recruitment costs for new staff Contract penalties Cancelled and/or lost orders Other Action to safeguard future business Reassuring customers Providing alternative sources of supply for customers.... Other Sanctions and penalties Compensation claim payments Solicitor s fees and legal expenses Staff time dealing with legal cases Fines and costs imposed due to criminal proceedings.... Increase in insurance premiums Other Other Total
12 Useful contacts HSE Books HSE priced and free publications are available by mail order from HSE Books, PO Box 1999, Sudbury, Suffolk CO10 2WA Tel: Fax: Website: (HSE priced publications are also available from bookshops.) HSE InfoLine For information about health and safety ring HSE s InfoLine Tel: Fax: or write to HSE Information Services, Caerphilly Business Park, Caerphilly CF83 3GG. You can also visit HSE s website: This leaflet contains notes on good practice which are not compulsory but which you may find helpful in considering what you need to do. This leaflet is part of the Revitalising Health and Safety Initiative, which has been launched by the Government and the Health and Safety Commission, because people are still dying, being injured or made ill at work. This leaflet is available in priced packs of 15 from HSE Books, ISBN Single free copies are also available from HSE Books. This publication may be freely reproduced, except for advertising, endorsement or commercial purposes. First published 03/02. Please acknowledge the source as HSE. INDG355 03/02 C4500 Printed and published by the Health and Safety Executive
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