The Serious Accidents Punishment Act (the “SAPA”), which was promulgated on January 26, 2021, will go into effect on January 27, 2022 for businesses (or places of work) with 50 or more employees. Representing a meaningful departure from the existing Occupational Safety and Health Act (the “OSHA”)—which has received criticism for not being effective in preventing workplace accidents, with the root cause being found in the OSHA regime imposing criminal liability mainly on those persons who are responsible for the specific location where the accident occurred—the SAPA expressly places responsibility for workplace accidents and occupational illnesses on the top decision-maker of the business concerned, in addition to broadening the scope of obligations and strengthening penalties for violations.
This legislative development took place in parallel with changes to the OSHA regime in Korea. For example, the amended OSHA will require representative directors of large companies to submit a safety and health plan to their respective boards of directors for approval. In addition, the Ministry of Employment and Labor (the “MOEL”) announced its 2021 audit plan for occupational safety and health matters.
Key Aspects of the SAPA
1. Legislative Goals
Among other things, the SAPA seeks to secure safety and health of workers in the workplace—or the members of the general public, where applicable—by holding accountable the top decision-maker of the business concerned for any violation of the SAPA which results in a “serious accident” as defined in the SAPA. By subjecting the top decision-maker—whether such person is an individual business owner or the responsible management personnel in a company—to criminal punishment for violation of the SAPA, the goal is to encourage fundamental changes at the top in terms of attitudes towards safety and health and incentivize concrete action to prevent serious accidents.
2. Obligation to Secure Safety and Health
The obligations of businesses and responsible management personnel under the SAPA are broad in scope and are comprised of the following:
- Establish and implement safety and health management system
- Establish and implement a plan to prevent recurrence of serious accident
- Perform the government’s improvement or corrective order as applicable
- Take managerial measures to comply with the applicable safety and health laws
3. Obligation of Service Recipient Company
If a company (“Company A”) receives services from another company (“Company B”), then Company A has the obligation to secure the safety and health of the workers employed by Company B where: (i) Company B’s workers provide labor services to Company A and (ii) at the place of work, which is subject to de facto control, operation and management by Company A (as determined by reference to the facilities, equipment and location concerned).
4. Responsible Management Personnel
An individual business owner or the responsible management personnel of a business (i.e., a person who represents the business and has the authority and responsibility to manage the business, or a person with a comparable level of authority in relation to safety and health matters) must fulfill the obligation relating to safety and health under the SAPA.
5. Penalties
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Serious Industrial Accidents
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Fatalities (one or more persons): imprisonment of one year or more and/or a criminal fine of up to KRW 1 billion (both may be imposed concurrently)
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Injuries (two or more persons receiving medical treatment of six months or longer due to the same accident): imprisonment of up to seven years or a criminal fine of up to KRW 100 million
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Occupational illness (three or more persons within one year, due to the same hazard): imprisonment of up to seven years or a criminal fine of up to KRW 100 million
* Punishment will be expanded by 50% in case of repeated violations within five years
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Serious Public Accidents
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Fatalities (one or more persons): imprisonment of one year or more and/or a criminal fine of up to KRW 1 billion (both may be imposed concurrently)
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Injuries (ten or more persons receiving medical treatment of two months or longer due to the same accident): imprisonment of up to seven years or a criminal fine of up to KRW 100 million
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Illness (ten or more persons receiving medical treatment of three months or longer due to the same cause): imprisonment of up to seven years or a criminal fine of up to KRW 100 million
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6. Vicarious Liability for Companies
A company may be subject to a criminal fine of up to KRW 5 billion in case of fatality (or up to KRW 1 billion in case of injury or illness). However, if a company is found to have exercised due care or supervision to prevent a violation of the SAPA, then the company may not be held liability for a serious accident.
7. Punitive Damages
In case of a serious accident which results from willful misconduct or gross negligence in performance of obligation to secure safety and health, the business owner may face punitive damages of up to five times the actual damages. The business owner may not be held liable to pay punitive damages if the business owner is found to have exercised due care or supervision to prevent a serious accident.
Key Aspects of the Amended OSHA (to go into effect in 2021)
1. Obligation on Representative Director to Prepare Safety and Health Plan (Effective from January 1, 2021)
A joint stock company with 500 or more employees or a joint stock company which ranks within (and including) 1,000 in 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 safety and health plan on an annual basis and report the same to the respective company’s board of directors for approval, as well as to diligently carry out the plan.
2. Prohibition on Delegation of Roles of Safety Manager and Health Manager (Effective from October 21, 2021)
A place of business with 300 or more employees cannot outsource a safety manager or health manager to an outside agency and must directly appoint the safety manager and the health manager from among the employees of the business.
MOEL’s Audit Plan for Safety and Health in 2021
1. Three Key Enforcement Areas
The MOEL will conduct focused audit with respect to falling from height, being squeezed between objects and wearing of personal protective equipment. The MOEL is also expected to conduct audit of (i) manufacturing businesses which use a large number of hazardous equipment and (ii) construction businesses when dangerous tasks are performed at construction sites.
2. Supervision over Safety and Health
The MOEL will enhance oversight over businesses which use subcontracting arrangements involving use of third party workers on site, and check whether the businesses concerned have carried out their respective obligations as service receiving companies regarding safety and health matters. As for the construction industry, the MOEL will conduct audits with respect to the headquarters as well as the construction sites.
3. Prevention of Large-Scale Accidents (e.g., fire and explosion)
With respect to businesses subject to the Process Safety Management (PSM) reporting obligation, if they receive a poor grade for three consecutive years, the MOEL plans to issue a work suspension order and carry out a health and safety audit. As for the construction industry, the MOEL is expected to conduct audits when tasks with exposure to fire hazard are performed.
Implications
Recently, the corporate responsibility for industrial accidents, including serious accidents, has steadily increased. Underlying this legislative development is the view that the root cause of industrial accidents is the insufficient safety and health management system within the relevant businesses and, in order to address such deficiency, it is necessary to hold the businesses and responsible management personnel accountable and strengthen regulatory oversight.
In light of these trends, there is a growing importance for businesses to establish and implement a safety and health plan that is concrete, realizable and tailored to the attributes and size of the businesses, and carry out regular monitoring and improvement processes to mitigate the risks faced by businesses and their responsible management personnel.
