The Direct and Indirect Costs of a Workplace Accident

The International Labour Organization estimates that every year, 2.3 million workers get injuries in the workplace. While some of these injuries are relatively minor, others can cause long-term damage, leading to extended absences from work and, in some cases, permanent disability. 

When an accident occurs at work, it affects not just the victim but also their family. Workplace accidents may also have major dire consequences for the business in the form of direct and indirect expenses.

Injuries can also lead to indirect costs for businesses, such as damage to property, increased insurance premiums, and decreased worker productivity.

In this guide, you will learn about the direct and indirect costs of workplace accidents. Moreover, we will also discuss the steps that may be taken by companies to reduce the probability of workplace accidents and the expenditures that result from them.

Explanation of Direct and Indirect Costs of Workplace Accidents

Direct Costs of Workplace Accidents

The direct costs of workplace accidents refer to the materials, labor, and time costs directly related to the workplace accident. The direct costs of workplace accidents are directly related to the accident and must be taken into account when considering the amount of compensation that the company is required to pay to the employee. 

Indirect Costs of Workplace Accidents

The extra uninsured expenses related to an accident are all considered indirect costs. We may classify these expenditures as either fixed or variable.

Fixed costs are those that are not changed by the accident. These include the cost of insurance, legal fees, and the cost of equipment or machinery. Variable costs are those that can vary by accident. These expenses include the expense of medical treatment, lost productivity, and reputation loss.

Examples of Indirect Costs

The Expense of Conducting an Accident Investigation

Accident investigations can be expensive, and they can take months to complete. The findings of the investigation can lead to new policies and procedures, which can then result in new costs. The investigation can also involve the hiring of outside consultants or specialists.

An inquiry into a workplace accident or incident may help find out what went wrong and what to do to stop similar accidents from happening to other employees in the future.

Costs to Replace or Repair Damaged Items

In some cases, accidents result in damage to property or equipment. These might include damaged vehicles or property, downed or damaged power lines, or broken windows. After an accident, it's necessary to repair the property or equipment. 

Training Expenses

Training costs can go up to train a new employee in case a trained and experienced worker is injured. 

Onboarding a new employee is another form of training. Onboarding is the process of getting a new employee familiar with the company culture, the workplace, the job, and any policies. For example, a new employee will have to be trained on company policies that govern safety.

Emotional Cost of an Injury

The emotional costs of an injury can be compounded, especially when an employee is injured on the job.

Negative feelings such as anger, frustration, sadness, and anxiety can lead to stress and mental health issues that can affect the performance of an employee and the productivity of the workplace. 

Workplace Accidents: What You Can Do to Prevent Them

Keeping a safe workplace of hazards is crucial for both worker safety and productivity. Fortunately, you may employ a variety of methods to reduce the likelihood of accidents occurring on the job.

Some of the best solutions and methods for preventing slips, trips, and falls include:

  • Make sure that there are no slippery surfaces on the floor.
  • Provide handrails on surfaces that are slippery.
  • Provide workers with the proper equipment to complete the work safely.
  • Provide workers with proper training that complements workplace safety standards.
  • Use proper safety equipment.

A really effective way to reduce hazards and in turn, workplace accidents, is to conduct internal auditing.

Here’s How JESI Can Help You to Reduce Workplace Accidents Risks and the Cost Associated With It

Injuries at work are a problem for everyone, but they are especially a problem for businesses. 

However, the real challenge lies in identifying the areas where the companies are most vulnerable to accidents and getting the right solutions in place. The correct use of technology can help eliminate or reduce some of the most common hazards found in workplaces.

In this technology era, businesses are using advanced technology to significantly reduce the risk of workplace accidents. 

JESI provides all-in-one worker safety solutions. By eliminating manual review procedures, JESI's Digitized Risk Assessments help businesses save up to 1000 hours annually. 

Downer, the industry-leading supplier of integrated services in Australia relied on a cumbersome and unreliable paper-based approach for its Journey Management operations.

As a result of using the JESI system, Downer was able to better manage its real-time operations, lower the number of vehicle accidents, and speed up the responses of its domestic workers.  

You can request a free demo of the JESI by clicking here


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