South Korea: Issues Regarding The Enactment Of The Serious Accidents Punishment Act Of Korea And Strategy For Companies In Korea

On January 26, 2021, the Korean government enacted the Serious Accidents Punishment Act (hereinafter referred to as the "SAPA"). The SAPA will go in effect on January 27, 2022, with a one-year grace period. The Korean National Assembly has indicated that the existing Occupational Safety and Health Act ("OSHA") has not properly provided the expected measures such as prevention of, follow-up management on, and damage restoration from life-threatening accidents occurring in businesses or at workplaces and these legal deficiencies have been responsible for the recurrence of large-scale accidents sacrificing human lives.

Aiming to address the above problems, the SAPA provides that aggravated penalty will be imposed to business owners and/or executives of businesses or workplaces where serious workplace accidents have occurred. The SAPA intends to ensure the right to safety for the workers and citizens by establishing sound corporate culture and safety management system of companies.

I. Main Contents of the SAPA

1. Purpose of SAPA

The SAPA is purported to prevent serious accidents and to protect the life of citizens and workers by providing for the legal ground to punish business owners and executives along with the companies in the event they are in breach of their duty to ensure safety and health in the course of operating their business or workplace, public facilities, public transportation means, or handling materials or products harmful to the human body.

2. "Serious Accident" Defined

"A serious accident" prescribed in the SAPA is classified into two types:

1. Serious Industrial Accident: This type of accidents refers to 'any death, injury, or illness as defined under the SAPA, which are caused by work-related structures, equipment, raw materials, gas, steam, dust, or caused in the course of performing works or other duties.'
2. Serious Public Accident: This type of accidents refers to a 'serious accident (death, injury or illness as defined under the SAPA) caused by a defect in design, manufacture, installation, or management of certain raw materials or products, public facilities or public transportation means'.

3. Who is Liable?

The SAPA prescribes that business owners and/or executives are obliged to ensure the safety of employees and others in the businesses or at the workplaces that are practically controlled, operated or managed by them or a company/institution under their control.

In particular, the SAPA intends to address the loopholes of the existing OSHA, which allowed the business executives of the original contractor to impute their liability regarding accidents by engaging third parties (sub-contractors, service providers, others who have been delegated such work). The SAPA expands the scope of punishment so that criminal liability may be directly imposed on the executives of the original contractor. In addition, the degree of punishment for negligent offenders—that has been relatively light so far—becomes much severe under the SAPA— one year or a fine of more than KRW 1 billion.

Direct Obligation on the Management

The safety and health obligation directly imposed on business owners and executives under the SAPA are as follows:

1. securing measures to establish and implement a health and safety management system comprising manpower and budget necessary to prevent accidents and disasters;
2. securing a system to prevent recurrence of accidents and disasters and to implement relevant measures;
3. securing measures to implement the improvement/correction orders of a central/local government agency pursuant to relevant laws and regulations; and
4. securing measures necessary to perform obligations under safety and health laws/regulations.
5. For further detail on the measures regarding items (1) and (4), please refer to the Enforcement Decree of the SAPA.

4. Comparison between OSHA and SAPA

The following is a comparison between the persons subject to OSHA and SAPA, duties thereof and criminal liability in case of any breach:

II. Issues Remaining to be Resolved Under the SAPA

During the enactment process of the SAPA, there were numerous legislative bills proposed and there were seriously conflicting opinions among the legislators until the final proposal was made. As there was insufficient time to fully conduct the deliberation process, the core aspects of the SAPA still remain unclear, which subjects the SAPA under heavy criticism from both the management side and the labor organizations even as the Enforcement Decree of the SAPA is being legislated.

For instance, "a business executive, etc." is defined as "a person who represents the business and has the overall authority and responsibility to manage the business, or a person who performs certain equivalent works and duties for the safety and health." However, it is unclear whether this term refers to the final decision-maker of a business organization constituting the entirety of business, or whether this term includes a person in charge of health and safety management at a workplace where human life was damaged. Specifically, in practice, the safety of a workplace depends not only on the business executives, but also on the roles and responsibilities of senior managers, supervisors, and workers. Therefore, imposing criminal liability on a person with the ultimate decision-making authority in a business may result in a conflict with the constitutional principle of self-responsibility.

In addition, there are some provisions that require clear standards to interpret the obligation to secure safety and health. In theory, the vaguely defined concepts under the SAPA are expected to be further defined and specified under the Enforcement Decree of the SAPA, which is currently being legislated. Nevertheless, the draft Enforcement Decree prepared by the Ministry of Employment and Labor of Korea ("MOEL") still remains vague and indefinitive at large, raising serious concerns among the relevant parties. If the issues raised so far—such as violation of the constitutional principle of clarity—fail to be addressed before the date of effect, which is coming in less than seven months, there is a potential for further confusion and conflict regarding the constitutionality of the SAPA.

III. Our Suggestions for Companies in Korea

As the SAPA purports to provide legal grounds for the criminal liability on business owners and executives, the concern brought to the management world is significant. In particular, for example, the construction industry accounts for more than half of all industrial accidents involving human deaths. As such, the construction industry was significantly alarmed and responded by taking proactive measures, such as forming internal taskforce teams to prepare proper measures.

However, as the Enforcement Decree of SAPA is still pending to be enacted, it is not easy for companies to prepare clear measures as of current. Nevertheless, it is important that companies begin to take proactive measures to comply with the SAPA based on what we know: the legislative intent of the SAPA, the contents of the Enforcement Decree (to be finalized in the first half of year 2021), relevant press releases and updates from the government body (including MOEL), and the duties specified under the OSHA would allow for companies.

It is further noted that, prior to the enforcement of the SAPA, the MOEL had executed special site inspections on the headquarters of the company that has been involved in a multitude of accidents damaging human life, and has proposed the following six (6) items requiring major review from enterprises to establish and implement an effective safety and health management system:

• Leadership of CEO
• Safety Management Goals
• Manpower and Organization
• Risk Factor Management System
• Workers Engagement
• Upgrading Security Capacity of Subcontractors.¹

Furthermore, the MOEL has provided the draft Enforcement Decree, which specifies the mobilization of professional workforce for safety and health (organization exclusively responsible for workplace safety and health), provision of budgets, compliance monitoring and corrective measures, system for workers engagement at sites, health and safety education for employees, and improving of the health and safety management capabilities of subcontractors.

Considering the facts above, a company may take the following strategies in response to the SAPA:

• Set forth the safety and health goals and reflect the evaluation system in the company's management strategy;
• Prepare a separate organization and professional staff dealing with safety and health affairs and clarify the works and duties of the members;
• Delegate to persons responsible for health and safety affairs the substantive authority to secure safety and health of the business or workplace, such as preparation of budget allocation of human resources; and conduct regular checks and inspections on the site;
• Enact and amend regulations related to safety and health, including regulation for report to and resolution by the Board of Directors and regulation on delegation and decision making, and regulation on personnel affairs;
• Establish an autonomous safety management system through external expert consulting and detailed analysis on the safety-related technology;
• Develop manuals for work performance, procedures, and guidelines for safety and health affairs to be used by the company and its affiliates and/or contractors and propose specific implementation plans; and
• Conduct training for employees to fulfill the duty to secure safety and health in the business and at the workplace.

IV. Concluding Remarks

Despite the opposition from the Korean business world that the SAPA is too harsh, a series of safety accidents have recently led to calls for a revision to strengthen the SAPA. Further, the Korean government is conducting special supervision on major companies before the enforcement of the SAPA.

Companies in Korea are now required to establish a safety and health management system at a level much higher than the past; therefore, companies must thoroughly and actively monitor the trends of the Korean government and the National Assembly to meet the standards of obligation to secure safety and health at workplace. For any inquiries, contact our team at pr@draju.com.

Footnote

1. See briefing on the results of special inspection over the headquarters of a construction company "T", issued on April 26, 2021 by the Ministry of Employment and Labor of Korea.

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.