For many small and medium-sized enterprises (SMEs), occupational health (OH) is something they know they should take seriously. But often only engage with when a problem has already escalated. Imagine this. An employee is off sick for months. A stress grievance is raised. An HSE inspection flags exposure risks. A manager feels “stuck” and asks for an OH report to move things forward. On the surface, this looks like a sensible response. In practice, poor OH decision making (or poorly structured use of OH advice) can quietly cost SMEs far more than they realise.
Not just financially, but in time, confidence, legal exposure and operational effectiveness.
This article explores:
- why poor OH decision making happens so often in SMEs
- how common misconceptions create risk rather than reduce it
- the legal and regulatory context in the UK
- and what good OH decision making actually looks like in practice and how SKC Occupational health consulting can support
Occupational Health Is Often Used (But Not Always Used Well)
Most SMEs don’t deliberately misuse occupational health. The problem is more subtle.
OH is frequently treated as:
- a compliance exercise
- a medical “sign-off”
- a way to defer a difficult decision
- or a protective shield if things later go wrong
This mindset is understandable. Particularly for businesses without in-house HR or legal teams, but it fundamentally misunderstands the role of occupational health in UK employment practice. OH advice is one input into decision making. It does not replace management judgement. It does not make decisions for you. And it does not remove risk by default.
When OH is treated as a substitute for decision making rather than a support to it, costs begin to accumulate quietly and persistently.
The First Hidden Cost: Decision Paralysis
One of the most common patterns we see in SMEs is decision paralysis.
A long-term absence case continues month after month.
Multiple OH reports are commissioned.
Each report raises caveats, possibilities and recommendations, but no clear direction.
Managers hesitate.
HR feels exposed.
The employee remains in limbo.
From a legal and operational perspective, this is often the most risky position of all.
UK employment law does not require absolute certainty before action is taken. What it requires is that decisions are:
- reasonable
- proportionate
- evidence-based
- and procedurally fair
Repeatedly commissioning OH reports without clarifying the decision you are trying to make does not strengthen your position, it weakens it.
Tribunals frequently focus on:
- whether the employer understood the advice
- how it was applied
- and whether delay itself caused harm
Inaction, in other words, is still a decision.
The Second Hidden Cost: Misunderstanding “Defensibility”
Many SMEs believe that obtaining OH advice automatically makes a decision “safe”. This is a dangerous assumption.
In UK case law, OH reports are treated as evidence, not authority. Decision-makers are expected to:
- understand the advice
- question it where appropriate
- and apply it in the context of the role and the business
A report that is vague, poorly framed, disconnected from the job role, or misunderstood by managers can actively undermine a defence rather than support it.
In disability discrimination and unfair dismissal cases, tribunals regularly examine:
- whether the employer asked the right questions
- whether the report addressed the actual role
- and whether reasonable adjustments were properly considered and tested
Blind reliance on OH advice (without managerial analysis) is rarely persuasive.
The Third Hidden Cost: Escalating Absence and Operational Drift
Poor OH decision-making has a direct operational cost. In SMEs, every prolonged absence is felt more acutely:
- workloads are redistributed
- productivity drops
- temporary cover becomes expensive
- manager time is absorbed
When OH processes are unclear or reactive, absence often becomes self-perpetuating.
Employees remain off work because expectations are unclear, decisions are delayed, adjustments are discussed but not implemented, or the business appears uncertain.
HSE research consistently demonstrates that prolonged absence reduces the likelihood of a successful return to work. Early, structured intervention leads to markedly better outcomes. Occupational health should therefore shorten absence duration, not unintentionally prolong it.
The Fourth Hidden Cost: Manager Confidence and Capability
One of the least visible (but most damaging) consequences of poor OH decision-making is its effect on managers. In many SMEs line managers receive little formal training in OH issues, HR support is limited or overstretched, and/or managers fear “saying the wrong thing”.
When OH processes feel opaque or overly medicalised, managers often disengage. They stop having meaningful conversations, addressing performance issues, and/or escalating concerns early. Instead, everything is deferred to OH, even when the issue is primarily managerial rather than medical. Over time, this erodes management capability and confidence, increasing reliance on external advice without improving outcomes.
The Fifth Hidden Cost: Legal Exposure Through Poor Process
From a UK legal perspective, the biggest risk is rarely whether OH advice was obtained, but how it was used.
Common risk areas include:
- failure to consider reasonable adjustments properly
- lack of role-specific analysis
- inconsistent application of advice
- poor documentation of decision-making
- and excessive delay
HSE guidance, ACAS codes, and tribunal decisions all emphasise process. A well-reasoned decision, even one that is difficult for the employee, is far more defensible than a poorly managed, overly cautious process that drags on without resolution.
Why SMEs Are Particularly Vulnerable
Large organisations often benefit from internal occupational health teams, specialist HR support, legal oversight, and well-established frameworks. SMEs typically do not. As a result, clarity, proportionality, and structured support become even more critical. Ironically, in the absence of internal expertise, SMEs may over-compensate by commissioning more reports than necessary, delaying or avoiding decisions, or following advice without fully understanding it. None of these approaches reduce risk in the long term, and many inadvertently increase it.
What Good OH Decision-Making Looks Like in Practice
Effective occupational health support in SMEs is not about producing more reports. It is about asking better questions, understanding the business context, and aligning occupational health advice with the real decisions employers need to make.
In practice, this means:
1. Being Clear on the Decision
Before any referral:
- What decision are we trying to make?
- Capability?
- Adjustments?
- Safety?
- Attendance management?
2. Understanding the Role
OH advice must relate to:
- the actual job demands
- operational constraints
- safety requirements
Generic advice is rarely helpful.
3. Using OH as Decision Support
OH should:
- inform management judgement
- not replace it
Managers remain responsible for decisions.
4. Acting Proportionately and Timely
Delay increases risk.
Clear action reduces it.
SKC Occupational Health consulting will support you develop a different way of thinking about Occupational Health
Occupational health should be viewed as a strategic support function, not a compliance tick-box. It exists to enable confident decision-making and to reduce uncertainty, not simply transfer it elsewhere. This requires a shift in mindset: away from “What does the OH report say?” and towards “How does this help us make a fair, defensible decision?”
Why This Matters for SMEs in 2026 and Beyond
- Regulatory scrutiny is not decreasing.
- Workplace health issues are becoming more complex.
- Employee expectations are rising.
- Managers are under pressure.
SMEs that use occupational health well will:
- resolve issues earlier
- reduce absence
- improve manager confidence
- and lower legal risk
Those that use it poorly will continue to absorb hidden costs, quietly but consistently.
Final Thought
SKC Occupational Health Consulting is not a safety net you reach to when things go wrong.
We are an evidence based decision-making occupational health tool that helps SMEs act fairly, proportionately and confidently, before issues escalate.Our difference lies not in how often OH is used, but how clearly it is integrated into management decisions.
