All businesses are responsible for developing and following a health and safety policy to keep employees and the public out of danger. It’s also a legal requirement under the Health and Safety at Work Act 1974 (HSWA) and other relevant acts. However, some companies fail to comply with this legislation to avoid paying health and safety costs.
Being found guilty of breaching the regulation can cost far more than it would to comply, as you could face staggering fines, legal costs, compensation, sick pay, and more. Health and safety fines alone can cost £62,770 more than the cost of compliance for an SME.
On top of this, negligent health and safety management can result in accidents, detrimental effects to the firm’s reputation, and even imprisonment.
Health and safety consultancy Arinite has researched the average cost of breach fines in the UK and how many occurred during 2020. This data was then compared against 2016 figures and the cost of compliance.
The total cost of fines distributed for health and safety breaches in 2020 amounted to £23,964,364, which has decreased by 26% since 2016. However, some of the industries involved have seen an increase in cases.
The services industry had the largest total fine, with £7,883,010, a staggering 162.6% increase from 2016. Whereas the manufacturing sector’s fine total saw a 54.2% dip over four years, it was still the second-highest with £7,697,175.
After racking up £6,438,311 worth of total fines, the construction industry had the third largest amount, a 33.4% increase from 2016.
Reduction in fines for agriculture and utility sectors
However, some industries did see dramatic decreases in fines. The agriculture sector’s total amount had dropped by 78.1%, hitting £91,867. The utility industry also saw a huge drop in fines by 74.9%, amounting to £1,854,000.
How has the average fine changed?
The average fine across all industries has decreased from £115,440 in 2016, to £106,984 in 2020. The number of fines has also reduced by 20.3%, from 281 to 224. Contrary to this, some industries have seen a significant rise in the average cost of a breach.
Following the significant surge in total fines, the services industry’s average fine has risen from £96,828 to £140,768. The number of fines handed out to service based businesses has also increased by 80.6%.
Although the number of fines within the manufacturing industry was just over a third of the amount in 2016, the average fine increased from £112,111 to £139,949, which accounts for the sector’s high overall charge.
The construction industry’s average fine also climbed from £74,231 to £112,953, despite the number of fines slightly decreasing since 2016.
Which fines have decreased?
The agriculture industry has the lowest average fine, of £10,207, which has lowered from £24, 720 since 2016. This charge is likely due to the low number of cases in this field.
Although the utility industry has the largest average fine, of £206,000, it has been nearly halved since 2016, when it was a whopping £409,729, and the number of fines was double.
HSE Prison sentences
Accounting for almost half of the overall total fines, the construction and services industries were also responsible for 52.6% and 36.8% of the prison sentences for HSE cases in 2020.
The most significant HSE prosecutions of 2020
Leadec Limited was fined £2,000,000 and ordered to pay £30,000 in costs after pleading guilty to breaching Section 2 (1) of the HSWA. The investigation occurred after a worker suffered a fatal injury whilst cleaning waste-water pipes. The specialist industrial services company, based in Warwick, was found to have recognised the risks of operating high-pressure water jetting equipment but had failed to put in place the appropriate measures to mitigate the risk.
A relocation and refurbishment company was found guilty of breaching Section 3 (1) of the HSWA after a worker fell from height and became seriously injured. Modus Workspace Limited was fined £1,100,000 and ordered to pay costs of £68,116.18. The investigation found that the London-based business had failed to ensure those not in their employment were not exposed to risks.
Wilson James Limited, a construction logistics provider, was fined £850,000 and instructed to pay £11,750 in costs, after pleading guilty to a breach of Section 2 (1) of HSWA. This fine followed an incident where a traffic marshal was fatally injured by a reversing lorry. The investigation found that the Essex firm had failed to identify and manage the risks involved and put a safe system of work in place.
Cost of workplace injuries and ill-health in Britain
HSE revealed that between 2017/18 and 2019/20, an average of 610,000 workers were injured in workplace accidents. Another 559,000 workers suffered a new case of ill health, which they believed to be caused or worsened by their work.
In 2018/19, the total costs of workplace self-reported injuries and ill health was £16.2 billion, with employers bearing £3.2 billion of this amount. Ill health accounted for 66% of this cost, with injuries contributing 34%, due to it causing more time off.
Across 2019/20, there was an estimate of 38.8 million working days lost due to work-related ill health and non-fatal workplace injuries. Stress, depression, or anxiety accounted for 17.9 million days lost due to work-related ill health, and musculoskeletal disorders caused 8.9 million days.
The cost of compliance
The cost of compliance is far lower than the average fine. Analysts at Arinite studied HSE data on the expense required for the average company to meet health and safety guidelines, factoring in inflation since the study was published.
Yearly health and safety costs for an SME equal an average of £44,214, or £62,770 less than the average breach fine in 2020 of £106,984. For a small business with fewer than 50 staff, the yearly cost of compliance decreases to an average of £6,687, a huge £100,297 less than the average fine.
How can businesses comply with health and safety regulations?
To fulfil your duty of care as an employer and avoid facing these fiscal and litigation consequences, you need to complete specific tasks, including:
- Creating a health and safety policy
- Conducting risk assessment
- Consulting your workers on health and safety
- Providing safety training
If your business has five or more employees, you’ll need to appoint a health and safety competent person, which could be yourself, an existing employee, or a third-party company, such as Arinite.
The various costs associated with breaching health and safety laws can have an ongoing financial impact on your business. By complying with the relevant regulations, you can lower your outgoing costs, protect your business’s image, and provide a safe work environment.