SMEs Breaching Health and Safety Law Risk Fines 142% Higher than Compliance Costs

SMEs that defy health and safety regulations could face a fine 142% higher than the yearly cost of complying with the measures, according to research. 

Analysts at health and safety consultancy Arinite revealed the average health and safety breach fine during 2020 was £106,984, versus an average yearly cost of £44,214 for an SME to meet guidelines.

The total cost of fines distributed for health and safety breaches in 2020 amounted to £23,964,364, with construction, services and manufacturing industries seeing increased fines.

Robert Winsloe, Managing Director at Arinite, said: “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.”

In 2020, there were 224 cases of breaches against various health and safety regulations, resulting in fines and guilty verdicts.

Robert continued: “Despite the potential consequences, many businesses are continuing to breach guidelines, resulting in avoidable life-threatening incidents.

“Some firms may feel their budget restricts their ability to provide a full health and safety policy but being fined would be a much bigger financial hit.”

The services industry has seen the largest actual increase in average fine, rising from £96,828 in 2016 to £140,768. The HSE also handed out 80.6% more fines to service companies. 

The construction industry’s average fine climbed by 52.2%, from £74,231 to £112,953, despite the number of fines slightly decreasing since 2016.

The construction and services industries were also responsible for 52.6% and 36.8% of the prison sentences for HSE cases in 2020.

The manufacturing industry received just over a third of the fines given in 2016. However, the average fine increased from £112,111 to £129,949.

The utility industry had the largest average total fine of £206,000, which had decreased by 49.7% since 2016 when it was a whopping £409,729, and there were double the number of fines. 

In comparison, the agriculture industry has the lowest average fine, of £10,207, which has lowered from £24,720 since 2016.

Robert added: “To fulfil your duty of care as an employer and avoid facing fiscal and litigation risks, you must create a health and safety policy and conduct risk assessments.

“It’s also vital to provide safety training for staff and inform them of any risks in the workplace and how you’re addressing the issues.

“If your business has five or more employees, you’ll need to appoint a health and safety competent person too. You can nominate yourself, an existing employee, or a third-party company.”

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.

The analysts found that 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.

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 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.

Author: Editorial Team

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