"Threats to Corporate Management"... Intense Debate Over Responsible Parties and Exemptions in the Serious Accident Punishment Act

Fierce Debate Over Employer and Prime Contractor Responsibility
Business Community Says "Excessively Overreaching... Law Needs Reconsideration"

[Asia Economy Reporters Park Cheol-eung and Sung Ki-ho] The National Assembly's Legislation and Judiciary Committee resumed deliberations on the Serious Accidents Punishment Act on the 5th, but controversies remain. During the meeting, the committee plans to discuss detailed regulations such as penalties for business owners and corporations, compensation provisions, and grace periods for enforcement based on workplace size to reach a consensus. However, the gap in perspectives between the ruling and opposition parties is wide, making agreement difficult.

The business community is also opposing not only the government's revised proposal but also the versions presented by both ruling and opposition parties, arguing that they remain excessively burdensome enough to threaten corporate management. Fierce debates are ongoing particularly over the responsibilities of management (business owners) and prime contractors, the scope of compensation, and the grace periods. We examine the three major issues of the Serious Accidents Punishment Act.

Who is subject to punishment?

The biggest point of contention is whether the CEO is included among the management personnel subject to punishment. Currently, the ruling party insists that management personnel include 'the CEO and the director in charge of safety,' whereas members of the People Power Party and the business community argue that it should be 'either the CEO or the director in charge of safety.' The government proposal includes provisions to sentence business owners to imprisonment of two years or more in the event of industrial accidents.

The business community expresses concerns over the punishment provisions in the government's revised proposal and the ruling party's plan that could lead to the detention of business owners. While agreeing with the legislative intent, the business community holds the position that "the scope of punishment is excessively broad." In particular, provisions imposing large fines and punishing business owners are feared to cause serious harm to small and medium-sized enterprises (SMEs).

In SMEs, the owner often serves as the CEO, so if an accident occurs, the person responsible for managing the aftermath and handling the incident would be detained.

To address this, it is pointed out that the person responsible for the accident should be limited to one individual who practically oversees and manages industrial safety tasks among the CEO or directors. Additionally, it is argued that safety and health obligations should be specified clearly and concretely at a level that management personnel and prime contractors can fulfill.

Whether to extend grace periods by workplace size

The issue with the greatest disagreement between ruling and opposition parties in the Serious Accidents Punishment Act is whether to defer the application period based on workplace size. The bill proposed by Democratic Party members suggests a four-year grace period only for workplaces with fewer than 50 employees, while the government has additionally proposed a two-year grace period for workplaces with 50 to fewer than 100 employees. The Justice Party opposes any grace period, pointing out that 85% of serious accidents occur in workplaces with fewer than 50 employees. Within the Democratic Party, there have been proposals to reduce the four-year grace period to two years, but some argue that since the provision was agreed upon in consultation with labor groups when drafting the bill, it is acceptable to pass it as is. Consideration should also be given to the fact that the COVID-19 pandemic has exacerbated difficulties for SMEs and small business owners.

On the other hand, the business community requests that, in addition to the government proposal, a two-year grace period should also be granted to large corporations. Seung-tae Jeon, head of the Industrial Safety Team at the Korea Employers Federation, pointed out, "If the application is deferred according to company size as in the government's revised proposal, when a fatal accident occurs among subcontractor workers in companies with fewer than 100 employees, the subcontractor's management personnel may not be punished, but only the prime contractor may be penalized." He added, "To resolve such issues, adjusting the grace period is necessary to avoid confusion at the workplace."

"Excessive punishment levels must be aligned with reality"

The high level of punishment compared to advanced countries is also a point of controversy. In the UK and Singapore, the penalty for fatal accidents is imprisonment of up to two years. France and Canada impose imprisonment of up to one year. In contrast, the Serious Accidents Punishment Act imposes imprisonment of two years or more or fines ranging from 50 million to 1 billion KRW on business owners in the event of fatal accidents. This is heavier than the current Industrial Safety and Health Act (imprisonment of up to seven years or fines up to 100 million KRW).

Regarding punitive damages, the government proposed in its revised draft a cap of 'up to five times' the damages. This lowers the compensation standard compared to the original 'five times or more' or the Justice Party lawmaker Kang Eun-mi's proposal of 'three to ten times,' but it is still criticized as high. It is also uncertain whether the Democratic Party, which had previously advocated for strengthened regulations, will accept the business community's opinions.

The business community argues that the level of punishment should be realistic. They suggest removing the minimum fine and reconsidering the maximum fine, as well as reducing punitive damages to within three times the amount.

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