Health and safety should be top priority for every organisation, but what happens when a workplace accident occurs? We spoke to Mike Verheyen, Head of Health, Safety and Environment (HSE) at Winc about some of the direct and hidden costs associated with workplace injury and illness.
The most common workplace injuries are musculoskeletal, and direct costs such as workers compensation claims and legal fees are just the tip of the iceberg. In fact, indirect costs are estimated to equal up to 10 times greater than direct costs.1 From 2017-2018, more than 100,000 serious workplace injury claims were recorded in Australia, averaging $11,300 in compensations for each claim paid.2 Mike takes us through some of the costs we don’t often consider.
Lost productivity and potential output
“Following a workplace incident, productivity and output will be disrupted until the injured employee can return to work or a replacement is found,” says Mike. While workers suffer the consequences of injury, employers face decreased output, the cost of which is sometimes difficult to estimate. According to Safe Work Australia, lost productivity is measured using human capital (lost wages in the long term) and the frictional method (costs of lost production in the short term).2
Loss of current and future earnings
Loss of earnings is a major factor in workplace injury and illness claims. “If an employee’s physical capacity to perform their work duties is impeded due to workplace negligence, employers have a legal obligation to provide financial support,” says Mike.
Education and compliance costs
Education and compliance costs are associated with the steps that follow, including reviewing, refining and changing processes, buying new equipment, redesigning areas and so on. “Sometimes people don’t consider the time and energy spent on investigating, refreshing, re-educating, understanding and checking that processes are being followed through. This cost is to ensure the organisation has a safety culture that works and to prevent further injuries,” says Mike.
Reputational costs
Reputational costs are perhaps the trickiest to place in terms of monetary value and the hardest hitting. “Reputation is a company’s most precious commodity. It impacts what customers and your people think of the business and can therefore affect your ability to hire talent or your bottom line. Customers want to purchase products and services from companies who value safety and have the correct processes in place,” says Mike.
Our Health, Hygiene and Safety (HHS) specialists are ready to support with a virtual site survey. Health, Hygiene and Safety Surveys are currently only available to existing select customers located within metropolitan areas. Applications for a survey will be assessed on a case-by-case basis. For more information or to register your interest visit Winc Health, Hygiene and Safety Surveys today.
“If an employee’s physical capacity to perform their work duties is impeded due to workplace negligence, employers have a legal obligation to provide financial support,” says Mike.
References:
1Southall, A., 2018, ‘Reputation Management 101: How a Workplace Accident Can Ruin Your Warehouse Or Distribution Business Today’, <http://safety.southalls.com/blog/2018/05/24/reputation-management-warehousing-distribution>
2Safe Work Australia, 2015, ‘The Cost of Work-related Injury and Illness for Australian Employers, Workers and the Community: 2012–13’, <https://www.safeworkaustralia.gov.au/system/files/documents/1702/cost-of-work-related-injury-and-disease-2012-13.docx.pdf>
