On January 8, 2021, the bill on Punishment for Serious Accidents passed the National Assembly and was enacted into law. The Act on Punishment for Serious Accidents (the “Act”) stipulates that business owners and persons responsible for management will be criminally liable for serious accidents caused by their failure to their duties to implement occupational safety and health measures. With the enactment of the Act, companies with five or more regular employees and their management personnel will be subject to harsher punishment than as previously set forth under the Occupational Safety and Health Act (the “OSHA”) if a serious accident (i.e., a serious industrial or public accident) occurs due to their violation of duties concerning risk prevention in the workplace. Companies now face the burden of strengthening their compliance concerning occupational safety and health measures to prevent the occurrence of these accidents and to mitigate against potential risks of aggravated sanctions under the Act.
I. Key Aspects of the Act
1. Expanded criminal liability exposure
Under the Act, a “business owner” or “person responsible for management”(each, a “Subject Person”) is required to fulfill the duty to ensure occupational safety and health even if such person is not directly in charge thereof. If a serious accident occurs in violation of such duty, such as the case of death of one or more persons or case where several persons have become injured or ill and require treatment over a certain period of time, a Subject Person may be subject to criminal liability and held accountable for punitive damages. The Act defines “a person responsible for management” as someone “who represents the business and has the authority and responsibility to overall manage the business or someone corresponding to the foregoing in charge of tasks related to occupational safety and health.” Due to the ambiguous reach of “a person responsible for management” under such definition, controversy is expected over the scope of criminal liability exposure under the Act.
2. Duty to ensure occupational safety and health
Under the Act, a Subject Person has the duty to prevent hazards or risks in relation to occupational safety and health. However, the Act merely stipulates the duties in general terms, such as “measures to establish and implement the safety and health management system” and “managerial measures that are necessary to perform duties pursuant to applicable occupational safety and health laws”. The specific duties of a Subject Person to ensure occupational safety and health will be further specified in the Enforcement Decree of the Act in due course.
3. Increased duties in case of contracting, service provision or consignment
Even in case of contracting, service provision or consignment, if a Subject Person is actually responsible for the control, operation and management of the relevant facilities, equipment and workplace, such person bears the duty to ensure occupational safety and health for a third party performing the applicable tasks (such as the subcontractor or consignee) as to prevent the occurrence of a serious industrial accident. The OSHA also contains provisions on the contractor’s duty to take measures related to occupational safety and health. Therefore, the relations between them should be reviewed to ascertain the scope of relevant duties.
4. Expanded legal liability
- Criminal liability:
- In case of death of one or more employees, a Subject Person may be subject to an imprisonment of at least one year or a criminal fine of up to KRW 1 billion, and the company may also be subject to a criminal fine of up to KRW 5 billion.
- In case where there are two or more injured employees who need treatment for at least six months or where three or more persons become occupationally ill within a year, a Subject Person may be subject to imprisonment of up to 7 years or a criminal fine of up to KRW 100 million, and the company may also be subject to a criminal fine of up to KRW 1 billion.
- Punitive damages: In case of intentional or gross negligence, the company and the Subject Person be subject to punitive damages not exceeding five times (5x) the actual damages suffered.
5. Serious public accidents
This Act defines a “serious public accident” as a serious accident, such as the case of death of one or more persons or case where ten or more persons have become injured or ill and need treatment over a certain period of time, as a result of defects in the design, manufacture, installation or management of specific raw materials or products, public facilities or public means of transportation. In case of such serious public accident, the Act imposes criminal liability and punitive damages on the company and the Subject Person. Such level of potential liability is unprecedented.
II. Considerations for Companies
As discussed above, the Act contains various ambiguous provisions that could cause controversy, which will likely cause confusion in the early stages of enforcement of the Act. Nonetheless, companies will face considerable risks once the Act takes effect. Therefore, it would be advisable for companies and relevant personnel to review their existing practice and ensure that its occupational safety and health is adequate prior to implementation of the Act. As such, before the Act takes effect, it would be necessary for companies to undertake overall compliance monitoring regarding occupational safety and health in conjunction with the duties of the representative director to establish safety and health plan and report to and receive approval from the board of directors pursuant to Article 14 of the amended OSHA, which has become applicable from January 1, 2021.
Yoon & Yang is well-equipped to provide legal advice to companies in regards to the Act on the Punishment of Serious Accidents and other OSHA-related laws based on its accumulated expertise and knowledge over the years in the area of occupational safety and health. Please do not hesitate to contact us if you have any questions.