US Company Operating in Korea "Concerns About Serious Accident Punishment Act"

The American Chamber of Commerce in Korea, CEO Webinar
Concerns Over Government-Driven Regulations and Punitive Laws
Preparing for Differences in Business Environments Between Korea and the US

On the 8th, the Serious Accidents Punishment Act was passed at the National Assembly plenary session. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporters Choi Dae-yeol and Hwang Yoon-joo] CEOs of American companies operating in Korea have expressed concerns over various regulatory and punitive laws being promoted by the government and ruling party. This stems from the assessment that the business environment has become challenging due to laws such as the Serious Accidents Punishment Act (hereafter referred to as the Serious Accidents Punishment Act), which is set to be enforced in a year, as well as the amended Fair Trade Act and Labor Standards Act that changed at the end of last year. In particular, they foresee that business activities could be restrained due to the increased level of penalties for CEOs under the Serious Accidents Punishment Act.

James Kim, Chairman of AMCHAM, stated at a webinar hosted by the American Chamber of Commerce in Korea (AMCHAM) on the 22nd, "Many laws related to corporate management are changing in Korea, which is especially an important issue for CEOs," adding, "Unlike the U.S., which realistically considers that CEOs cannot be 100% responsible for all matters, Korea requires CEOs to take responsibility." He further noted, "American company CEOs still lack experience in these areas and need to prepare in advance."

The seminar, attended by CEOs and legal and government affairs officers from about 150 member companies, featured six lawyers specializing in corporate and labor law from the law firm Hwawoo, including attorney Shin Sang-heon. They reviewed the amended laws and potential emerging issues, responding to participants' questions. An AMCHAM official said, "We hold seminars about once every 2 to 3 weeks, but unlike previous sessions, many CEOs themselves expressed a desire to attend this time," adding, "There is high interest because many laws directly involve CEOs."

In March of last year, James Kim, Chairman of the American Chamber of Commerce in Korea (AmCham) (left), and Jeffrey Jones, Chairman of the Board, held a press conference on the current situation of the novel coronavirus (COVID-19) on the 5th at IFC in Yeongdeungpo-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

Having contracted throughout last year due to COVID-19, most companies are focusing their management plans this year on recovery or normalization. Meanwhile, from the end of this year, fines for collusion will double, and related laws will change to allow dismissed or unemployed individuals to join labor unions. The Serious Accidents Punishment Act holds business owners or management responsible and allows for criminal penalties if they fail to comply. These contents have also drawn negative reactions from the domestic business community.

In particular, despite the Serious Accidents Punishment Act being such an important issue that requires mid- to long-term planning, enforcement ordinances have yet to be established, leaving foreign companies frustrated over how responsibility will be determined and the extent of preventive measures.

With the law’s enforcement scheduled in a year, opposition remains strong domestically, especially among employer organizations. There are concerns that focusing solely on punishment could cause more harm than good. Park Jae-geun, Head of the Industrial Research Division at the Korea Chamber of Commerce and Industry, said, "While we agree with the law’s intent, it imposes all responsibility for industrial accidents, which arise from complex factors, on companies and applies excessive penalties," adding, "A comprehensive effort including systems for accident prevention, facility investment, education, and awareness change is necessary, and encouraging and motivating these efforts should come first."

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