As the UK heads into what experts believe will be the longest recession since records began, every business will be looking at ways to manage costs and weather the economic storm.

Although much has been said in recent weeks about record profits in the energy sector, both in the media and in political circles, businesses in the North-east are not immune to the impact of the global economic turmoil, says Malcolm Gunnyeon, partner and health and safety law expert, Brodies LLP.

Here, the H&S law expert explains more…

The cost of raw materials is rising, uncertainty around the scale of future energy costs continues and the Chancellor has confirmed that everyone will soon be paying more tax.

Any decision to cut costs within a business is a difficult one but those decisions are being made right now by every business, in every sector of the North-east economy. There is, of course, a myriad of factors that have a bearing on where budgets should be prioritised, and inevitably there will be a range of opinions around the boardroom table regarding where and how it may be possible to streamline costs without impacting on customer service, product quality or staff satisfaction. However, for ethical, legal, and financial reasons, any decision to reduce the budget available to protect the health and safety of staff should be taken only as the very last resort.

First and foremost, protecting the health and safety of employees is simply the right thing to do. It is a value that is embedded in the culture of the business community here, and staff, customers and suppliers rightly expect that value to be vigorously upheld, perhaps even more so in difficult times.

The law has similar expectations. The duty on every business is to reduce health and safety risks to a level that is as low as reasonably practicable. Whilst the cost of protective measures may be a relevant consideration, challenging economic circumstances or the need to maintain profitability is not a defence. In fact, the sentencing guidelines that courts have regard to in health and safety cases specifically refer to “cost cutting at the expense of safety” as an aggravating factor justifying a harsher punishment.

Whilst of lesser importance than the moral obligation and legal duty, there is also a financial imperative to prioritise safety. The reality is that a reduction in safety spend is a false economy. In addition to the very real human cost of a serious workplace accident or fatality, a business guilty of a breach of health and safety law will also face very real financial consequences. Fines imposed for health and safety offences continue to rise and, crucially, they cannot be insured against.

The last five years have seen a significant change in the way in which health and safety fines are calculated. The focus now is on a company’s turnover rather than its profit. That change takes on greater significance against the current backdrop of rising costs and pressures on profit margins. A company’s turnover might remain the same, but its ability to pay a substantial fine will not. Recession and global economic uncertainty do not change the guidance to the courts, which remains that fines must be “sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation”.

So, whilst arguments can undoubtedly be made for deferring expenditure on new equipment, freezing recruitment or restricting budgets for training and development, it is essential that any cost cutting is viewed through a safety lens before it is implemented. Directors must ask themselves whether the proposed reduction in spend compromises the safety of staff or members of the public. If the cut is simply unavoidable, then the reason for the decision and the factors considered should be recorded in detail. It is far easier to prepare a comprehensive account of the decision-making process at the time the decision is made. Once an accident has happened it will be much more difficult or, more likely, simply too late.

This article first appeared in The Press and Journal.