Why should SMEs invest in occupational health?

Occupational health services are more prominent in larger organisations than in small businesses. Occupational health specialist Andy Phillips looks at why SMEs should invest in OH and how to decide on the type of services to offer.

Small and medium-sized enterprises (SMEs) are defined within the Companies Act 1985: small enterprises are those with fewer than 50 employees, while medium-sized enterprises have fewer than 250. Both represent a large majority of the overall economy as they employ 12.5 million people in the UK, which makes up approximately 99% of all UK businesses and 58% of total employment, according to the Occupational Health Advisory Committee (OHAC, 2009). Businesses such as construction, wholesale, retail, transport and hotels and catering account for 99% of SMEs.

OH services can play an important role in helping to maintain workplace health and wellbeing in this sector. Anecdotal evidence suggests that small businesses can receive huge benefits from the provision of readily available OH advice, providing there is awareness of the issues that motivate the SME and the ability to motivate and educate the small business in seeing the bigger picture.

While SMEs experience the same types of difficulties as larger businesses, there are a number of differences when focusing upon the OH needs of this sector.

The Chartered Institute of Personnel and Development (CIPD) draws a clear relationship between absence and the size of the work­force, with smaller organisations more likely to report lower absence levels than their larger counterparts. A survey conducted by the Federation of Small Businesses (FSB) in 2006 suggested that absences due to minor ailments make up 75% of those surveyed in the SME sector; this works out at 1.8 days per employee per year.

The effect of long-term absence (LTA) from work has the potential to make a substantial impact on the SME by virtue of the actual absence from the business. Some examples of the direct consequences to the business of LTA include:

  • the financial burden on the small business when paying out statutory sick pay and overtime to other workers;
  • the effect on the skill mix and limited manpower for business productivity, which may lead to worries about the quality of the product or service delivered;
  • the effect of unexpected employee absence with limited resources to cover loss of turnover and potential for loss of product or service delivery; and
  • reorganisation of manpower and staff working longer shifts and more hours to compensate for the backlog of work.

As well as the direct consequences of sickness absence, there are a number of perceived indirect knock-on effects on the SMEs, and these include:

  • job loss and redundancy;
  • altered relationship with clients or customers; leading to
  • loss of business reputation; which leads to
  • liquidation or loss of business.

Many SMEs do not have a qualified and experienced human resources function due to the costs required (OHAC, 2009, accessed February 2011). Evidence suggests therefore that managers are not always trained in absence management; the resulting effect is the impact of LTA on the business. This is because it is not considered until an employee’s absence has incurred heavy financial loss.

quotemarksWhile SMEs experience the same types of difficulties as larger businesses, there are a number of differences when focusing upon the OH needs of this sector.”

With the financial bottom line being a strong motivator, business owners have an increased likelihood themselves to work through illness. The loss of business continuity, a perceived drop in service standards and loss of personal income are key drivers in their motivation to remain at work (FSB, 2006). Moreover, when feeling unwell, SME owners are less likely to seek medical assessment due to fears that the medical advice may affect their ability to work and their overall business strategy.

Facts and figures

Evidence highlighted within a paper from the Health and Safety Executive (HSE, 2006) suggests that 82% of all reported OH injuries occur within SMEs and in some cases these figures rise to 90% of fatal accidents at work.

Many of the SMEs are considered dangerous industries (European Agency for OH Safety and Health at Work, 2003). The HSE suggests that managing health and safety is an integral part of “good business” that helps companies conform to health and safety legislation and to avoid any action that is taken against them from local HSE inspectors.

Anecdotal evidence, however, suggests that some small businesses typically operate in fire-fighting mode, and adopt a “close the stable door after the horse has bolted” approach to the management of health problems at work.

Some risk management measures are perceived as costly and, as such, small businesses may be tempted to re-evaluate the cost be­nefit approach to safety management. There have been a number of occasions when the visit of the local health and safety inspector has prompted an SME to seek appropriate OH support. Evidence of this is highlighted in case study 1.

Despite evidence from studies that indicate that a large number of SMEs recognise the importance of good OH provision, only 3% of people working in SMEs have access to comprehensive OH advice (Pilkington et al, 2001).

Knowledge flaw

A survey conducted by NHS Plus found that SMEs lack an understanding of OH, especially in relation to the services that are provided (Occupational Health, 2008). This evidence is strengthened by Vectra Group Ltd (HSE, 2004) and expanded by OHAC 2010, which suggests that there is poor understanding of OH within SMEs and a lack of management training in the role of OH for managers in this sector.

quotemarksOnly 3% of people working in SMEs have access to comprehensive OH advice.”

The CIPD asserts the view that early involvement of an OH professional is identified as the most effective approach for the management of long-term sickness absence.

Despite this, evidence from the FSB suggests that of those studied within its survey regarding the use of external agencies, most did not use any service for managing sickness absence of employees.

Many SMEs struggle to keep their heads above water regarding the best use of their income. Limited allocation of monies for external services such as health and safety, together with the high-risk nature of the work undertaken by some SMEs, particularly that of the construction industry, means that there is still a gap in the provision of proactive health and safety risk prevention for employees.

Weighing up the benefits

SMEs that do understand the role of OH are motivated to provide the service to their employees. However, the costs of the services influence these decisions and, as such, any free or low-priced services are likely to be attractive to the sector.

It is important to provide tangible demonstration of the effectiveness of OH interventions within UK research. For example, London Underground has seen a return on investment of 8:1 following a stress programme. This means that for every pound spent on workplace health, there is a beneficial return of about £8. This ratio is important to the cash-limited SME sector.

It is recognised by OH professionals that any OH services should be tailored to that of the undertakings it serves and this is particularly so with SMEs.

However, this may lead to problems. What mode of delivery should one adopt when seeking to deliver OH services to this sector? The delivery of OH services has received a certain degree of thought following studies from European models of service provision. Common themes across Europe include making OH health provision mandatory, incentivising the use of OH through tax benefits for SMEs and reducing insurance premiums for small businesses.

The Faculty of Occupational Medicine (FOM) has suggested that SMEs do not necessarily require a traditional doctor-and-nurse-based service but could benefit from simple, sector-specific guidance on practical measures; the aim being to improve health and to prevent health risks at work and those issues that surround the effects of health at work (FOM, 2006). Alternative frameworks have been recommended to include the establishment and provision of OH helplines and websites for those needing help.

quotemarksPractice evidence suggests that retained delivery of OH to SMEs can be as rewarding as those services delivered within other larger sectors.”

As a result, there have been a number of approaches devised in order to deliver OH advice within the SME market, including an NHS Plus SME helpline, the Constructing Better Health scheme, Scotland’s health at work SME toolkit and both the Welsh and English SME helplines.

Despite being readily available, it is important to ensure that the SME sector is aware of this availability in order to gain the most from the services (FSB, 2006).

Making the case for OH

Evidence suggests that there remains a heavy reliance on the use of general practitioners (GPs) in the provision of OH advice or fitness to work advice in the sector (FSB, 2006).

FOM recommends the mobilisation of existing primary care structures such as GPs or practice nurses. However, work by Nicholson argues that GPs are under-resourced to take on additional OH work (Nicholson, 2004).

Whatever the approach, and because of the diversity of the SME sector, it is important to ensure that OH refrains from the “one-size-fits-all” approach (see case study 2).

Is there an argument that preventative OH within SMEs is not truly being addressed? Practice evidence suggests that retained delivery of OH to SMEs can be as rewarding as those services delivered within other larger sectors.

Much depends upon whether or not there is a business case for the profession to deliver retained OH services with the challenges already faced within the profession, such as low availability of qualified and experienced OH professionals and financial viability.

With the diversity within the SME market, there are plenty of challenges to be faced within this sector. Furthermore, once the clinician understands the difficulties that are faced by SMEs, this can often act as a driver to negotiate change in order to prevent unnecessary expenditure.

Previous research has suggested that some SMEs are simply unaware of the role of OH and the benefits it can have for their businesses, but experience has shown that delivering OH to SMEs is worthwhile to the employer, employees and the OH service.

Andy Phillips is an occupational health specialist nurse, lecturer in OH nursing and director of Eminence Occupational Health.


CIPD. “Absence management: a survey of policy and practice 2010”.

Federation of Small Businesses. “Health matters: the small business perspective”. (2006)

European Network for Workplace Health Promotion. “Report on the current status of workplace health promotion in small and medium-sized enterprises (SMEs)”.

European Agency for OH Safety and Health at Work. “Improving OH safety and health in SMEs: examples of effective assistance”. (2003). s.2.3; pp.34.

Occupational Health Advisory Committee. “Report and recommendations on improving access to OH health support” (accessed February 2011). (2009). 

HSE. (2006). RR504 – “Six SME case studies that demonstrate the business benefit of effective management of OH health and safety”.

Occupational Health. (2008). 60(3) 8-9. “SMEs lack understanding of what OH health is about”.

HSE. (2004). Report RR257 – “OH Health and SMEs: focused intervention strategies”.

Nicholson, PJ. (2004). “OH health services in the UK – challenges and opportunities”. OH Medicine. 54:147-152.

Pilkington, A, Graham, MK, Cowie, HA, Mulholland, RE, Dempsey, S, Melrose, AS and Hutchinson, PA. (2002). “Survey of use of OH health support”. HSE RR445/2002

Black, C. (2008). “Working for a healthier tomorrow”.

Faculty of Occupational Medicine. (2006). “Position statement: Provision of OH health services to small and medium enterprises”.

Case study 1

A small manufacturing company in South Wales had received a visit from the local HSE inspector following a complaint from an employee who had alleged that he was experiencing secondary health effects after exposure to a certain metal in the manufacturing process. To date, this is yet to be proven.

Despite control measures being implemented throughout the company, there was little evidence of statutory health surveillance under the Control of Noise at Work and the Control of Substances Hazardous to Health Regulations. As such, the HSE inspector recommended that health surveillance was to be undertaken following the necessary risk assessments.

After the initial audiometry, spirometry and skin inspection screening was completed in 2008, a number of changes were made to the processes and control measures following advice from OH. One such control was identified following skin inspection, when the OH nurse spotted an increased incidence of irritant dermatitis within the company. Following liaison with management, the cause was identified as the regular use of acetone as a hand-washing agent. The incidence of skin problems has now been substantially reduced by the introduction of an appropriate hand-care regime and the use of an appropriate hand-washing solution.

Interestingly, the company has only received personal injury claims that pre-date the OH attendance at the company. At present, the OH adviser is working through case management referrals, best practice forklift truck driver assessments and simple lifestyle screening activities. More recently, OH usage statistics have been provided for management in order to recommend and develop further OH strategies.

Case study 2

A housing association in South Wales with 75 employees was directed to an OH health provider by the SME helpline funded by the Welsh Assembly Government. Staff absence averaged eight days per employee per year. There had previously been advice on employee health from a local GP.

Following an OH-needs assessment, it was agreed to focus on employee absence, provide simple lifestyle screening and conduct workstation risk assessments. Health surveillance was also provided to the three “handypersons” following risk assessments of their job. This was all provided on a one-day-per-month retained flexible contract. At the time of writing, the company absence had reduced sickness absence to two days per employee per year.

However, the true value is found in the groundbreaking work that the company has provided their employees since the introduction of OH. It was recently reported to the OH adviser that the handypersons had been requesting health surveillance for eight years prior to the introduction of the service. Moreover, the company is now looking to apply for accreditation under the Corporate Health Standard – Healthy Working Wales award for their wellbeing and OH strategies. HR managers now wonder how they managed to cope without the provision of retained OH services.

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