From January 1, 2021, pursuant to Article 14 of the Occupational Safety and Health Act (the “OSHA”), a joint stock company (“jusik hoesa” in Korean) with 500 or more employees or a construction company which ranks within (and including) 1,000 in terms of the construction track record for civil engineering projects per Article 23 of the Framework Act on the Construction Industry must have its representative director prepare a plan regarding safety and health on an annual basis and report the same to the company’s board of directors for approval, and to implement the approved plan in good faith.  

Given that this duty is imposed on the representative directors of companies, it raises a number of important considerations—including in relation to the newly enacted Serious Accidents Punishment Act (the "SAPA"), which will take effect from January 27, 2022 for businesses with 50 or more employees—and we discuss these considerations and more in the form of Q&A below. 

1.   Are all businesses subject to Article 14 obligation under the OSHA?

No.  The obligation regarding a safety and health plan (the “Safety and Health Plan”)—which must be fulfilled every year—falls on the representative director of one of the following types of businesses: 

• A joint stock company with 500 or more employees, or

• A construction company which ranks within (and including) 1,000 in terms of the construction track record for civil engineering projects. 

For the avoidance of doubt, companies which do not fall under the above scope do not have to comply with Article 14 of the OSHA (for example, non-construction companies with fewer than 500 employees). 

2.   What action must be taken by a representative director who is subject to Article 14 obligation?

Every year, such representative director must prepare the Safety and Health Plan, submit the plan to the company’s board of directors for approval and implement the approved plan in good faith.  

Article 13 of the Enforcement Decree under the OSHA prescribes that the following matters be set forth in the Safety and Health Plan, among other things: 

1. The management principle regarding safety and health;  

2. The composition, personnel, and roles and responsibilities of the company’s safety and health management organization;  

3. The budget and facility status related to safety and health; and  

4. The activities related to safety and health in the immediately preceding year and the action plan regarding safety and health for the immediately following year. 

3.   What is the liability exposure for a representative director who fails to comply with Article 14 obligation?

If a representative director subject to Article 14 of the OSHA fails to comply with the obligation, he or she may be subject to an administrative fine not exceeding KRW 10 million (approximately USD 9,000 according to the USD-KRW exchange rate at the time of writing).  

4.   Once the board of director approves the Safety and Health Plan, is there additional obligation on the representative director, who is subject to Article 14 obligation, to oversee the implementation of the Safety and Health Plan?

Yes, the representative director must in good faith implement the Safety and Health Plan approved by the board of directors. 

5.   When is the deadline to obtain the approval of the board of directors regarding a Safety and Health Plan?

There is no specific deadline set forth in the OSHA. 

However, obtaining the board of directors approval as soon as practicable during the first half of each year is recommended for the following reasons:  

• In the administrative guideline jointly published in December 2020 by the Ministry of Employment and Labor (the “MOEL”) and the Korea Occupational Safety and Health Agency (the “KOSHA”) titled a “Guideline on Representative Director’s Establishment of Safety and Health Plan” (the “Guideline”), it is recommended that the representative directors subject to Article 14 obligation prepare the Safety and Health Plan and submit the same to the board of directors for approval during the initial months of each year, so that adequate time can be secured for plan implementation (as well as for improvements, as may be needed) during the remainder of the year.

• The MOEL has indicated that the labor audits during 2021 will examine the status of compliance regarding Article 14 of the OSHA, where applicable.

6.   Could you elaborate on the relationship between Article 14 of the OSHA and the SAPA?

To begin with, this new obligation under Article 14 of the OSHA is placed on the representative directors of joint stock companies with 500 or more employees (or construction companies with track record ranking within 1,000).  The SAPA, which will take effect on January 27, 2022 for businesses with 50 or more employees, will impose various obligations on the “Responsible Management Personnel,” which is generally understood to refer to the representative directors of Korean companies. 

[Korean version]