China will impose harsher penalties on companies and their
executives in order to prevent work safety accidents and to protect
On 31 August 2014, the Standing Committee of the National
People's Congress approved the Amendments to the Work Safety
Law which will come into effect on 1 December 2014 (the
"Amendments"). The Amendments make more
than 70 changes to the existing law with a view to:
improving accident prevention and emergency response
enhancing law enforcement; and
increasing penalties for companies and their executives in
violation of the law.
The current Work Safety Law was adopted in 2002. It is widely
believed that lenient penalties and weak enforcement of the law are
among the major reasons for frequent work safety accidents in
China. Severe accidents in recent years such as the 2014 dust
explosion in Kunshan and 2013 oil pipeline explosion in Qingdao
have aroused wide public concern over work safety.
The Amendments impose on companies fines ranging from
RMB200,000 to RMB20 million. The amount of fines depends on
the seriousness of the accident as follows:
ordinary accident: RMB200,000 – RMB500,000
large accident: RMB500,000 – RMB1 million
serious accident: RMB1 million – RMB5 million
extremely serious accident: RMB5 million – RMB10 million;
or RMB10 million – RMB20 million if the circumstances are
The four categories of work safety accidents above are defined,
under a regulation issued by the State Council in 2007, according
to the casualties and losses incurred as a result of the accident.
An "ordinary accident" is an accident which causes no
more than 3 deaths or 10 serious injuries, or direct economic loss
of no more than RMB10 million.
An "extremely serious accident" is one that causes
more than 30 deaths or 100 serious injuries, or more than RMB100
million in direct economic losses.
More severe penalties will also be imposed on the "person
in charge" if the accident occurs due to his/her fault or
negligence. For this purpose, the "person in charge"
generally will be the legal representative or other senior
executives of a company. The penalties include demotion or
dismissal as well as a fine between 30% and 80% of the person's
income of the previous year. (The Amendments do not indicate
whether the income is gross or net of tax.) By way of contrast, the
existing law contemplates a fine for the "person in
charge" of between RMB20,000 and RMB200,000.
The "person in charge" who is responsible for a
serious or extremely serious accident will also be permanently
prohibited from serving as the "person
in charge" in a company in the same
The Administration of Work Safety has also been granted more
enforcement authority. In addition to its existing enforcement
authority, it is now empowered to:
seal up facilities and equipment that fail to comply with
national or industrial standards for work safety;
confiscate hazardous materials produced, stored, used, traded
or transported illegally; and
close down a workplace for producing, storing, using or trading
hazardous materials in violation of law.
The Administration of Work Safety may also order a company to
suspend production or business operations, cease construction, or
stop using relevant facilities or equipment. If the company refuses
to comply with the order, the Administration of Work Safety may
require relevant suppliers to suspend power supply to the violating
company with only a 24-hour prior notice.
Information on serious offenders will be published and shared
with other governmental regulators and banks.
review their work safety policies and implementation in light
of the Amendments; and
review their work safety liability insurance in light of the
nature of their operations and potential risks.
Company executives should be aware of potential liabilities, and
take a more rigorous role in supervising the work safety condition
of their companies.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
The festive activities of staff at employer endorsed Christmas functions should be of concern to employers.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).