Issues Regarding the Act on the Punishment, etc. of Critical Industrial Accidents

Issues Regarding the Act on the Punishment, etc. of Critical Industrial Accidents

 

Abstract

A heated debate over the Act on the Punishment, etc. Of Critical Industrial Accidents is yet to come to an end despite its promulgation in January 2021. A series of tragic industrial accidents over the years led to a public discussion over the need to enact a new law to enhance liabilities and allow criminal punishments of the employers as well as companies regarding the serious industrial accidents. In response, the Act on the Punishment, etc. Of Critical Industrial Accidents was passed. However, the business circles are opposed to the Act because they believe the punishments are excessive and the comprehensive liabilities discourage both the domestic and global corporations. On the other hand, the labor circles criticize that the Act is insufficient to prevent the accidents and protect the employees. This paper argues corporate compliance is a proper legal response to deal with the uncertainty of such controversial law.

 

I. Introduction

The Act on the Punishment, etc. Of Critical Industrial Accidents (henceforth the Industrial Accidents Act) was promulgated on January 26th, 2021. The Industrial Accidents Act intended to enhance employers’ legal responsibilities in serious industrial accidents but unfortunately brought backlash from both the business and labor circles. This paper aims to provide key contents of the Industrial Accidents Act, along with the criticisms raised by the business circles as well as the labor communities. Lastly, this paper will suggest corporate compliance as a legal response to this new controversial Act.

 

II. Understanding the Industrial Accidents Act

  1. Contextual Background of the Industrial Accidents Act[1]

In response to the series of fatal industrial accidents in Korea, public awareness on the issues of industrial accidents began to grow. Before the enactment of the Industrial Accidents Act, there was a revision in the Occupational Safety and Health Act to strengthen the safety regulations in the workplaces mainly to prevent ‘the outsourcing of the risk’. ‘The outsourcing of the risk’ refers to the corporations outsourcing dangerous labors to subcontractor companies where such labors are usually given to temporal employees. This allowed corporations to escape from their responsibilities for industrial accidents. However, after the tragic death of a young temporal employee of the subcontractor of the Tae-an Thermal Power Plant in 2018, the public demanded revision of relevant laws in order to prevent such outsourcing and irresponsibility.

Although the Occupational Safety and Health Act was revised in 2020, criticisms were raised for its insufficiency to prevent industrial accidents. It was an administrative regulation that allowed punishing original contractor only if the liabilities defined in the Labor Standard Act are violated. Also, it had limitations to holding the employer responsible for the industrial accident itself. Thus, the Industrial Accidents Act was passed by the National Assembly after an amid debate over the content of the draft bill. The contents that follow explains the key features of the Industrial Accidents Act.

 

  1. The Purpose and the Effective Time of the Industrial Accidents Act

The Industrial Accidents Act was enacted to define the enhanced liabilities and allow criminal punishments, administrative sanctions, as well as punitive damages towards the employer. The goal is to prevent serious industrial accidents and protect employees. For a business with 50 employees or more, the Industrial Accidents Act is to take effect a year from the promulgation while a business with less than 50 employees will be regulated by the Act three years after the legislative notice. However, an exceptive clause states that a business with less than 5 employees is excluded from the regulation which raises concerns from the labor circles regarding the effect of the Act.

 

  1. Enhancement of the Employer Liabilities

According to the Industrial Accidents Act, “the employer” subjected to the legal responsibilities refers to a person who represents and exercises overall control over the business or a person in charge of the safety and health work within the business. The liabilities under the Act include, building up and maintaining a safety and health managing system to prevent industrial accidents, preparing countermeasures in response to critical industrial accidents, following through the administrative regulations according to the relevant laws, and carrying on other legal responsibilities that will be further implemented by future Presidential decrees.

If a fatal industrial accident is caused by the violation of the Industrial Accidents Act, the employer is subjected to criminal punishments of a minimum jail sentence of 1 year, or a fine up to 1 billion won(about $900,000). An employer responsible for serious industrial accidents without any death toll is to face a maximum jail sentence of 7 years or a maximum fine of a 100 million won. Due to the dual liability clause, the company separately faces a maximum fine of 5 billion won for the deathly accidents and that of 1 billion won for other incidents with an additional clause which exempts the company that provided an appropriate level of supervision. In addition to such penalties, both the top executives and the corporate can be responsible for the punitive damages of up to 5 times the amount of the original damages.

 

III. Criticisms from the Business Circles

  1. Comprehensiveness of the Industrial Accidents Act

The business circles and legal experts point out that the comprehensiveness of the Industrial Accidents Act increases the risk of the employer and the companies due to the uncertainty of legal interpretation and application. Some of the issues that further needs specification are the accurate definition of those subject to the punishments, liabilities of the employer and the company regarding the employees’ safety and health, the range of legal responsibilities of the original contractor if the labor was subcontracted, and a possible contradiction between the newly enacted Industrial Accidents Act and the existing criminal punishment laws for intentional crimes.[2]

 

  1. Excessive Punishments Dispiriting the Domestic and International Corporations

Considering that punishing the employer by the Industrial Accidents Act depends on whether he or she violated the safety and health related liabilities, the secondary industry which is easily exposed to many industrial hazards will inevitably be affected by the Act.[3] Industries regarding the construction, manufacture, petrochemistry, steel, and shipbuilding have been the backbone of Korea’s economy ever since the industrialization. The business and corporate communities are showing concerns that criminal punishments and punitive damages will discourage these crucial industries of Korea.

Another backfire of the Industrial Accidents Act concerning the business circles is the possible risks of the small and medium-sized companies.[4] First, the heavy fine of the employer and the company as well as punitive damages can lead to an insolvency of a small-sized company. In most of these cases, the employer is the owner of the company. Therefore, when the employer is punished, these small businesses are left with no leadership in charge to settle the problem. In addition, the Industrial Accidents Act enhances the liabilities of the companies which leads to an increase in relevant costs. To reduce such costs, the original contractor might discontinue the contract with subcontractor. Considering that 42.1% of the domestic small-sized manufacture businesses are engaged in subcontracting contracts, the Act can cause serious economic damages.[5]

In addition to the possible negative impacts on the domestic businesses, increased owners’ risk might dispirit the investing global corporates or even lead to a corporate exodus.[6]

 

IV. Criticisms from the Labor Communities

  1. A “Ragged” Law

The labor communities point out that the Industrial Accidents Act has been ragged by the corporate and political interests and that the Act fails to meet the goal set in the beginning of the enactment. For instance, the name of the draft bill incorporated the word ‘corporate’ to emphasize the punishments of the companies. However, in the process of revising the draft, the word ‘corporate’ was omitted. Another setback criticized by the labor communities is that the liabilities clause for the government officials supervising the safety and health has been removed from the final bill.[7] In addition, the minimum fine has been omitted from the bill and is further limited by the existence of the maximum fine.[8] Such changes raises concern in the labor communities that the Act will be ineffective to achieve the original intentions – endowing heavy responsibilities upon the companies and the employers to prevent serious accidents in the workplace.

 

  1. Exclusion of Companies with Less than 5 Employees

The biggest loophole of the Industrial Accidents Act is that businesses with less than 5 employees are exempted from the Act.[9] For instance, a couple days after the bill was passed, a 51 years old employee who worked at a plastic recycling factory died because her arm got stuck in the recycling machine. Even if there had been violations of safety and health liabilities by the employer, he or she cannot be punished by the Industrial Accidents Act for that factory had less than 5 employees. Such small-sized businesses consist 79.8% of the entire businesses in which 31.6% of industrial casualties and 24.5% of industrial death toll took place in 2019.[10] The labor circles criticize that the Act which neglects such small-sized businesses is ineffective in preventing accidents and protecting the employees.

 

V. Dealing with the Uncertainty: Corporate Compliance

Major law firms have already begun to prepare for the legal disputes concerning this newly enacted Industrial Accidents Act. Many law firms have created task force teams to deal with this new change and hosted seminars on the relevant issues to inform and prepare their clients. Along with such efforts, corporate compliance is being emphasized as the preventive measures to industrial accidents as well as a method to implement safety and health liabilities.[11] If a company abides by the occupational safety compliance policies, it will help to prevent accidents. Also, even if accidents and casualties are not prevented, the compliance program can act as a proof which shows that the employers fulfilled their liabilities defined by the Industrial Accidents Act. Though the law itself can be uncertain or controversial, an appropriate solution can be found during the process of seeking out the best possible response to the law.

 

 

 

 

 

References

Han, Woo Ram. Moon, Jae Yong. “안전책임 입증할 때만 중대재해 경영자 처벌“

Maeil Business News Korea, 6 Jan. 2021, https://m.mk.co.kr/news/politics/view/2021/01/16903/.

Hong, Seok Ho. “암참 회장 “한 기업 임원, 미보다 훨씬 높은 수준의 법적 책임 져야“

DongA Ilbo, 22 Jan. 2021, https://www.donga.com/news/article/all/20210122/105052271/1.

Kang, Han. “중대재해 방지, ‘필요한 안전 조치‘ 어디까지인가“ Law Times, 21 Jan. 2021, https://m.lawtimes.co.kr/Content/Article?serial=167405.

Kwon, Young Kook. “중대재해법, 제 눈엔 ‘종이호랑이법‘일 뿐입니다“ OhmyNews, 21 Jan. 2021, http://omn.kr/1rsbq.

Oh, Jong Tak. “기업살인법 본뜬 중대재해법, 실효성은 있을까” Sisa Journal, 25 Nov. 2020,

http://www.sisajournal.com/news/articleView.html?idxno=208109.

Park, Sang Hyun. “‘중대재해법’ 웨비나 나선 로펌들… “사고 예방이 가장 강력한 대응수단“ Herald Business, 22 Jan. 2021, http://biz.heraldcorp.com/view.php?ud=20210122000532&ACE_SEARCH=1.

 

 

 

 

 

 

 

 

 

 

[1] Oh, Jong Tak. “기업살인법 본뜬 중대재해법, 실효성은 있을까” Sisa Journal, 25 Nov. 2020,

http://www.sisajournal.com/news/articleView.html?idxno=208109.

[2] Kang, Han. “중대재해 방지, ‘필요한 안전 조치‘ 어디까지인가“ Law Times, 21 Jan. 2021, https://m.lawtimes.co.kr/Content/Article?serial=167405.

[3] Id.

[4] Han, Woo Ram. Moon, Jae Yong. “안전책임 입증할 때만 중대재해 경영자 처벌“

Maeil Business News Korea, 6 Jan. 2021, https://m.mk.co.kr/news/politics/view/2021/01/16903/.

[5] Id.

[6] Hong, Seok Ho. “암참 회장 “한 기업 임원, 미보다 훨씬 높은 수준의 법적 책임 져야“

DongA Ilbo, 22 Jan. 2021, https://www.donga.com/news/article/all/20210122/105052271/1.

[7] Kwon, Young Kook. “중대재해법, 제 눈엔 ‘종이호랑이법‘일 뿐입니다“ OhmyNews, 21 Jan. 2021, http://omn.kr/1rsbq.

[8] Id.

[9] Id.

[10] Id.

[11] Park, Sang Hyun. “‘중대재해법’ 웨비나 나선 로펌들… “사고 예방이 가장 강력한 대응 수단“ Herald. Business, 22 Jan. 2021, http://biz.heraldcorp.com/view.php?ud=20210122000532&ACE_SEARCH=1.

Posted in 2021, Spring 2021.