How much is investing in health and safety worth?


The perennial question, especially from the accountants. What they really want to know is will the investment into safety return anything, or is it a pointless cost. So we need to find some way to measure the cost of the outcomes of an accident, and then we can justify the investment. The costs of an accident can be measured in direct and indirect costs.

Direct Cost

1.      For the injured person, there is almost always pain and suffering endured.

2.      Depending on the company, sick time, compensation time, etc, the worker may experience a loss of income.

3.      If the injury or illness is serious enough, there is a real possibility that the worker may lose their job.

4.      Doctor and hospital or medical bills are sure to be of major concern to both the worker and employee.

Indirect Cost

1.      Suffering endured by the workers family.

2.      The employer will likely pay for missed work days. Work is not performed but yet the employer has paid for it.

3.      Compensation payments and medical expenses.

4.      Lower moral or negative attitudes by other workers.

5.      Loss in productivity.

6.      Machinery repair or replacement costs.

7.      Retraining or replacing workers.

The indirect costs are more difficult to measure, but estimates range from being 0.5-20 times the direct costs.

The other safety costs

The Department of Labour have put together a more detailed table on these costs, including the tangible and intangible costs.

Once you have a working safety system that is being invested into, they key is to continue the investment and maintain a sense of concern about the possibility of a safety accident. Here’s the tricky part though; the aim of safety programs is to prevent nothing occurring – no safety accident. If nothing happens it can be easy for a cost-cutting accountant to then suggest reducing the safety investment! And so the wheel turns.

To fight this threat, continue to report the cost of accidents within your business and your industry.