Despite Amendments to the Serious Accident Punishment Act, Employer Punishments Remain... "For SMEs, It Leads Directly to Closure"

Government's Serious Accident Punishment Act Amendment Faces Strong Backlash from Business Community
Some Penalty Provisions Eased but Still Pose Significant Threat to Corporate Management

[Asia Economy Reporter Changhwan Lee] Although the government has submitted a revised bill on the Serious Accidents Punishment Act (Serious Accidents Act) to the National Assembly, opposition from the business community is intensifying. While some punitive provisions were eased in the revision, they are still considered excessive enough to threaten corporate management, and the level of punishment for management (business owners) and prime contractors is deemed too severe compared to major foreign countries.

Revision Focused Solely on 'Corporate Punishment'

On the 29th, when the government’s revised Serious Accidents Act was disclosed, economic organizations that had strongly demanded a halt to the legislation unanimously expressed that it was insufficient. Business leaders expressed serious concerns over the lack of amendments regarding the strengthening of punishments for business owners and prime contractors, which is the most contentious issue.

Im Wootak, Head of Safety and Health at the Korea Employers Federation, said, "Although the government’s revision was announced, companies still have significant anxiety about the bill’s promotion and clearly oppose it. Especially, if there is no change regarding the core issue of strengthening the responsibilities of business owners and prime contractors, it will be difficult for the revision to gain corporate consent."

Until now, even if a serious accident occurred at a workplace, business owners or prime contractors were punished only when specific violations were identified, but if the bill passes, they will be mandatorily punished.

Companies predict that mandatory punishment of business owners will severely restrict corporate activities, and small and medium-sized enterprises (SMEs), in particular, may face closure. A representative from the Korea Federation of SMEs also stated, "If punishment is imposed on business owners in addition to fines on corporations, SMEs will inevitably face closure, so legislation that considers the reality of SMEs is necessary."

There is also criticism that punishing business owners is akin to holding them responsible for something beyond their control and that imposing joint and several liability merely because of their position is similar to the old practice of collective punishment (yeonjoje).

Cho Donggeun, Professor Emeritus of Economics at Myongji University, analyzed, "By this logic, the president, as the final decision-maker, should be held responsible for the current government’s failures in disaster and accident policies. It is a double standard to impose different logics only on companies while not doing so for administrative or legislative responsibilities."

On the 22nd, at the Korea Federation of Small and Medium Business in Yeouido, Seoul, during the 'Economic Organizations' Announcement on Halting Legislation of the Serious Accidents Punishment Act,' Kim Ki-moon, Chairman of the Korea Federation of Small and Medium Business, is delivering a statement with seven heads of economic organizations in attendance. Photo by Kang Jin-hyung aymsdream@

Controversy Over Punitive Liability Remains... Should Move Toward Strengthening Prevention Policies

The business community considers it natural that the causation presumption clause, which deviated from the presumption of innocence principle and caused controversy, was deleted. The causation presumption clause allowed business owners and prime contractors to be held responsible through presumption even if the causal relationship of the accident was not proven.

The bill stipulated that if violations of safety and health obligations were confirmed three or more times by investigative agencies within five years before the accident, or if the business owner obstructed fact-finding investigations or ordered concealment of the incident, causation responsibility could be presumed and imposed on the business owner.

However, the government removed this clause, arguing that it could violate the 'presumption of innocence' principle and that the provision itself was not suitable for presuming causation. The business community emphasized that imposing unconditional punishment on accidents beyond the management scope and responsibility of management violates both the presumption of innocence and the principle of culpability under criminal law, making the clause unreasonable from the start.

Controversy over punitive liability, one of the core principles of the Serious Accidents Act, also remains. The government expanded the scope of application deferral in the revision. The original bill by Assemblyman Park Jumin included a deferral clause stating, "For workplaces with fewer than 50 employees, enforcement begins four years after promulgation." The revision added, "For workplaces with 50 to fewer than 100 employees, enforcement begins two years after promulgation."

Regarding punitive damages, the revision proposed "up to five times" the amount of damages, lowering the standard compared to the original bill's "five times or more" and the Justice Party Assemblywoman Kang Eunmi's bill of "three to ten times."

The business community evaluated that although the government partially eased punitive liability by expanding deferral targets and lowering damage standards through the revision, it clearly showed the intention to push the bill forward. If passed, Korean companies will face the world's highest level of accident punishment through fourfold sanctions: corporate fines, personal punishment of business owners, administrative sanctions such as business suspension and work stoppage, and punitive damages.

In fact, Korea’s Industrial Safety and Health Act already has relatively high punishment levels compared to major advanced countries such as the United States, Germany, and Japan. For violations of safety and health measures, Korea punishes business owners with imprisonment of up to seven years or fines up to 100 million won, whereas Japan imposes imprisonment of up to six months or fines up to 500,000 yen (about 5.5 million won), and the United States imposes imprisonment of less than six months or fines up to $10,000 (about 12 million won).

Therefore, to effectively reduce fatal accidents, the business community argues that rather than strengthening punishments, Korea should significantly enhance its industrial accident prevention policies, which are currently very insufficient compared to other countries.

A business representative said, "Lowering the punishment level of the Serious Accidents Act slightly and delaying its enforcement does not eliminate concerns about corporate management contraction and side effects in industrial sites. Priority should be given to improving the industrial accident prevention system and workplace practices to ensure that the strengthened Industrial Safety Act functions properly."

This content was produced with the assistance of AI translation services.