Health and safety breaches cost SMEs dearly

Small and medium businesses undercutting their health and safety efforts could face fines more than double the average cost of compliance. SMEs typically spend under £50,000 on compliance, and while average fines are over £60,000 more than that, the risk is especially pronounced in the utilities sector, where the average fine is more than £200,000.

Despite the potential consequences, many businesses are continuing to breach guidelines, resulting in avoidable life-threatening incidents. According to Robert Winsloe, Managing Director at Arinite, this may be because some firms – particularly SMEs – feel their budget restricts their ability to provide a full health and safety policy. However, he warned that being fined would be “a much bigger financial hit.”

Winsloe’s comments came in response to a study from Arinite, which found that in 2020, there were 224 cases of breaches against various health and safety regulations, resulting in fines and guilty verdicts. The services industry was the biggest offender, with 80.6% more fines handed to the sector in 2020 than in 2016, while the average fine rose from £96,828 to £140,768.

At the same time, the utilities sector saw the number of fines meted out double over the same period. The industry saw its average fine decrease by 49.7% to £206,000, and the spike in breaches suggests firms are taking the figure less seriously than before.

While SMEs might feel like they can take their chances in this way, though, Arinite found that the savings from undercutting health and safety did not come close to justifying the potential financial implications of slacking on compliance. The researchers estimated the average cost of health and safety compliance for an SME is £44,214 – or £62,770 less than the average fine of all combined industries. In the case of an SME operating in the utilities sector, that proportion is even worse, with SMEs caught out on compliance there facing an extra £161,786 in costs.

Winsloe added, “Failing to implement health and safety regulations can be devastating for companies. Not only could you face hefty fines or even a prison sentence, but you could also be putting your staff members at risk of fatal injuries.”

Aside from the ethical impacts of failing to meet health and safety obligations to employees, and the immediate financial punishments, there are also long-term shockwaves such behaviour causes, within firms and society at large. Between 2019 and 2020, there were an estimated 38.8 million working days lost due to work-related ill health and non-fatal workplace injuries. This decreases productivity across the workforce of a company, and output of the national economy. 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.