"66.5% of Companies with Over 50 Employees Find It Difficult to Comply with the Serious Accident Act by the Enforcement Date"

Response Companies 40%, Budget Allocation, Inspection and Improvement of Compliance with Relevant Laws
"Obligations Excessively Broad, Punishment Too Severe... Exemption Provisions Needed"

[Asia Economy Reporter Ki-min Lee] With just over four months remaining until the enforcement of the Serious Accidents Punishment Act, a survey revealed that six out of ten companies find it difficult to comply with the related obligations by the enforcement date. This is due to unclear obligations and scope of penalties, as well as difficulties in budgeting and executing the immediate procurement of personnel, facilities, and equipment. Moreover, the severity of criminal penalties is considered too high, raising concerns that even industrial accidents without intentional or gross negligence could lead to criminal punishment of business owners or management officials, potentially causing business suspensions not only for small and medium-sized enterprises but also for large corporations.

The Korea Employers Federation and the Korea Federation of SMEs announced on the 7th the results of a 'Survey on the Implementation Preparation and Difficulties of the Serious Accidents Punishment Act' conducted among 314 domestic companies (with 50 or more employees). The Serious Accidents Punishment Act, which includes provisions to sentence business owners and management officials to imprisonment of one year or more or fines up to 1 billion KRW in the event of industrial fatal accidents, will be enforced from January 27, next year. For workplaces with fewer than 50 employees, the Act will apply from January 27, 2024.

However, regarding whether the obligation of management officials to ensure safety and health as stipulated in the enforcement decree can be complied with by the enforcement date, 66.5% of all respondent companies and 77.3% of companies with 50 to fewer than 100 employees answered that it would be 'difficult.'

Among the obligations of management officials, 41.7% of respondent companies identified 'budgeting and execution necessary for securing personnel, facilities, and equipment, and improving harmful and dangerous factors,' and 40.8% pointed to 'inspection and improvement of compliance with safety and health-related legal obligations' as the most difficult regulations to comply with.

Furthermore, companies anticipated that the biggest difficulties after the enforcement of the Serious Accidents Punishment Act would be ▲ excessively broad scope of obligations increasing management burden (61.5%) ▲ possibility of punishment even if accidents occur due to worker negligence (52.2%) ▲ excessive level of criminal penalties causing serious anxiety about punishment (43.3%).

Regarding the most urgent issues to be improved in the Serious Accidents Punishment Act, 74.2% responded that establishing exemption provisions for management officials’ punishment in serious industrial accidents without intentional or gross negligence is necessary. Following that, large corporations most frequently selected the specification of management officials’ obligations and the scope of responsibility of the primary contractor (52.3%), while small and medium-sized enterprises most often chose the mitigation of the level of criminal punishment for management officials (37.3%). For large corporations, this reflects the unclear legal responsibility when accidents occur at subcontractors, and for SMEs, it appears to reflect the fear of punishment since the business owner is often the owner-manager.

Ryu Ki-jung, Executive Director of the Korea Employers Federation, pointed out that the ambiguity of the Serious Accidents Punishment Act remains unresolved, causing not only SMEs but also large corporations to struggle with compliance, making confusion and side effects on the ground inevitable. Director Ryu emphasized, "While excessive criminal penalty provisions are problematic, it is highly unreasonable for management officials to face criminal punishment even for accidents without intentional or gross negligence," urging the government and the National Assembly to prepare exemption provisions and pursue supplementary legislation.

Lee Tae-hee, Head of the Smart Jobs Division at the Korea Federation of SMEs, also stated, "Most SMEs are directly managed by owners, so the fear of business suspension due to punishment is very significant," adding, "Active government consulting and budget support considering industry-specific characteristics are necessary, and a grace period of more than one year should be granted to allow SMEs sufficient preparation."

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