The cost of health and safety compliance

Consultancy firm Entec UK Ltd questioned around 2,000 businesses across the country from various sectors to investigate the costs of compliance with health and safety regulations across different sizes of organisation.

Unsurprisingly, the study found that small firms (those with less than 50 employees) spent the least amount on average each year on compliance - just over £4,000. This compared to over £27,000 for medium sized companies (50 - 249 employees), almost £420,000 for large organisations (250 - 4,999 employees) and £630,000 for very large organisations (over 5,000 workers).

However, further analysis revealed that the cost of compliance with health and safety regulations per employee was much higher for small and medium sized companies compared with larger firms.

Small firms spend just under £150 per worker and medium sized companies just over £166, whereas the cost per employee is only £20 for large firms and slightly less than £20 for very large businesses.

The figures suggest that the cost of compliance per employee for small firms is 7.5 times higher than that for large companies.

Specific regulations

The study, carried out on behalf of the Health and Safety Executive, also showed that for certain regulations the cost of compliance per employee in small firms was even greater.

On average, small firms spend 66 times more per employee each year in order to comply with the Manual Handling Regulations and 25 times more on the Noise at Work Regulations.

The research report said that one possible explanation for the huge difference in spending on manual handling was the capital costs of procuring equipment to comply with these regulations and the fact that the money spent was "easier to recall than the costs of the amount of time invested."

The differences were much less significant for both the Control of Substances Hazardous to Health (COSHH) and Management of Health and Safety at Work Regulations, with the cost per employee at small firms being around 5 times more than large businesses for both.

Site visits

As part of the study the researchers also made a series of site visits to investigate what businesses were spending their money on in order to comply with health and safety regulations and whether the benefits outweighed the costs.

Small, medium and larger organisation all said training was the main aspect of expenditure. Other aspects mentioned most often were personal protective clothing and safety equipment, modifications to machinery and consultancy.

Of the organisations visited, 60% reported that the benefits of implementing health and safety systems had outweighed the costs. Only 24% said that the costs and benefits had "broken even" and 10% said it was "too early to say". Just 3% stated that the costs outweighed the benefits, while another 3% "did not know".

Interestingly both small and large organisations were more likely to report that benefits had outweighed costs (72% and 75%, respectively) compared to medium organisations (47%).

However, despite these findings the researchers found that "very few organisations actually measure the impact of their activities and therefore have very little information on which to base an assessment of the costs and benefits of this activity."

Other findings

The wide-ranging study also quizzed large and small firms on several other interesting aspects of health and safety.

For example, it found that the main motivators underlying the development of health and safety systems were legal obligation - particularly in larger organisations - health and safety publicity - particularly in SMEs - and requirements from other existing internal systems and procedures.

The main frustrations, when establishing health and safety systems, for newly established organisations were reported as time restrictions, cost, lack of knowledge/skill and lack of information and guidance. A third reported no frustrations when setting up health and safety systems.

The study also found that larger organisations preferred Internet based sources of information, compared with a preference for paper based information among SMEs.

Overall, over two thirds of organisations had formal health and safety systems in place with the proportion greater for large organisations than SMEs. The majority of organisations record accidents, fewer record ill-health and again larger organisations were more likely to record accidents and ill-health than SMEs.

Report recommendations

The report concluded: "Further guidance and advice is required for all organisations, but especially SMEs, on new regulations that are relevant to them, setting performance targets for health and safety, and evaluating the effectiveness of specific activities and their impact on these targets.

"Additional guidance, regarding measurement of health and safety performance, is required by all organisations to allow them to demonstrate the benefit of compliance with regulation.

"This should allow performance to be determined without the necessity for the occurrence of accidents."

A full copy of the report "Costs of compliance with health and safety regulations in SME's" is available to download from the HSE website - see link above/right.

Angie Bell