Menu
Costs of a poor Health & Safety culture
Organisations with effective HSE management systems tend to perform more successfully, this is reflected in some of world’s most profitable organisations. The also earn the confidence of their key stakeholders.
What would you do if a serious accident occurred involving a key worker ?
- How would your business cope ?
- What would the effects be ?
- How would you counteract and manage these effects ?
Insurance policies don’t cover everything and may only pay for serious injuries or damage. All other costs will have to be met by the business. Just imagine the costs if your company was prosecuted…..
Now, let’s look at what these costs could be…..Direct costs are easy to calculate and often insurable by business.
Indirect costs are the ones that you need to seriously take into consideration and be aware of. They are harder to calculate and prepare for and tend to be uninsured. They include:
- Lost time or time away from the job not covered by workers’ compensation insurance
- Extra wages including overtime working, temporary labour and training, payment to other workers who were not injured, for example those who stopped work to look after or help the injured worker and those who require output from the injured in order to complete their tasks
- Sick pay
- Production delay and the cost of overtime imposed by the accident (lost production, additional supervision, and additional heat, light, etc.)
- Fines from enforcing bodies or courts
- Loss of contracts or inability to fulfil contracts
- Legal costs either direct to courts or to Legal Advisors
- Damage to products, plant, buildings, tools, equipment
- Clearing the site after any incident
- Management time spent caring for the injured, investigating the accident, and supervising the activities necessary to resume the operation of business: Subsequent drop in productivity of the management team
- Excess on any insurance claim/s
- Loss of business reputation
- Loss of expertise and experience
- Costs brought about from any enforcement action following the accident such as prosecution fines and costs of imposed remedial works
In addition, the UAE has local (Emirate or Zone specific) and Federal Health and Safety laws in place. Failure to comply with any of these statutory HSE requirements may result in:
- Criminal sanctions, the police will conduct a formal investigation into an incident and retain the passports of any employees they consider responsible for the incident. If referred to the public prosecutor and then criminal court, a minimum penalty of at least one year’s imprisonment and a fine may be imposed
- Civil compensatory damages, subject to the nature and severity of the incident
- Contractual liability
- Liability to pay blood money (Diya) Where there is a fatality at work in addition to statutory compensation – under UAE law equivalent to 24 months’ basic salary at the time of death (Article 149 of UAE Labour Law) and/or civil compensatory damages
- Negative publicity which can impact upon the ability to retain and recruit staff, brand recognition, and attainment of new business and future revenue
Ministry of Labour Inspectors can enter and inspect workplaces at any time without prior notice and impose any measures aimed at averting any danger or risk to employees. They may also levy fines or rectification notices on companies for breaches of these requirements, regardless of whether a workplace accident has actually occurred or not.
In addition to supporting clients in managing their legal obligations and risk, Corporate OHS also offers crisis management and business continuity services.