In our Series 1: Health and Safety Framework article, we discussed how maintaining a safe workplace is not only a legal responsibility but also makes good business sense. Workplace incidents carry significant economic, human, social, and organizational costs. This article will explain the importance of investing in workplace health and safety, the potential costs of workplace illness and injury, and how to mitigate these risks.
Why invest in work health and safety
Workplace accidents can result in:
- Economic costs: Medical bills, lost productivity, and increased insurance premiums.
- Human costs: Emotional trauma, pain, and suffering.
- Social costs: Impact on families, friends, and co-workers.
- Organizational costs: Damage to equipment, loss of productivity, and harm to the company’s reputation.
Proactively preventing incidents ensures a safer environment, better business outcomes, and compliance with work health and safety (WHS) laws.
Common Causes of Workplace Incidents
- Faulty work practices
- Poor housekeeping (hazards in the work area)
- Poor maintenance of plant and equipment
- Inadequate training and supervision
- Stress or judgment errors (due to fatigue, deadlines, or boredom)
- Miscellaneous conditions (weather, excessive workload, or end-of-shift fatigue)
Employers must always consider these factors and take measures to address them.
The costs of workplace illness and injury
Workplace injuries incur direct and indirect costs. Here’s a breakdown of both:
Direct Costs
Salaries and lost hours
Payments to injured employees, even when they cannot work.
Accident investigation
Costs for internal or external investigations into incidents.
First aid and medical costs
Expenses for medical treatments, training, and first aid equipment.
Rehabilitation and retraining
Helping injured employees return to work through medical treatment, retraining, or reassignment.
Damage to property and equipment
Accidents can damage expensive machinery or cause fires, electrical failures, etc.
Third-party liability
Injuries to visitors, contractors, or clients on the premises can lead to liability claims.
Increased insurance premiums
Each compensation claim can raise the cost of workers’ compensation insurance.
Legal costs
Disputed claims or lawsuits can lead to significant legal fees.
Industrial action
In some cases, incidents lead to employees refusing to work, slowing down productivity.
Indirect Costs
Loss of productivity
Injured employees may return to work at reduced capacity, and uncertainty about safety can lower morale and output.
Decrease in employee morale
Frequent accidents can erode employees’ trust in management.
Increase in absenteeism and turnover
A dangerous work environment leads to higher absenteeism and employees leaving the company.
Impaired public image
A tarnished reputation can affect customer relationships, industry standing, and recruitment efforts.
Loss of business
Reduced productivity, high turnover, and a poor reputation can cause long-term financial losses.
Implementation of corrective actions
Organisations may need to spend on new safety measures, training programs, or equipment to prevent future incidents.
Investing in health and safety can save your business significant costs and reduce the likelihood of accidents. By implementing effective safety measures, organisations ensure a safe working environment and maintain business productivity and morale.
Need help? If you’d like assistance in identifying risks or implementing health and safety measures, please contact us.