Example of Accident and Illness Costs

Accident and illness costs are the expenses that a company or institution incurs due to accidents or illnesses that affect its employees. These costs can be classified into three categories: accidents, illnesses and prevention.

Accident Costs

Also known as human costs, they are those that arise once an employee has suffered an accident in the workplace.

Disease Costs

These costs are generated when illnesses have already occurred in workers, or preventively when potential illnesses are treated. These include payment of health insurance or social security contributions.

Prevention Costs

They are investments made with the objective of minimizing the risk of accidents. These can range from changes in facilities to the purchase of safety equipment.

Importance of Cost Management

Maintain Economic Balance: It is crucial that these expenses are always below the profits generated. Otherwise, the sustainability of the company would be at risk.

Who bears the costs?

In general, the costs are shared:

• The Employer: Covers the financial cost, which includes insurance and medical expenses.
• The employee: Face the physical and emotional toll resulting from the accident or illness.

Practical example

Prevention Costs

Let's assume a company with 200 employees decides to upgrade its tanning facilities to safely handle substances like sulfuric acid and chromium. The company acquires safety equipment and trains its staff in the proper handling of these materials.

Human Costs

These costs could include rehabilitation of an employee who suffered burns due to an accident with sulfuric acid, or support for your family in case of disability.

Economic Costs

The company must decide whether to assume these expenses directly or take out insurance that covers such eventualities. The latter could be considered a passive investment that minimizes long-term costs.

Role of Administration in Cost Management

Directors must ensure that expenses incurred in the prevention and treatment of accidents and illnesses do not exceed profits. They should also evaluate whether it is convenient to hire an occupational health service that covers medical expenses.

In short, effectively managing costs related to accidents and illnesses is crucial to the well-being of both employees and the company.