Business Case for Health and Safety - Direct, Indirect Costs

Any accident or incidence of ill-health will cause both direct and indirect costs and possibly lead to an insured as well as uninsured cost. Direct costs are those that are directly associated with the accident. They may be insured (claims on employers and public liability insurance) or uninsured (fines, sick pay).

Direct Costs

• Fines
• Compensation payouts
• Medical costs
• Sick Pay

Indirect Costs

Indirect costs again may be insured (business loss, product or process liability) or uninsured (loss of goodwill, loss of reputation, extra overtime payments, accident investigation costs, production delays).

• Delays to production following the accident
• Personnel allocated to investigating and writing up the accident report
• Recruitment and training costs for replacement workers
• Damage to equipment and materials
• Reduction in product quality following the accident
• Reduced productivity of injured workers on light duty
• Overhead cost of spare capacity maintained in order to absorb the cost of accidents
• Lower motivation to work and workforce morale, increased absenteeism
• Loss of reputation
• Loss of goodwill
• Damage to the environment (e.g. from chemical incidents)

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