SMEs and Health & Safety
Tom Papworth
SMEs and Health & Safety Tom Papworth
SMEs and Health & Safety
About the author Tom Papworth is Associate Director for Economic Policy at CentreForum. He holds degrees from the Universities of London and Kent and has over 15 years public policy and research experience, having worked for Government, the private sector, policy institutes and membership organisations. He is the author of ‘The path to IPO: funding SME jobs and growth’ and ‘The business case for immigration reform’.
Acknowledgements CentreForum would like to thank all those within small and medium sized enterprises who took the time to complete our survey, and in particular to the seven people who participated in telephone interviews. Without their help this report would not have been possible. We are also grateful to the Confederation of British Industry and the Health and Safety Executive for their help in promoting our survey, and to St John Ambulance for sponsoring this project.
isbn: 978-1-909274-23-5 Published February 2015 CentreForum This work is licensed under a Creative Commons Attribution-NonCommercialShareAlike 4.0 International License. For more information visit creativecommons.org
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:: Contents
Foreword
4
Introduction
5
1: Small businesses and health and safety – an overview
7
2: Review of literature on regulatory compliance
13
3: Survey of SMEs’ compliance with health and safety regulations
21
4: Qualitative evidence of SMEs’ views of health and safety
30
Conclusion
34
Annex I: Survey methodology
39
Annex II: Survey questions
42
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:: Foreword SMEs are the engine room of economic growth. They are critical to the UK’s future prosperity. It is important to strike the right balance between regulations necessary to protect society and the ability of SMEs to function effectively. Health and safety is an area where that balance is especially sharp. Losing a valuable employee can have a disproportionate effect on small organisations. Good health and safety is good business. In the last few years there have been a number of changes in health and safety regulations, as successive Governments seek to find the sweet spot enabling organisations to operate safely and effectively. Each change has to be understood, and that is easier for large organisations with dedicated health and safety departments than for SMEs, who turn to trusted third parties such as St John Ambulance for guidance through the new regulatory landscape. Now that the changes following the implementation of the Lofstedt report have had some time to settle down, we wanted to better understand whether SMEs feel that the new regulations are working for them. Is the balance right? What support should be provided in the future? The findings of this paper are in many ways encouraging. They indicate broad support for health and safety regulations. SMEs recognise the value of a workforce that is kept safe. The considerable amount of work that has gone into making the regulations easily understood has clearly paid off. There is more that can be done to clarify matters and this report sets out useful recommendations. I am sure that this research will be much valued by health and safety policy makers and by those who offer training, advice and other support to the SME community. Sue Killen Chief Executive, St John Ambulance
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:: Introduction Health and safety regulations are frequently ridiculed. Examples of a customer at a pub being told he could not carry his own drinks to his table, a charity shop refusing to sell knitting needles, and an airline passenger being told to stop sucking a boiled sweet are all painfully familiar.1 The author recalls with some irritation being told by a railway employee that he was not allowed to take his just-purchased coffee away from the refreshment counter without putting it in a bag, because (allegedly) of health and safety rules. Yet attempting to create a safer and healthier working environment is clearly a laudable aim. Forty years after the Health and Safety at Work Act, the UK is one of the safest places in the world to work,2 with workplace fatalities following a downward trajectory.3 For the most part, frustration with the regime appears to result from officious bureaucrats making overly-cautious interpretations of the legislation.4 But excessively drafted or applied regulations have a real cost, and those costs fall most heavily on smaller companies. The Health and Safety Executive estimates that, on average, firms spend £200 per employee per annum complying with health and safety regulations.5 However, the Better Regulation Task Force has noted that smaller companies face higher regulatory compliance costs than their larger competitors.6 The Prime Minister views these smaller firms as “the lifeblood of our economy” and has pledged to reduce the regulatory burden they face.7 Pulling in the opposite direction are concerns that small and medium
1 2 3 4 5 6 7
Such stories are commonplace though these were all taken from a single newspaper article. “Health And Safety Gone Mad: Bans On Yo-Yos, Knitting Needles Branded ‘Silly’ By Executive”, Huffington Post, 24 December 2012. Health and Safety Executive website, downloaded 15 September 2014, www.hse.gov.uk/aboutus/index.htm. www.hse.gov.uk/statistics/fatals.htm “Health and safety ridiculed because over zealous officials are using it as an excuse, historian says”, Daily Telegraph, 1 August 2013. HSE, ‘Work and Enterprise Panel 2: Business survey’, 2007. ‘Costs of compliance with H&S regulations in SMEs’, HSE, 2003. “Cameron: Small businesses are ‘lifeblood’ of UK economy”, BBC News, 27 January 2014, www.bbc.co.uk/news/ business-25909235.
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enterprises (SMEs) may not be adequately compliant.8 14.4 million people work in SMEs and it is therefore important that their employers are able to ensure that their working environment is both safe and healthy. What is more, what falls under the health and safety rubric is enormously diverse, from the correct posture when working at a desk to rules for working at heights; from handling heavy objects to handling dangerous chemicals; from the correct provision of equipment to the availability of first aid equipment and trained staff. This report examines the level of compliance with health and safety legislation in SMEs, and what can be done to help them comply – both to reduce the burden of regulation and to improve the effectiveness of implementation. It also looks more closely at first aid provision in SMEs as a subset of health and safety regulations. In Chapter 1 we examine small businesses in detail: how important they are to the economy; the importance of health and safety regulations; what the regulatory requirements are for SMEs and what are the costs of implementation. In Chapter 2 we review existing literature on health and safety, while noting that very little has been written specifically on first aid. We discuss existing research on what drives compliance, the cost of compliance, the way that firms of different sizes approach the regulations, and some other challenges and policy recommendations. Chapter 3 sets out the findings of our own survey of SMEs. This survey was conducted during May and June 2014; we set out the methodology and questions in Annex I and II. In particular, we consider the attitude of SMEs to health and safety and first aid regulations, their confidence about their ability to comply, what challenges they identified, what they thought of recent or imminent changes to the regulations, levels of awareness and where SMEs go for information. We complement this survey with a discussion, in Chapter 4, of a number of interviews that we conducted with individuals who work in SMEs, which helped better understand our findings. In conclusion we find that the results of our research suggest that existing concerns that SMEs are over-burdened and non-compliant may be unfounded. However, there is still work that could be done to make compliance both easier and more effective. We suggest that the balance between being thorough and being easy to comply with is broadly right, while identifying specific actions that could be taken by those wishing to help SMEs more easily comply with the regulations. 8
See Chapter 2 for a discussion of the evidence.
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:: 1 –
Small businesses and Health & Safety – an overview
SMEs in the UK There are approximately 4.9 million businesses in the UK, of which over 99% are small and medium enterprises (SMEs) – defined here as firms that employ fewer than 250 people. Small and medium enterprises employed 14,424,000 people in the UK in 2013. The European Commission’s SME Performance Review estimates the Gross Value Added of SMEs as €473 billion, or 49.8% of the UK economy.9 Table 1.1: Business in the UK by size Category
Number of employees
No. of firms
Micro Small
Total employed
Turnover (£)
0-9
4,671,000
7,762,000
496 bn
10-49
186,000
3,664,000
490 bn
Medium
50-249
30,000
2,998,000
491 bn
All SMEs
0-249
4,889,000
14,424,000
1,557 bn
>250
6,000
9,907,000
1,702 bn
4,895,000
24,331,000
3,279 bn
Large All firms Source: House of Commons Library10
As well as providing 59% of private sector (and around half of all11) jobs and 47% of all turnover, SMEs are also drivers of competition, innovation and entrepreneurship. As we noted in an earlier report, “SMEs… drive productivity improvements and spur innovation, by encouraging ‘productive churn’ and stimulating competition. They are at the heart of the process 9 10 11
Matthew Ward and Chris Rhodes, Small businesses and the UK economy, Standard Note: SN/EP/6078, House of Commons Library, 13 June 2014. Note: The figures from the House of Commons Library do not add up to the totals stated. Total employment, including in the public sector, was between 29.68m and 30.09m in 2013, according to ONS Labour Market Statistics.
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of ‘creative destruction’; indeed, it is axiomatic that today’s large businesses started small, and that their future rivals and replacements are to be found in the innovative start-ups of today. SMEs are a vital part of any free enterprise society and it is from SMEs, rather than government or large corporates, that job growth will emerge in the near future.”12
It is therefore important that a regulatory framework for H&S is established that both protects workers and ensures SME competitiveness. It should not be assumed that safety and competitiveness are mutually exclusive. The European Commission takes the view that “Risk prevention and the promotion of safer and healthier conditions in the workplace are key not just to improving job quality and working conditions, but also to promoting competitiveness”,13 clearly implying that they are complementary. Nonetheless, it is clear that opportunity costs are incurred by any amount of regulation. Creating a healthy and safe working environment The wellbeing of every worker in the UK depends upon the healthiness and safety of their working environment, and thus the policies and practices that apply within the millions of workplaces. Almost half of all employees work in SMEs. Even this may underestimate the significance of employment in SMEs from a H&S perspective, as the proportion of SMEs varies across sectors. For example, the agricultural sector has a much greater proportion of SMEs than other sector groups and is also one associated with high risk activities and a disproportionately high number of accidents. In Chapter 2 we discuss existing literature that suggests the employees of SMEs are on average subject to higher risk. Overall, while the number of incidents has been trending downwards, there were 148 fatal injuries to workers in 2012/13.14 Some research “suggests that employees rate workplace safety as first in importance among labour standards, even beyond family and maternity leave, overtime pay and paid sick days”.15 Ensuring competitiveness through regulatory efficiency The wellbeing of every UK citizen depends upon a healthy, thriving economy, which requires that regulation be as easy and costless to comply with as possible. 12 13 14 15
Tom Papworth and Adam Corlett, The path to IPO: funding SME jobs and growth, CentreForum, 2013. Communication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and The Committee of the Regions on an EU Strategic Framework on Health and Safety at Work 2014-2020, European Commission, Brussels, 6.6.2014, COM(2014) 332 final, June 2014. www.hse.gov.uk/statistics/fatals.htm First aid readiness in the Australian workplace, referencing Smith 2010.
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There is broad agreement that regulations are a greater financial and administrative burden for smaller businesses. The Forum of Private Business (FPB) estimates the total cost of regulatory compliance at more than £19.2 billion, of which H&S regulations are the third highest category. In addition, 40% of businesses surveyed by the FPB cited the time taken to understand and implement regulatory changes as an even greater impact on their operations, costing firms a total of £38.85 billion in lost opportunities.16 The Health and Safety Executive (HSE) is aware of these challenges. According to the findings of their Work and Enterprise Panel, median health & safety expenditure (for all firms) is £200 per annum per full-time employee.17 In 2003 the HSE cited a Better Regulation Task Force initiative from 1999 when they noted “that smaller companies are often at a competitive disadvantage compared with larger organisations because of the cost and time involved in regulatory compliance.”18 H&S requirements for businesses H&S requirements are laid down in several Acts of Parliament, most notably the H&S at Work Act 1974. Many of these Acts transpose EU directives. The HSE is the national independent watchdog for work-related health, safety and illness, charged with reducing work-related death and serious injury in workplaces in England, Scotland and Wales.19 Its sponsoring department is the Department for Work and Pensions, under the responsibility of the Minister of State for Disabled People. There are six main branches of health and safety legislation, known collectively as “the six pack”: :: Management of Health and Safety at Work Regulations 1999 :: Provision and Use of Work Equipment Regulations 1998 :: Manual Handling Operations Regulations 1992 :: Workplace (Health, Safety and Welfare) Regulations 1992 :: Personal Protective Equipment at Work Regulations 1992 :: Health and Safety (Display Screen Equipment) Regulations 1992. All businesses are required to assess their H&S risks and processes, though only those with five or more employees are required to write down their 16 17 18 19
Cost of compliance continues to rise for small firms, Forum research shows, FPB, July 2014, www.fpb.org/press/july-2014/ cost-compliance-continues-rise-small-firms-forum-research-shows. HSE, ‘Work and Enterprise Panel 2: Business survey’, 2007. ‘Costs of compliance with H&S regulations in SMEs’, HSE, 2003. www.gov.uk/government/organisations/health-and-safety-executive.
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conclusions (their H&S policy). Other requirements include provision of basic facilities (such as toilets); consulting employees and informing them of their rights; providing insurance; and displaying appropriate signage. Firms with more than ten employees or in higher risk sectors are also required to keep an accident book. Crucially, employers must give their employees the relevant H&S training and well-maintained safety equipment/clothing needed to do their job.20 Given that the elimination of risk is impossible, businesses must also have “adequate and appropriate” first aid arrangements, including (as a minimum) “a suitably stocked first-aid box”, an appointed person to manage first aid arrangements and information about these for employees. Firms may also need, or choose to have, some dedicated “first-aiders”, who receive training and qualifications in “first aid at work” or “emergency first aid at work”. Table 2 sets out the HSE’s guidance for the number of first aid-trained personnel that should be available in a workplace at any time:21 Table 1.2: Suggested numbers of first aid-trained personnel available at any time during work From your risk assessment, what degree of hazard is associated with your work activities?
How many employees do you have?
What first-aid personnel do you need?
Low hazard eg offices, shops, libraries
Less than 25
At least one appointed person
25-50
At least one first-aider trained in EFAW
More than 50
At least one first-aider trained in FAW for every 100 employed (or part thereof)
Less than 5
At least one appointed person
5-50
At least one first-aider trained in EFAW or FAW depending on the type of injuries that might occur
More than 50
At least one first-aider trained in FAW for every 50 employed (or part thereof).
Higher hazard eg light engineering and assemly work, food processing, arehousing, extensive work with dangerous machinery or sharp instruments, construction, chemical manufacture
20 21
‘Essentials of H&S at work’, and ‘H&S made simple’ HSE, First at work – your questions answered, www.hse.gov.uk/pubns/indg214.pdf
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According to a review of the H&S (First-Aid) Regulations 1981 and accompanying guidance, conducted by Casella Winton in 2003, the key obstacles to meeting these requirements were the difficulties of maintaining this cover across shifts, out of hours work, different areas and buildings, and also obtaining volunteers.22 Given the vast variety of sectors, businesses and locations, regulators have chosen not to be precise or prescriptive. As a result, firms cannot always be certain as to what their legal requirements are and whether they are in compliance. H&S regulations under the coalition government As noted earlier, the chief task of regulators and employers is finding the right balance between the conflicting needs of workplace safety and economic efficiency. The ideal approach would be effective both at reaching the large and heterogeneous business audience and at ensuring adequate H&S (including first aid) provision for all employees without creating an overwhelming burden. The coalition government has looked at H&S through two reviews: ::
Common Sense, Common Safety: A report by Lord Young of Graffham, a former politician and businessman, into the operation of H&S laws and the growth of the compensation culture (2010)23 :: Reclaiming H&S for all: An independent review of H&S legislation by Professor Ragnar E Löfstedt, Director of King’s Centre for Risk Management, King’s College London (2011).24 In light of these two reports, the coalition government has attempted to reduce the compliance costs for lower risk industries, to simplify guidance, and to tackle rogue H&S advisers and the disproportionate fear of lawsuits which both lead to businesses acting more cautiously than the law requires.25 Since October 2012, the HSE has implemented a cost recovery scheme called “Fee for Intervention” (FFI). Regulations 23 to 25 of The H&S (Fees) Regulations 2012 put a duty on the HSE to recover the costs of carrying out its regulatory functions from those found to be in material breach of H&S law. Those who are compliant with the law, or where a breach is not material, are not to be charged FFI for any work that HSE does with them.26 22 23 24 25 26
Casella, 2003. Young, 2010. Löfstedt, 2011. www.gov.uk/government/policies/improving-the-health-and-safety-system www.hse.gov.uk/fee-for-intervention/
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From April 2013 the number of HSE inspections was significantly reduced for low-risk businesses.27 Following the Löfstedt review in particular, a number of changes came into effect on 1 October 2013. The HSE no longer approves first aid training, qualifications or training organisations.28 This gives businesses more flexibility, but also means that they are now responsible for assessing the adequacy of any training. The regulations on reporting injuries have also been clarified and liberalised, while injured claimants must now prove negligence rather than just breach of legislation.29 The government is also seeking to “exempt self-employed people whose work activities pose no potential risk of harm to others from H&S law”.30 This report contends that the government’s initiatives have only partially narrowed the gap between H&S regulations and the levels of understanding and compliance among SMEs. If our hypothesis is correct, this could lead either to heightened risks to workers or to unnecessary costs for businesses.
27 28 29 30
www.chtdata.com/2012/09/28/health-safety-legislation-to-shift-attention-to-high-risk-industries/ www.hse.gov.uk/firstaid/approved-training.htm Although first aid qualifications can still be approved by Ofqual and others, and the United Kingdom Accreditation Service can assure the quality of some bodies. press.hse.gov.uk/2013/hse-legislation-changes/ www.barbour-ehs.com/wp-content/uploads/2013/11/Health-and-Safety-legal-update.pdf
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:: 2 – Review of literature on regulatory compliance In Chapter 1 we discussed why H&S regulation is important to SMEs and why it is important for workers that SMEs are fully compliant. We also looked at existing H&S rules for businesses including recent innovations. In this chapter we consider what the existing literature says about the compliance challenges facing (especially small and medium sized) businesses. We consider both general literature on regulatory compliance and specific literature on H&S regulation. A substantial part of the latter was produced by external research organisations at the request of the HSE. Despite this report’s particular interest in first aid, we found that the literature was insufficiently focused to provide particular insights into SME’s compliance with first aid regulations. Drivers to business compliance with health and safety regulations The existing literature suggests that compliance is primarily driven by obligation and reputation. For example, a report by Entec UK on behalf of the HSE found that “The main motivators underlying the development of H&S systems were legal obligation (particularly in larger organisations), H&S publicity (particularly in SMEs) and requirements from other existing internal systems and procedures.”31
This is supported by the European Commission, which believes that “[F]ulfilling legal obligations and enforcement measures taken by controlling bodies, including labour inspectorates, remain key drivers for OSH [occupational safety and health] management in a majority of establishments.”32
We would expect legal drivers to be a factor – legislation exists to incentivise actors. A number of other reasons for businesses to comply with H&S 31 32
Entec UK Limited on behalf of the Health and Safety Executive, Costs of compliance with health and safety regulations in SME’s, 2003. European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on an EU Strategic Framework on Health and Safety at Work 2014-2020, COM(2014) 332 final, 2014.
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regulation are cited. A study by Greenstreet Berman Ltd, also on behalf of the HSE, found that SMEs in particular “[B]elieved that improving health and safety was integral to business risk management. The organisations were motivated to improve aspects of health and safety because of the potential risk to the business if this was not addressed. These benefits included a mix of both tangible and intangible benefits, such as maintenance of reputation, client requirements, controlling insurance premium costs, reduction in absence rates as well as general improvements in health and safety.”
However, they go on to note that “SMEs rarely systematically or comprehensively track the costs and benefits of undertaking a particular initiative... In general, it proved very difficult to identify organisations within the SME sector that could… quantify business benefits as a result of health and safety initiatives. There is little evidence of SMEs citing reduced costs of accidents and ill health, partly because they do not track such costs and partly because such costs are often not apparent to SMEs because they are too small to have a statistical record of accidents.”33
One significant exception was the impact on insurance premiums. Three of the six SMEs that Greenstreet Berman spoke to cited static or reduced insurance premiums resulting from H&S compliance. Other firms reported a significant reduction in absences, greater client confidence resulting in less time spent on client inspection of sites, access to a wider market and to greater competitiveness on factors other than price.34 One notable absence from prior research, but which emerged from our own work (see Chapters 3 and 4), was that firms are genuinely eager to ensure a safe and healthy working environment for their staff. This is particularly true for smaller firms where senior management are likely to be more familiar with their staff. Compliance costs and SMEs The social costs of poor health and safety are potentially dramatic. The social security costs of sickness and accidents (i.e. the costs borne by taxpayers) were £2.4 billion in 2010/11.35 However, the calculation for individual businesses is not the social cost but the private cost of (non-)compliance. It is 33 34 35
Greenstreet Berman Ltd, Six SME case studies that demonstrate the business benefit of effective management of occupational health and safety, HSE, 2006. Greenstreet Berman Ltd, op cit. HSE, Costs to Britain of workplace fatalities and self-reported injuries and ill-health, 2010/11, Crown Copyright 2013.
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therefore important to note that effectiveness and competitiveness were not mutually exclusive. A report by ISSA (2010) into “the international return on prevention for companies [i.e. the] Costs and benefits of investments in occupational safety and health” found that “[T]here are benefits resulting from investment in occupational safety and health in microeconomic terms, with the results offering a Return on Prevention ratio of 2.2. In practice, this means that for every 1 EUR (or any other currency) per employee per year invested by companies in workplace prevention, companies can expect a potential economic return of 2.20 EUR (or any other currency). The study’s results therefore support the microeconomic case for companies to invest in prevention. Occupational safety and health is a statutory obligation for employers that is beneficial to employees, but it is equally a factor for business success.”36
This is supported by European Commission (2011), which put the average savings in the range 1.29 to 2.89 times the amount invested in improving health and safety.37 However, there are two caveats to these figures. Firstly, there are inevitably diminishing marginal returns to additional expenditure; the return will not continue to be 2.2 times the sum invested. Secondly, these figures average across all businesses; insofar as SMEs face higher compliance costs, that return will be reduced. And evidence from academic, public sector and NGO research has found measurable differences between levels of compliance in SMEs and in larger firms. A 2007 HSE survey found that micro firms in particular “may be failing to address strategic issues surrounding the management of H&S in the workplace because they are less likely to believe that it will improve their bottom-lines” and “that smaller businesses are less likely to have a positive attitude towards H&S issues, or regard it as a key strategic area.”38 This may be due in large part to the different cost:benefit ratios in firms of different sizes. Entec (2003) found that larger organisations “report considerably less expenditure per employee for all regulations compared with organisations of fewer than 5000 employees” and are “more likely to think that the benefits outweighed the costs.”39 A group of experts on regulatory issues, assembled by the European Commission (“The Expert Group”), was 36 37 38 39
The return on prevention: Calculating the costs and benefits of investments in occupational safety and health in companies, International Social Security Association, Geneva, 2011. European Commission, Socio-economic costs of accidents at work and work-related ill health, Unit B.3, Directorate-General for Employment, Social Affairs and Inclusion, November 2011. ‘Work and Enterprise Panel 2: Business survey’, op. cit. ‘Costs of compliance with health and safety regulations in SMEs’, op. cit.
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even confident enough to quantify the difference: “Various studies find that small enterprises bear a disproportionate regulatory burden in comparison with larger businesses: On average, where a big company spends one euro per employee to comply with a regulatory duty a medium-sized enterprise might have to spend around four euros and a small business up to ten euros.” 40
It is therefore likely that some firms face compliance costs that outweigh the private benefits of having a healthier and safer workforce. It is beyond the scope of this report to calculate how many companies are in this position, but it may explain why a large majority of respondents to a 2013 European Commission public consultation suggested that “more should be done to reduce administrative burden and compliance costs for small and mediumsized enterprises (SMEs).” Yet they go on to note that “The majority of respondents also indicated that these objectives should be pursued while maintaining a high level of compliance with OSH principles, regardless of the size of the company.”41 In microcosm, this is the regulator’s dilemma. The nature of compliance: proactive or reactive In addition to the different cost-burden for different sized businesses, smaller firms appear to approach H&S regulation reactively rather than proactively. While larger firms seek out deficiencies in their H&S policies, smaller firms generally limit themselves to responding when told exactly what to do. Kings College London (2005) found that “Previous studies support the contention that SMEs want to be told exactly what to do and how to comply through face-to-face interventions with an inspector. Research shows that SMEs have major difficulties identifying hazards and find the concept of self-assessment alien. This view is accepted in government, and has been highlighted in previous HSE funded research.”42
This is borne out by other research. Vickers et al (2006) present a framework that “supports the view that most small firms have a reactive stance towards regulation, but also that attitudes and motivations can range from overt avoidance to more positive and even proactive stances.”43 This last point is particularly germane in light of reforms by the coalition government to the H&S regime that have increased the level of discretion and self-assessment. 40 41 42 43
Report of the Expert Group, Models to reduce the disproportionate regulatory burden on SMEs, European Commission, May 2007. European Commission COM(2014) 332 final, op cit. Kings College London, Making an impact on SME compliance behaviour: An evaluation of the effect of interventions upon compliance with health and safety legislation in small and medium sized enterprises, HSE 2005. Ian Vickers, Philip James, David Smallbone and Robert Baldock, Understanding small firm responses to regulation: The Case of Workplace Health and Safety, Policy Studies, 2006.
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If Kings College London (2005) is correct, these may run counter to the needs of SMEs. We will consider this further in Chapters 3 to 4. Wilson et al (2012) find that “In general, SMEs had poor awareness of compliance issues; non‐compliance was only really recognised and acknowledged if identified by a regulator and only regarded as serious if prosecuted.”44 This is supported by Kings College London (2005), which found that SMEs “[B]elieved that they were compliant until it was made known to them that they were not. In other words they viewed compliance reactively and not as a process in which they should be continually engaged. Compliance was not, as an enforcer would define it, complying with the requirements of the law. Compliance to the SMEs … was doing all they were told to at an inspection, or advisory visit or other intervention. In those SMEs in authorities where few interventions occurred, they still all believed they complied and believed that someone would let them know (they did not know who) if they did not.”
The report concludes that “The process of compliance was more one of the SME recognising the gap between what they were doing and how they ‘ought’ to operate and taking action to close that gap. In this study that ‘gap’ was best closed by personal face-to-face interaction.”45
This raises two issues. Firstly, the desire for individual advice and guidance is clearly unrealistic considering the number of SMEs. However, there may be an opportunity for private (commercial and not-for-profit) providers to step in and provide this support where there is a demand. Secondly, there may be a gap between SMEs’ perception of compliance and the reality of their providing a safe, healthy working environment. If so, this too may present an opportunity for private providers to help identify these gaps and work with SMEs to fill them. Other health and safety challenges for SMEs OECD (2007) identifies a number of challenges SMEs face complying with regulation. These include: :: :: 44 45
low levels of contact with enforcing authorities (“the sheer numbers of such enterprises often lead to very infrequent inspections”) poor accessing and understanding of information
Christopher D.H. Wilson, Ian David Williams and Simon Kemp, An evaluation of the impact and effectiveness of environmental legislation in small and medium-sized enterprises: experiences from the UK, Business Strategy and the Environment, 21 (3), 2012, pages 141-156. Kings College London, Making an impact on SME compliance behaviour, op cit.
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::
the temporary or casual nature of work (which makes training staff costly) :: lack of internal health and safety competence :: lack of access to specialist external health and safety advice :: stretched, incompetent, disinterested or frightened management :: insufficient time, money and other resources. Overall they find that SMEs suffer from “a lack of resources exacerbated by higher compliance costs and poor access to finance; the ignorance of regulatory obligations… as well as of solutions; poor integration of management activities into core business activities; and a lack of exposure to public scrutiny.”46 The European Commission elsewhere suggested that guidance and risk-assessment tools have “not been sufficiently disseminated [nor] sufficiently targeted at SMEs.”47 This is particularly concerning as “there is sufficiently strong evidence to conclude that employees of small enterprises are subject to higher risks than the employees of larger ones, and that small enterprises have difficulties in controlling risk.”48 Though there is some research that suggests employees of larger firms are more prone to injuries, on balance the evidence points towards smaller firms.49 Arocena and Núñez (2010) find “evidence that the effort and type of OHS management system does significantly affect the injury rate” and that effective “organization-oriented procedures” are “significantly less developed” in small firms.50 Policy recommendations The EU Strategic Framework on Health and Safety at Work 2014-2020 contains three challenges, one of which is “Improving the implementation record of Member States, in particular by enhancing the capacity of micro and small enterprises to put in place effective and efficient risk prevention measures” (emphasis added). The means of achieving this are: :: :: 46 47 48 49 50
Improving quality of guidance and providing practical tools to facilitate compliance with OSH legislation Simplifying existing legislation and eliminating unnecessary
OECD, Small business and environmental compliance: Review and Possible Application of International Experience in Georgia, 2007. European Commission, Evaluation of the European Strategy on Safety and Health at Work 2007-2012, DG for Employment, Social Affairs and Inclusion, 2013. Peter Hasle and Hans Jørgen Limborg, “A Review of the Literature on Preventive Occupational Health and Safety Activities in Small Enterprises’, Industrial Health, 2006. RoSPA NOSCH SME map, Howard Fidderman, pp 12-14 Pablo Arocena and Imanol Núñez, “An empirical analysis of the effectiveness of occupational health and safety management systems in SMEs”, International Small Business Journal, 2010
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:: ::
administrative burdens Assessing the situation of micro-enterprises in low-risk sectors and considering how to simplify the implementation of risk assessment Promoting the exchange of good practice.
This is notably different from the proposals that came out of the European Commission’s Expert Group in 2007, which proposed:51 1. Size-related exemptions 2. Reduced obligations (i.e. partial exemptions) 3. Simplified obligations 4. Temporal exemptions 5. Administrative coordination, especially one-stop shops 6. Common commencement dates 7. Tailor-made information, coaching, training 8. Electronic services 9. Privileged treatment of small businesses 10. Early evaluation of regulatory impact on small businesses As we shall see in subsequent chapters, the 2007 proposals were not supported by SMEs employing between 20 and 249 staff. Strategies to improve compliance often focus on improving written guidance. There are two reasons to be cautious about this approach. Firstly, SMEs and larger firms appear to differ as to the form in which they prefer information: “Larger organisations preferred Internet based sources of information, compared with a preference for paper based information among SMEs” (Entec 2003). Second, and more profoundly, the Royal Society for the Prevention of Accidents notes that “SMEs have potential access to large amounts of information. Much of this is simple, free and practicable”.52 Thus it may be that methods to improve engagement will be more effective than methods to provide better information. This in turn may suggest a focus on emphasising the benefits to SMEs of compliance, highlighted at the beginning of this chapter. Hasle and Limborg (2006) suggest that “The most effective preventive approaches seem to be simple and low cost solutions, disseminated through personal contact...”53 However, while face-to-face engagement with inspectors might be the most effective way of encouraging engagement among SMEs, it 51 52 53
Report of the Expert Group, op cit. RoSPA, op. cit. Hasle and Limborg, 2006, op cit.
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SMEs and Health & Safety
is hardly the most efficient; as noted above, the number of SMEs in the UK (4.9 million – see Chapter 1) renders such an approach logistically impossible, though where inspectors are visiting firms we would expect to see an effect (if only because of the reactive nature of SMEs, highlighted above). A more efficacious way of encouraging good health and safety practice may be to rely on business-to-business relationships, trade associations, voluntary organisations and networks of all kinds. A survey by Lehaney et al (2012) revealed that networks, and even virtual organisations, “[W]ould be a valuable way to link SMEs with their larger counterparts, partly because SMEs do not have the resources and time to release members of staff easily to attend physical workshops and other events... It is in the interests of larger organisations to assist SMEs within their supply chains, as the effects of absences resulting from poor health and safety management in SMEs result in supplies being disrupted.” 54
This echoes Entec (2003), which found that “Construction companies perceive an added benefit of ensuring acceptance onto tender lists and success in gaining contracts”.55 Pressure through the supply chain from larger firms and contractors would be a powerful incentive to comply.
54 55
Brian Lehaney, Ikechukwu A. Diugwu. Michael Willemyns and Peter Hosie, “A survey that contributes to the development of a framework to evaluate health and safety strategies in supply chains”, International Journal of Networking and Virtual Organisations, Volume 10 Issue 1, January 2012. Entec (2003), op cit.
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:: 3 – Survey of SMEs’ compliance with health and safety regulations To further our understanding of how SMEs view health and safety regulation and the challenges they face in implementation, CentreForum conducted a survey of SMEs. The survey methodology is outlined in Annex I and the questions and possible responses are listed in Annex II. The responses discussed below represent the views of firms employing between 20 and 249 members of staff. Readers should therefore be cautious about making inferences about micro- and very small businesses. While there may be commonalities across all SMEs, the survey did not generate significant statistics for the very smallest firms. Attitude to Health and Safety regulations The first and perhaps most striking result is that 99.67% of firms believe that health and safety regulations are necessary.56 Just one of the 304 respondents believed that they were unnecessary. This is less surprising when one considers that around three quarters felt that complying with H&S was “the right thing to do”57 and four fifths acknowledged that it was a legal obligation.58 Additionally, two thirds felt that H&S was important for avoiding staff injuries and absences.59 Only a quarter of respondents found H&S difficult to comply with compared to three quarters that believed them to be easy to comply with.60 This is not to say that firms did not experience any difficulties complying. Rather, it suggests that on balance three quarters found compliance unproblematic.
56 57 58 59 60
Number of respondents (N) = 304. Margin of error (MoE) = 0.67%. 75.66%. N = 304. MoE = 4.82%. 80.59%. N = 304. MoE = 4.45%. 68.09%. N = 304. MoE = 5.24%. In addition, two free text answers listed “Keeping people safe” and “Staff safety and well being is paramount”. 27.15%. N = 302. MoE = 0.67%.
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SMEs and Health & Safety
Confidence in compliance with Health and Safety regulations Four fifths of respondents were confident that their company complied with all relevant Health and Safety regulation (figure 3.1). Figure 3.1: Confidence in firm’s compliance with health and safety regulations
Don’t know Yes
No
Figure 3.2 shows respondents’ confidence in their own understanding of H&S and in their (or their colleagues’) ability to self-assess their firm’s compliance. Well over nine in ten respondents felt that they had a good understanding of Health and Safety requirements against less than 2% that felt that they did not.61 A similar number were confident of their (colleagues’) ability to selfassess the firm’s Health and Safety needs.62 Respondents’ confidence around the first aid aspects of H&S were equally positive. Again, over nine in ten respondents felt confident in their firm’s current First Aid arrangements63 and almost nine in ten felt that they had a good understanding of the First Aid components of Health and Safety requirements.64
61 62 63 64
53% agree and 39% strongly agree as against just 1.33% disagreeing and 0.33% strongly disagreeing. 86.26% agree or strongly agree as against just 2.75% disagreeing or strongly disagreeing. 51.70% agree and 40.14% strongly agree as against 1.70% that disagree and 0.68% that strongly disagree. 57.34% agree and 31.74% strongly agree as against 1.71% that disagree and 0.34% that strongly disagree.
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SMEs and Health & Safety
Figure 3.2: Confidence in Health and Safety and First Aid requirements (individual and firm level) Strongly Agree
Agree
Neither agree nor disagree
Strongly Disagree
Disagree
I have a good understanding of Health and Safety requirements I have a good understanding of the First Aid components of Health and Safety requirements I feel confident in our firm’s current First Aid arrangements I feel confident in my (or colleagues’) ability to self-assess our firm’s Health and Safety needs
0
20
40
60
80
100
We note that the above findings are supported by a 2014 Eurobarometer survey on working conditions, in which 85% of workers expressed satisfaction with workplace health and safety in their current job.65 Challenges to complying with health and safety regulations We noted above that only a quarter of respondents felt that, on balance, compliance with H&S was difficult. However, two thirds of respondents identified issues that made compliance with H&S more difficult.66 In this section we examine the challenges that respondents face when implementing H&S. Table 3.1 shows respondents’ views of the difficulties posed by compliance with H&S generally. A third of respondents reported that “a perception of low importance” was a challenge.67 This was not limited to H&S compliance officers complaining about a lack of support from senior management (though there was an element of this – see Chapter 4). 31 managers, chief executives and partners, asked to name up to three factors that make complying with H&S more difficult, indicated that a perception of low importance was a factor. This could suggest a dichotomy between those who felt that the regulations were necessary and those who felt that they were important. Alternatively, it could suggest that (these) managers themselves consider H&S important but felt that their staff did not.
65 66 67
Eurobarometer, Working Conditions Report, Flash Eurobarometer 398, April 2014. 35.43% reported not experiencing any difficulties complying with H&S. N = 302. MoE = 5.39%. 36.4%. N = 302. MoE = 5.43%.
23
SMEs and Health & Safety
The other major challenge, reported by two fifths of respondents, was a lack of time and resources.68 By comparison, less than a sixth in each case did not understand what was needed or felt that guidance was insufficient, lacked feedback from employees or unions or felt H&S was poorly integrated with the core business. Fewer than one in ten feared that H&S compliance costs would undermine their competitiveness. Table 3.1: Difficulties of complying with health and safety regulations Response Percent 14.9%
Response Count 45
Perception of low importance
36.4%
110
Lack of time/resources
42.4%
128
Fear of loss of competitiveness
9.9%
30
Poor integration with core business activities
12.6%
38
Lack of feedback from employees / unions I have not experienced any difficulty in complying with these regulations
13.6%
41
35.4%
107
Other (please specify)
6.6%
20
Don’t understand what’s needed / Insufficient guidance
answered question
302
skipped question
3
Table 3.2 shows respondents’ views of the difficulties posed by compliance with first aid regulations. Around three fifths of respondents report experiencing no difficulty complying with first aid regulations.69 Of those that did, between a fifth and a quarter reported insufficient numbers of people volunteering and/or a lack of staff time as the major barriers. The numbers reporting that there was a perception of low importance in their firm was around one in six. Fewer than one in eight were concerned about first aid compliance costs, while barely one in 17 did not understand what was needed or felt that guidance was insufficient.
68 69
42.4%. N = 302. MoE = 5.57%. 58.2%. N = 302. MoE = 5.56%.
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SMEs and Health & Safety
Table 3.2: Difficulties of complying with first aid components of health and safety regulations Response Percent 6.0%
Response Count 18
Perception of low importance
16.4%
49
Insufficient number of staff volunteering
23.1%
69
Lack of staff time
22.7%
68
Cost I have not experienced any difficulty in complying with these regulations
13.4%
40
58.2%
174
Other (please specify)
3.3%
10
Don’t understand what’s needed / Insufficient guidance
answered question
299
skipped question
6
Recent health and safety changes Question 10 of our survey asked about their awareness of a number of changes to H&S and first aid arrangements that were made between 2011 and 2013. Awareness of the changes was fairly good: between a half and two thirds of respondents were aware of each change. Table 3.3: Respondents’ awareness of recent changes to health and safety regulations Response Percent Fewer inspections for low-risk businesses
57.2%
Revised Approved Codes of Practice and guidance The Health and Safety Executive no longer approves first aid training, qualifications or training organisations
66.2% 59.5%
69.5% The regulations on reporting injuries have been clarified and liberalised Injured claimants must now prove negligence rather than just breach of legisla36.4% tion The Health and Safety Executive now recovers its costs from firms that are found 59.5% to be in breach with OHS law (Fee for Intervention) The ‘Health and Safety Made Simple’ website launched by the Health and Safety 42.8% Executive and targeted especially at small and medium sized low-risk businesses 19.3% Exempting most self-employed people from health and safety law (proposed) answered question = 269 skipped question = 36
25
SMEs and Health & Safety
There were two notable exceptions. Only around a third of respondents were aware that injured claimants must now prove negligence rather than just breach of legislation.70 This is not a compliance question; knowledge of this fact is not necessary for firms to meet the requirements. Only one in five firms were aware of proposals to exempt most self-employed people from H&S.71 This is unsurprising considering that our respondents were firms employing between 20 and 249 staff. In fact, very few of the smaller firms (those employing fewer than 20 staff) responding appeared to be aware of these proposals too. However, the numbers of firms involved were too few to make any meaningful inferences about the wider population. What is notable is that around four times as many respondents who expressed a preference disapproved of this proposal than those who approved of it (see Table 3.4).72 Even so, the level of awareness of some significant changes could be considered low in light of their potential importance for SMEs. Barely half of respondents were aware that low-risk businesses now faced fewer inspections.73 This is especially remarkable when cross-tabulated with Question 18 (“Would you agree or disagree that your business manages significant Health and Safety risk?”), as it suggests that the respondent’s perception of the risk-profile of their own firm makes no difference to their awareness of the reduction in the incidence of inspections for low-risk businesses.74 A third of firms were not aware of revisions to the Approved Codes of Practice, about which the HSE consulted in 2013.75 Four in ten were unaware that the Health and Safety Executive no longer approves first aid training, qualifications or training organisations.76 Four in ten were also unaware of the Fee for Intervention scheme, whereby firms that were found to be in breach have to pay the costs of inspection.77 Three in ten were not aware that regulations on reporting injuries have been clarified and liberalised.78 Table 3.4 sets out the views of respondents to these changes. Note that this includes the views of these that were already aware of the changes and of those who were only made aware of them through the survey. While there 70 71 72 73 74 75 76 77 78
36.4%. N = 269. MoE = 5.75%. 19.3%. N = 269. MoE = 4.72%. 10.99% approved against 42.2% who disapproved. Note that the largest response (46.81%) was from those who did not have a strong feeling either way. 57.2%. N = 269. MoE = 5.91%. 57.21% of high-risk firms were aware of the change compared to 54.55% of low-risk firms. This is well within the margin of error. 66.2% of respondents were aware. N = 269. MoE = 5.65%. 59.5% of respondents were aware. N = 269. MoE = 5.87%. 59.5% of respondents were aware. N = 269. MoE = 5.87%. 69.5% of respondents were aware. N = 269. MoE = 5.5%.
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SMEs and Health & Safety
is a strong amount of apathy or ambivalence about the changes (broadly 30-45% having no strong feelings or not knowing what they thought), these changes were broadly popular. Only three changes were not popular with a majority of respondents and one of those (Fee for Intervention) still had twice as much approval as disapproval.79 Table 3.4: Respondents’ attitude towards recent changes to health and safety regulations No strong feelings Response or don’t Count know 29.31% 290
Approve
Disapprove
58.62%
12.07%
65.73%
1.05%
33.22%
286
15.86%
38.28%
45.86%
290
58.97%
12.41%
28.62%
290
63.51%
5.96%
30.53%
285
44.60%
19.51%
35.89%
287
58.62%
1.72%
39.66%
290
10.99%
42.20%
46.81%
282
Fewer inspections for low-risk businesses Revised Approved Codes of Practice and guidance The Health and Safety Executive no longer approves first aid training, qualifications or training organisations The regulations on reporting injuries have been clarified and relaxed Injured claimants must now prove negligence rather than just breach of legislation The Health and Safety Executive now recovers its costs from firms that are found to be in breach with OHS law (Fee for Intervention) The ‘Health and Safety Made Simple’ website launched by the Health and Safety Executive and targeted especially at small and medium sized low-risk businesses Exempting most self-employed people from health and safety law (proposed)
answered question skipped question
295 10
We noted above that most firms disapproved of exempting self-employed people from H&S. The other profoundly unpopular change was the decision that HSE would cease approving first aid training, qualifications and training organisations. More than twice as many respondents disapproved of this change than approved.80 Against this we must recognise that slightly more people were apathetic or ambivalent about this change than disapproved. Nonetheless, this would suggest that the decision to cease approving first aid has not been welcomed by SMEs.
79 80
44.6% approve as compared to 19.51% disapproving. 15.86% approve compared with 38.28% disapproving.
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SMEs and Health & Safety
Sources of information and guidance Figure 3.3 shows the popularity of various potential sources of guidance on H&S. By far the most popular source of guidance is the HSE itself. Around four fifths of firms went directly to the HSE for guidance.81 This includes all sources of HSE guidance and it not limited to direct contacts. The two next most common sources of guidance, accessed by more than half of firms, were training providers such as St. John Ambulance82 and H&S consultants.83 These were in turn significantly more popular than other websites, insurance companies, suppliers and (surprisingly) trade associations and business networks (the latter being cited by just over a fifth of firms).84 Even more strikingly, fewer than one in ten went to their local authority for guidance despite local authorities being responsible for some H&S inspections.85 Figure 3.3: Where SMEs go for Health and Safety guidance? The Health and Safety Executive Your local council(s) Friends and business contacts Trade associations and business networks Equipment / product suppliers Insurance company Health and safety consultants Training providers such as St John Ambulance Other websites or internet searches 0
10
20
30
40
50
60
70
80
Despite the popularity of the HSE, Table 3.3 shows that barely two fifths or respondents were aware that the HSE had launched a “Health and Safety Made Simple” website targeted especially at small and medium sized low-risk businesses.86 This may be a reflection that the website was relatively new, or it could be that respondents had not registered the change, but it does at least suggest that this resource may be under-used and not having as much impact as might be hoped. This may also help to explain why around three quarters of firms felt that they would benefit from more specific guidance focussed on businesses like theirs 81 82 83 84 85 86
79.3%. N = 299. MoE = 5.16%. 53.2%. N = 299. MoE = 6.35%. 50.5%. N = 299. MoE = 6.37%. 21.2%. N = 299. MoE = 5.20%. 9.7%. N = 299. MoE = 3.77%. 42.8%. N = 269. MoE = 5.91%.
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SMEs and Health & Safety
(Table 3.5).87 It may well be that SMEs in low-risk businesses are unaware that such focussed guidance is already available. Nonetheless, this suggests that an opportunity exists to assist businesses by providing more tailored information. Help and support for SMEs Question 14 asked what changes might help SMEs better comply with H&S. Five responses were prompted along with the opportunity to free-text other suggestions. The only response that was supported by a majority of respondents was the above-mentioned provision of information targeted to specific firms. By comparison, between a fifth and a quarter felt that reduced H&S requirements would help,88 while a similar number felt a more prescribed approach would help.89 This suggests that the HSE has the balance about right – a proposition that was supported by one of the free text answers, which stated that “We are of the opinion that it is about right, and happy with the stus [sic.] quo”. Around three in ten felt that more training courses and guidance from first aid organisations would be helpful,90 and a third of respondents felt greater instruction from public agencies on how to ensure compliance would help.91 Table 3.5: Factors that would help firms comply with health and safety regulations
Response Percent
Reduced Health and Safety requirements A more prescribed approach More specific guidance focussed on businesses like yours Greater instruction from public agencies on ensuring compliance Training courses and guidance from first aid charities or companies answered question skipped question
22.1% 24.0% 72.2% 32.7% 29.7% 263 42
This latter adds weight to the suggestion that an opportunity exists to assist businesses by providing guidance, both on H&S compliance in general and on first aid specifically. It is notable that three of the free text responses highlighted the cost of guidance and resources rather than its availability. 87 88 89 90 91
72.24%. N = 269. MoE = 5.41%. 22.1%. N = 263. MoE = 5.01%. 24.0%. N = 263. MoE = 5.16%. 29.7%. N = 263. MoE = 5.52%. 32.7%. N = 263. MoE = 5.67%.
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:: 4 – Qualitative evidence of SMEs’ views of health and safety Question 20 of the survey invited respondents to leave contact details if they wished to contribute further to our research. Twenty three respondents provided contact details; following approaches by CentreForum, seven interviews were conducted, one from a small (40 staff) enterprise and the remainder from medium (50-249) enterprises. In addition, 61 free text answers were given in response to the five questions where free text was possible.92 This chapter considers the additional insights that these interviews and responses provide. Readers should keep in mind the relationship between qualitative and quantitative research: the responses discussed in this chapter offer insights into the findings in Chapter 3 and provide greater understanding of motives and concerns, but we cannot make inferences as to how common these views are. Attitude to Health and Safety regulations In keeping with our survey, the interviewees were generally positive about H&S. One respondent noted the importance of workers enjoying a safe environment; asked what aspects were less important, he refused to accept the premise of the question. He felt that H&S was “here for a reason” and emphasised that his firm had “a strong culture of compliance.” Another said that the most important drivers of H&S compliance were moral considerations of employee wellbeing, as opposed to legal or financial motives. A third mentioned how important H&S was and how seriously the firm took it; the firm had H&S committees that including representatives of every department and which met regularly to discuss accident prevention and learn lessons from particular incidents. A fourth interviewee said that H&S was an “important thing” that “people underestimate” and urged against watering it down. 92
Excluding responses to question 20.
30
SMEs and Health & Safety
Others took a more mixed view. Though generally “happy with the way things are going”, one felt that physical risk was inevitable in the job, and that HSE wanted to see risk eliminated, which was impossible. In the wake of HSE criticism of their firm following an accident, he observed that firms “can only do so much. [We] cannot be 100% idiot-proof”. Another said that, while he had no issue with the regulations, there was a problem with interpretation in that non-qualified workers make ill-informed judgments. A third, who identified her firm as a low-risk environment, felt that this reduced the seriousness with which H&S was taken but also felt that the regulations were not onerous. Several said that they had aligned their H&S policies with ISO18001 (aka. BS OHSAS 18001), the international standard for occupational health and safety.93 One respondent had won awards for H&S compliance. Another had a NEBOSH qualification.94 There was very little concern over first aid. The response to questions about first aid tended to consist of numbers of first aiders and first aid boxes, though one did note that policy “works when tested.” There was concern about litigation, with one respondent noting that it was difficult to protect both employees and the company. He felt that it was too easy for individuals to litigate even where they were to blame, and expressed concern about the growth of the legal industry and “ambulance chasing” lawyers. This was from somebody who had responded to the survey that he was aware that injured claimants were now required to prove negligence on behalf of employers rather than just a breach of legislation. He nonetheless wanted reform of “No win, no fee” legal cases. Another concern was over home-workers: one interviewee believed workplace assessments were difficult (staff were supposed to undertake them but it was difficult to make staff treat them as important) and she was concerned that they did not have first aid boxes or report accidents, despite this being company policy. Challenges to complying with health and safety regulations We noted in Chapter 3 that a lack of time and resources was the most commonly cited challenge to compliance. In conversations, time and resources frequently came up – though one interviewee added “what price do you put on health and safety?” This statement perfectly summed up the 93 94
For details, see the British Standards Institute website, www.bsigroup.com/en-GB/ohsas-18001-occupational-health-and-safety/ National Examination Board in Occupational Safety and Health, www.nebosh.org.uk/About_Nebosh/.
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SMEs and Health & Safety
broader question about the opportunity cost of H&S; there is an optimal level of H&S spending and firms will (as with all other costs) seek to identify that optimal level. Echoing that, an interviewee referred to the trade-off between the time staff spent training and the time they spent working. He explained that in his firm there was an additional challenge in that the plant operated 24 hours a day and was constantly staffed by three rotating shifts; finding time for training disrupted shift patterns. This supports the findings of the 2003 Casella Review that the key obstacles to meeting first aid regulations were the difficulties of maintaining this cover across shifts, out of hours work, different areas and buildings; and also obtaining volunteers. The other major challenge that came up in the survey was a perception of low importance. This did not feature directly as a theme in the interviews, but could be discerned within other answers, of which the above paragraph is an example. A couple of interviewees raised the level of clarity in the legislation and guidance as a major challenge – one that was not available as a prompted answer in the survey. One noted that terms were vague, highlighting in particular requirements that policies be “suitable”, “sufficient” and “practicable.”95 A second put it more bluntly: “If I can be prosecuted, I want to be clear.” This second respondent did not want to have to defend her judgement; she wanted a list of cause and effect (“If x, then y”) and to be utterly clear whether she was compliant or not. For this reason, she preferred the tick box approach to compliance from which the HSE had moved away. A third supported this, noting that greater discretion over interpretation left businesses vulnerable and liable. One interviewee expressed concern over the dispersal of information, feeling that guidance on the regulations was scattered over too many sources. Another felt that keeping on top of changes was a challenge. This might suggest that the information opportunity highlighted at the end of Chapter 3 could, to some extent, consist of pulling together the various strands of information into a single source. But it may be more than just a coordination problem: one medium enterprise employing c.200 staff suggested that his company had 60 spreadsheets of legal requirements, requiring a “business division to know what we need to know in relations to each of 800 sites a year.”
95
This interviewee felt that the fire regulations were clearer than the other H&S regulations.
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SMEs and Health & Safety
Improving policy and compliance While both survey respondents and interviewees were broadly supportive of H&S regulation, one interviewee suggested that flexibility in implementation was important: “no regulation can fit every company”. She also suggested that fewer regulations, targeted inspections and greater discretion for inspectors would be beneficial. A second noted that, for staff, it was important that guidance be brief and in plain English – especially considering some staff are not native English speakers. A third suggested that more information was always useful (“nothing is unhelpful”) and recommended inter alia guidance on interactions with HSE, an advice helpline, separating advisory from compliance visits and one-to-one advice sessions. This was supported by others. One suggested that bringing qualified people into the workplace to help with compliance would be useful. This interviewee noted that this could entail a cost for the firm and implied that there may be grounds for subsidising that cost. Another said that cheaper experts and risk-assessments and even free advice would be welcome. She added a call to restore the HSE helpline and to provide an online “check box” mechanism for testing compliance. Alongside this, many indicated that they did already pay for guidance. One interviewee also suggested that better qualifications and training was needed. Another highlighted the lack of standardisation in forms and policy documents. She suggested that there should be a standard order and even a standard form for setting out method statements, safety protocols, etc. Finally, a couple of respondents noted that dialogue outside H&S circles was unhelpful. One referred to “nonsense in the press about health and safety gone mad” while another said that his approach was to “keep an eye on what’s going on, [and] ignore the Daily Mail.”
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SMEs and Health & Safety
:: Conclusions SMEs are strongly committed to, and supportive of, health and safety regulations (H&S) and in particular to first aid requirements. Our survey found near-universal support for the view that H&S is necessary, while three quarters found the regulations easy to comply with. This represents a significant challenge to those who portray H&S as an unnecessary burden and to the HSE’s suggestion “that smaller businesses are less likely to have a positive attitude towards health & safety issues...”96 This is important because SMEs provide employment to half the UK workforce and generate half of UK GDP. Getting the balance between cost and benefits of H&S right therefore matters both to workplace safety and to economic competitiveness. We found evidence that SMEs feel that this balance is about right, both through the strong support highlighted above and the fact that the number believing that H&S should be reduced was broadly the same as the number believing that a more prescribed approach would be more helpful. Compliance appears to be motivated less by legal obligation and fear of incurring costs than a sense that complying with H&S is “the right thing to do.” This stems from a real concern for the wellbeing of staff and a desire to reduce absences. It therefore casts doubt on the view expressed in much of the literature that compliance is driven by legal obligation, publicity, risk management, reduced insurance premiums, market access and competitiveness (e.g. Entec, 2002 and Greenstreet Berman, 2006). We therefore reject the HSE’s suggestion that SMEs “may be failing to address… management of health & safety in the workplace because they are less likely to believe that it will improve their bottom-lines”. However, our survey and interviews support the view in the literature that SMEs are more reactive than proactive in their approach to H&S and that self-assessment presents a challenge. In fact, on balance, SMEs view the shift from a check-list approach to more self-assessment as both a burden and a 96
‘Work and Enterprise Panel 2: Business survey’, op. cit.
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SMEs and Health & Safety
concern (compared with the assurance that the check-list approach provided). They would welcome a more prescriptive approach that provided them with confidence that they were doing enough to comply. It may therefore be the case that coalition policy, driven by a desire to reduce burdens for SMEs, is in fact counter-productive and has caused increased worry and compliance costs for businesses. This does not undermine the suggestion that the main driver for compliance is staff welfare; it may be that firms seek assurance that they are doing enough to keep people reasonably safe. However, it does raise a question-mark over SMEs’ level of compliance. It may be that the strong level of confidence is a sign not that firms are compliant but that they are mistaken. This would reconcile our finding that four fifths of SMEs believed they were compliant with the view of Kings College London (2005) that many SMEs “[B]elieved that they were compliant until it was made known to them that they were not”. If there is in fact a dichotomy between perception and reality, there may be a role for a third party (from the public or private sectors, including both commercial and charitable organisations) to identify gaps and guide SMEs towards a means of resolving them. There are challenges to compliance, though it is notable that a third of respondents had experienced no difficulty complying with H&S generally, and that three fifths had experienced no difficulty complying with first aid regulations. Chief among the challenges were the cost in money and time of compliance, and a belief (presumably among others in the firm) that H&S is of low importance. Challenges were far less pronounced in the case of first aid, where the biggest problem was an insufficient number of people volunteering, and where no issue garnered more than a quarter of respondents. Improved guidance and advice – an opportunity for private providers Evidence on whether there is a demand for improved guidance is mixed. In Chapter 2 we saw that the Royal Society for the Prevention of Accidents believed that “SMEs have potential access to large amounts of information. Much of this is simple, free and practicable”.97 This might explain why only a sixth of respondents to our survey suggested that H&S guidance (and just a twentieth that first aid guidance) was insufficient, though we also note the lack of awareness of existing sources of information among our survey respondents.
97
RoSPA, op. cit.
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While awareness of most changes was good, frequently over a third of respondents were unaware of a change (albeit many having only been introduced the previous year). We were especially surprised that over two fifths of firms were unaware that low-risk firms faced fewer inspections from 2013, and that only two fifths of firms were aware that there was a newly-launched HSE source of guidance for low-risk SMEs. We note also the European Commission’s view that guidance and risk-assessment tools have “not been sufficiently disseminated [nor] sufficiently targeted at SMEs”98; our survey found that three quarters would like more guidance targeted at firms such as theirs. Overall, we judge that an opportunity does exist to provide more tailored information to SMEs. We also suggest that there is scope for web-based guidance despite the reference in Entec (2003) to “a preference for paper based information among SMEs”. The Entec finding is based on evidence gathered over a decade ago and we feel that this may not reflect internet use in 2014. We nonetheless caution that methods to improve engagement will be more effective than methods to provide better information. The most effective preventive approaches seem to be simple and low cost solutions, disseminated through personal contact.99 The HSE is unlikely to support separate advisory and compliance visits or one-to-one advice sessions for at least three reasons: 1. HSE is clearly constrained in that advice is costly and HSE does not have the budget to provide free advice visits 2. In an environment based on self-assessment, HSE may be concerned that firms might infer that following the advice was sufficient to demonstrate compliance (the “But we did what you said” fallacy) 3. An HSE inspector confronted with a serious breach would feel compelled to take formal action. This presents an opportunity for private sector advisers, who can sell advice that is de-coupled from investigation. The challenge for these providers is to convey confidence that they are qualified sufficiently and thus that their advice is worth buying. This is especially true as the adviser would be unlikely to accept any liability in the event that its advice proved insufficient. The support for a return to a pro forma mechanism for testing compliance clearly runs counter to recent changes. This suggests a further opportunity for private sector bodies to provide online toolkits that could serve this purpose, 98 99
European Commission, Evaluation of the European Strategy on Safety and Health at Work 2007-2012, DG for Employment, Social Affairs and Inclusion, 2013. Hasle and Limborg, 2006, op cit.
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though firms would need to be conscious of the fact that this can only be indicative and would not abrogate their responsibility to conduct adequate self-assessment. Policy implications Legislators may wish to note that proposals to “exempt self-employed people whose work activities pose no potential risk of harm to others from health and safety law” are supported by very few businesses employing between 20 and 249 members of staff. We note, however, that this group are not those that would benefit, but rather those who might view the beneficiaries as competitors. The decision that the HSE will no longer approve first aid training, qualifications and training organisations is also unpopular with SMEs. SMEs find HSE approval a useful mechanism for determining which training organisations, qualifications and courses provide sufficient training to ensure both compliance with the law and a safe environment for staff. CentreForum would recommend that the HSE review this decision and consider reinstating its process for approving first aid training organisations. Failing that, other mechanisms will need to be found to convey confidence. Again, this offers opportunities for non-state providers to step in and provide that assurance. In Chapter 2 we noted a shift in approach by the European Commission. This change is supported by our survey. Of the ten proposals their Expert Group produced in 2007, only one was supported, two were opposed, and four did not feature in SMEs’ responses. This suggests that the issues the Expert Group highlighted in 2007 were not a major concern to SMEs, and that the Commission was right to revise their approach from 2014. Nonetheless, their current approach still does not satisfy the concerns of SMEs in the UK. Looking at the EU Strategic Framework on Health and Safety at Work 2014-2020, we find that ::
:: ::
Improving quality of guidance and providing practical tools to facilitate compliance with OSH legislation is welcome only if it consists of more targeted advice and guidance focused on subsectors and types of firm Simplifying existing legislation and eliminating unnecessary administrative burdens would be welcome but was not highlighted in our survey Assessing the situation of micro-enterprises in low-risk sectors and considering how to simplify the implementation of risk assessment is 37
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an extremely broad ambition that requires more detail :: Promoting the exchange of good practice would be welcome. There are two factors that we need to note in reference to the European Commission’s approach, however. Firstly, the focus of the current EU Strategic Framework is on micro and small enterprises. Our survey and interviews focused on non-micro SMEs. Indeed, insofar as the Commission’s focus is on smaller SMEs and we focused on bigger SMEs, the divergence may be the result of competitive tensions between these two groups. The second is that the UK is widely recognised to be a leader in health and safety policy. It may be that the above measures are more appropriate for other member-states. An opportunity exists for the research contained within this paper to be repeated in other European member-states to identify the needs of their smaller businesses and to determine whether there are commonalities of differences across the EU. Summary In conclusion, we find that health and safety regulations are not seen as an unnecessary burden by SMEs. Rather, they are welcomed as helping guide firms towards ensuring a safe working environment for their staff. Self-assessment has not been popular, however, as many firms dislike the increased administrative costs and the greater level of uncertainty. SMEs – at least those employing over 20 members of staff – are also very sceptical about proposals to exempt the self-employed (their smaller competitors) from health and safety requirements. The main challenges facing SMEs wishing to comply with health and safety regulations are, inevitably, resources (time and money) and a sense that others in the firm do not see compliance as a priority. Information and guidance is rarely unhelpful, however. An opportunity exists, especially among private sector bodies, to provide improved guidance and advice – potentially filling the gap left by the move to self-assessment by providing toolkits to test compliance. Despite much loose talk in the media, SMEs are supportive of health and safety regulations. We hope that this report helps demonstrate how both public policy and private provision can support SMEs and make adherence to health and safety regulations easier and more effective.
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:: Annex I: Survey methodology To better understand their attitude to health and safety regulation, CentreForum conducted a survey of SMEs. The survey ran from 5 May 2014 to 9 June 2014. The survey was available online and ran on the Survey Monkey platform. CentreForum and St. John Ambulance emailed approximately 30,000 SMEs from the Dun and Bradstreet database. The firms were based in England and Wales and the only unifying feature was that they had email addresses. The survey was also promoted via CentreForum, the Confederation of British Industry (CBI), St John Ambulance and the Health and Safety Executive twitter feeds and via the CBI’s monthly newsletter to SMEs. The survey consisted of 20 questions with a mix of categorical and scalar answers. Opportunities for free text answers were provided where appropriate. Population and sample size A total of 489 responses were received. Table A1: Number of employees in business (excluding partners) Answer Options
Response Percent
Response Count
0
0.0%
0
1-5
1.4%
5
6-9
1.9%
7
10-19
3.8%
14
20-49
30.9%
114
50-249
51.8%
191
250+
10.3%
38
answered question 369 skipped question 120
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Of the respondents, 38 were from firms with more than 250 employees. These are not SMEs and so we excluded these answers from our analysis. A further 120 respondents did not answer the question. As we could not be sure that these were SMEs we also excluded these responses. Of the remaining 331 responses, 26 were received from firms employing fewer than 20 staff. Though demonstrably SMEs, we decided to also exclude these firms. Including them in our research would have enabled us to discuss the full range of SMEs, but the sample would have been heavily skewed towards the larger end. Statistics would therefore not be representative of the full range of SMEs. Furthermore, the small number of firms employing fewer than 20 staff would render comparison impossible as the number of smaller firms does not lend itself to statistically significant analysis. The result of the above left us with 305 responses from firms employing between 20 and 249 members of staff. Confidence interval and margin of error In line with common survey practice, we selected a confidence interval of 95%. Relying on 305 responses from firms employing between 20 and 249 members of staff, we generate a maximum margin of 5.61%. However, this margin of error only applies to balanced (50:50) responses; where the distribution is extreme (99% to 1%) the margin of error shrinks to 1.12%. Margins of error for individual questions are reported where appropriate. Limitations of the survey methodology Good research acknowledges both its strengths and its weaknesses. While the sample size is acceptable and the margins of error tolerable, there are some challenges that need to be acknowledged. The first is sample selection. As noted above, the only common feature among the 30,000 SMEs on the Dun and Bradstreet database was that they had email addresses. While we cannot see any significant reason why this would present a problem, it is at least imaginable that a lurking variable may exist that makes firms with email addresses not representative of the wider SME population. Were a link to be found between the propensity to have (provided) an email address and attitudes to health and safety, it would significantly affect the validity of the results. Secondly, the response rate (around 500 out of a population of around 30,000) is low, though not unusually low for an online survey. This explains in part why the margins of error are as wide as they are. We have reported these 40
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individually in the report. Nonetheless, there is an associated risk that the respondents to the survey are self-selecting. If respondents were primarily drawn from those who were already positive about health and safety, this would significantly affect the results. Thirdly, there is the risk that the task of responding was given to a person with an explicitly health and safety-focused role, who may therefore be naturally more positive about this area of regulation. Figure A1 shows that a substantial number of respondents (78%) had either Health and Safety officers or first aiders as one of their roles, but around two thirds (68%) had other roles, suggesting that a substantial number of respondents had more than one role. We should not, therefore, assume that most respondents’ answers were shaped solely by their health and safety responsibilities. Figure A1: Role of survey respondent 60 50 40 30 20 10 0
Manager, Company Executive/ Chief Exec Secretary Admin officer or Partner or PA
Head Health & First aider of HR Safety Officer
Other
Finally, we need to consider the balance between small and medium firms. As noted above, once we have narrowed our survey down to firms employing 20-249 staff we find that around two thirds were medium enterprises and a third were small. This does not reflect the overall weighting of small and medium enterprises in the economy and so may suggest that our survey results are biased towards the interests of medium-sized companies.
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:: Annex II: Survey text / questions CentreForum on behalf of St John Ambulance are developing a report on Health and Safety regulations and are seeking your views. The survey will not take more than 5-10 minutes to complete, and we are very grateful for your participation. All of your responses will be kept confidential and not passed on to any other organisation. To what extent do you agree or disagree with the following statements? :: ::
I have a good understanding of Health and Safety requirements I have a good understanding of the First Aid components of Health and Safety requirements :: I feel confident in our firm’s current First Aid arrangements :: I feel confident in my (or colleagues’) ability to self-assess our firm’s Health and Safety needs Strongly agree / agree / neither agree nor disagree / disagree / strongly disagree Do you believe your company is compliant with all relevant Health and Safety regulations? Yes / No / Not sure How many people are currently First Aid trained on your premises? 0 / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8 / 9 / 10 / more than 10 / not sure Which of the following apply to your company? :: :: ::
We have assessed our Health and Safety risks and management We have a written Health and Safety policy We keep an accident book 42
SMEs and Health & Safety
:: :: :: :: :: :: :: :: ::
We have an appointed person to manage First Aid policy We have consulted employees on Health and Safety needs We have informed employees of their Health and Safety rights We display a poster on Health and Safety law We provide employees with a leaflet or electronic document on Health and Safety law We have employers’ liability insurance We have one or more suitably stocked First Aid boxes We provide employees with well-maintained Personal Protective Equipment as necessary We ensure employees use Personal Protective Equipment correctly
On the whole, do you consider Health and Safety regulations to be: :: ::
Necessary Unnecessary
On the whole, do you consider Health and Safety regulations to be: :: ::
Easy to comply with Difficult to comply with
Which of the following, if any, do you find make compliance with Health and Safety regulations more difficult? Choose up to 3: :: :: :: :: :: :: :: ::
Don’t understand what’s needed / Insufficient guidance Lack of feedback from employees / unions Lack of time/resources Fear of loss of competitiveness Poor integration with core business activities Perception of low importance Other, please explain (free text) I have not experienced any difficulty complying with these regulations
Which of the following, if any, do you find make compliance with the First Aid components of Health and Safety regulations more difficult? Choose up to 3: :: ::
Insufficient number of staff volunteering Don’t understand what’s needed / Insufficient guidance 43
SMEs and Health & Safety
:: :: :: :: ::
Cost Perception of low importance Lack of staff time Other, please explain (free text) I do not experience any difficulties in complying with the First Aid components of Health and Safety regulation
What makes you comply with Health and Safety regulations? Choose up to 3: :: :: :: :: :: :: :: :: :: :: ::
Complying with client requirements Legal obligation More efficient operations Avoiding staff injuries and time off Avoiding litigation Right thing to do Have been warned or fined before Lower insurance costs Pressure from employees and unions Reputational risk Other, please explain (free text)
Which of the following changes from 2011, 2012 and 2013 are you aware of? :: :: :: :: :: :: :: ::
Fewer inspections for low-risk businesses Revised Approved Codes of Practice and guidance The Health and Safety Executive no longer approves first aid training, qualifications or training organisations The regulations on reporting injuries have been clarified and relaxed Injured claimants must now prove negligence rather than just breach of legislation The Health and Safety Executive now recovers its costs from firms that are found to be in breach with OHS law (Fee for Intervention) The ‘Health and Safety Made Simple’ website launched by the Health and Safety Executive and targeted especially at low-risk SMEs Exempting most self-employed people from health and safety law (proposed) 44
SMEs and Health & Safety
How do you feel about these changes? :: :: ::
Fewer inspections for low-risk businesses Revised Approved Codes of Practice and guidance The Health and Safety Executive no longer approves first aid training, qualifications or training organisations :: The regulations on reporting injuries have been clarified and relaxed :: Injured claimants must now prove negligence rather than just breach of legislation :: The Health and Safety Executive now recovers its costs from firms that are found to be in breach with OHS law (Fee for Intervention) :: The ‘Health and Safety Made Simple’ website launched by the Health and Safety Executive and targeted especially at low-risk SMEs :: Exempting most self-employed people from health and safety law (proposed) Approve / Disapprove / No strong feelings or don’t know Since 2011, do you feel the Health and Safety environment has: :: Resulted in a change in your practice :: Become more effective :: Become more burdensome :: Made it clearer what your obligations are Strongly agree / Agree / Neither agree nor disagree / Disagree / Strongly disagree Where do you go for Health and Safety guidance? :: :: :: :: :: :: :: :: ::
The Health and Safety Executive (including their website) Your local council(s) Training providers such as St John Ambulance Trade associations and business networks Health and Safety consultants Insurance company Equipment / Product suppliers Friends and business contacts Other, please specify (free text) 45
SMEs and Health & Safety
Which of the following changes would be helpful to you? :: :: :: :: :: ::
Reduced Health and Safety requirements A more prescribed approach More specific guidance focussed on businesses like ours Greater instruction from public authorities on ensuring compliance Training courses and guidance from first aid charities or companies Other, please explain (free text)
What is your position in your firm? (Tick all that apply) :: :: :: :: :: ::
Manager / Chief Executive Company Secretary Executive / Admin officer or Personal Assistant Head of HR Health and Safety officer First aider
How many employees does your business have (excluding partners)? :: :: :: :: :: :: ::
0 1-5 6-9 10-19 20-49 50-249 250+
What sector does your business primarily fall under? :: :: :: :: :: :: :: ::
Agriculture, Hunting & Forestry Fishing Mining & Quarrying Manufacturing Electricity, Gas & Water Supply Construction Wholesale, Retail & Repair Hotels & Restaurants 46
SMEs and Health & Safety
:: :: :: :: :: :: :: :: ::
Transport, Storage & Communication Financial Intermediation Real Estate, Renting & Business Activity Public Administration, Defence & Compulsory Social Security Education Health & Social Work Other Community, Social & Personal Service Activities Private Households with Employed Persons Extra-Territorial Organisations & Bodies
Would you agree or disagree that your business manages significant Health and Safety risk? Agree / Disagree How old is your company? :: :: :: :: :: ::
Less than one year 1-2 years 3-5 years 5-10 years 10-20 years 20 years +
Would you be interested in sharing your thoughts on Health and Safety regulations with us in further detail – by phone, email or in person – at a later point? If so, please enter your contact details below.
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