How high are the indirect costs of a workplace accident for the employer?

In 2022, there were according to the German Social Accident Insurance 960,700 reportable accidents in Germany. This figure consists of  787,412 reportable workplace accidents and 173,288 commuting accidents. It also shows that despite a slight decline in workplace accidents – cf. 885,009 accidents in 2012 vs. 787,412 in 2022 – the figures remain relatively constant at the same high level from a statistical perspective. This is reason enough for Shoes For Crews to take a closer look at the topic. In today’s article, we therefore explore when an accident qualifies as a workplace or commuting accident and what is meant by direct and indirect costs for the employer. 

Workplace and commuting accidents

Workplace accidents are accidents suffered by insured persons as a result of their insured activity. Statutory accident insurance provides protection while carrying out these activities. This insurance also covers commuting accidents that insured persons may suffer on their way to or from work. Detours are also covered if they are necessary, for example:

• to arrange childcare during working hours
• when carpooling
• due to diversions
• because the workplace can be reached more quickly via a longer route

No insurance cover applies if injuries or damage to health occur accidentally during the insured activity without external influence. For example, if a child suddenly gets a nosebleed at after-school care or an employee suffers a heart attack at their desk. That covers the definitions; based on this, we can now turn to the possible consequential costs.

Costs of a workplace accident

A workplace accident initially causes harm to the health of employed staff. In addition, it causes financial damage for the employer. Direct costs are those covered by accident insurance, while indirect costs are those that are not covered. Here is an example for illustration: 

• Direct costs: hospital stay, transport, medication, therapies
• Indirect costs: property damage, additional work, extra tasks, loss of materials/orders, reputation

Consequently, costs are referred to as indirect when tools, machinery or other equipment are damaged in an accident. Property damage has occurred because the affected tools and work equipment must be replaced or repaired. Additional work and extra tasks will be necessary to replace employees affected by the workplace accident; this also includes overtime for the remaining staff. A workplace accident can also cause costs because certain delivery deadlines may not be met due to the absence of staff. In the worst case, this can lead not only to a loss of materials and/or orders, but also damage the company’s reputation among customers. In addition, the employers’ liability insurance association may increase its contribution payments for your company if it is obliged to make payments due to prolonged staff injuries. “A typical increase of five percent is already enough to result in several hundred euros in additional costs per year.” Learn more about estimated flat-rate and actual indirect costs in the following section.

Indirect costs

The actual indirect costs of a workplace accident depend heavily on the size of the business and the type of industry. “Many companies calculate a flat rate of €500 per day caused by a workplace accident. This certainly does not underestimate the costs. Chambers of skilled crafts have concluded that small businesses should calculate at least €200 per day and larger companies rather €400 per accident day. The average total costs of a workplace accident were calculated by the Austrian General Accident Insurance Institution and amount to €2,300 per accident. Since we are discussing indirect costs for the business here, these figures can also be applied to German companies. There is therefore no doubt that investing in preventive measures pays off – naturally to protect employees’ health, but also from a financial perspective.

Costs and benefits of preventive measures 

The costs and benefits of investing in preventive measures are summarised as the Return on Prevention (ROP) , the ratio of prevention benefits to prevention costs. Between 2006 and 2008, a research project on “the prevention balance from a theoretical and empirical perspective” was conducted under the direction of Prof. Dr. Dietmar Bräunig at Justus Liebig University Giessen. We have summarised the study’s findings for you:

• The influence of occupational health and safety is rated highest in the company areas of production, transport and storage. 
• The greatest effects of occupational health and safety within the company are stated as follows: reducing hazards, increasing employees’ awareness of hazards, reducing unsafe behaviour, reducing the number of workplace accidents, improving the company’s public image, improving company culture and reducing absence times.
• Expenditure on occupational health and safety represents investments that, in the opinion of the respondents, “pay off” for companies. The Return on Prevention (ROP) is 2.2.

The final point in particular is of special interest to us. An ROP of 2.2 for companies means that, for every euro invested in occupational safety measures, €2.20 is saved in the long term. This clearly shows that investment is worthwhile for companies, and we at Shoes For Crews are here to support you. With our diverse range of safety and work shoes, we offer the right solution for every industry. Curious about our range? Then feel free to contact us at any time.