Tick Tock, the Serious Accident Punishment Act Is About to Take Effect... No Time or Capacity to Prepare

Full Enforcement of Serious Accident Punishment Act Early Next Year... Concerns Over Corporate Survival Risks
Some Borrow to Invest in Facilities... "To the Extent of Risking Bankruptcy"
77.3% of SMEs "Find Compliance Difficult"... Large Corporations Also Tense Over Punishment Abuse

Joint Investigation at Korea Zinc Onsan Smelter Site of Major Accident
(Ulsan=Yonhap News) Reporter Kim Geun-ju = The Ulsan Police Agency, together with the National Forensic Service and others, is conducting a joint investigation at the Korea Zinc Onsan Smelter accident site in Ulju-gun, Ulsan. Two workers died in an accident at this plant on May 30. 2021.6.3
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[Asia Economy Reporters Kim Cheol-hyun, Hwang Yoon-joo, Kim Hee-yoon, Lee Jun-hyung] #. The CEO of Root Company A, located in Siheung, Gyeonggi Province, is hesitant to invest in production facilities due to cost issues, even though the Serious Accident Punishment Act is imminent. They received an estimate that installing risk detection systems would require a total investment of 2.4 billion KRW for three production lines. Last year's sales were about 1.8 billion KRW. The CEO of Company A said, "To equip all facilities with safety sensors and systems, we would have to risk bankruptcy," adding, "In the root industry, there is a sentiment that if something happens, you will inevitably go to prison."

#. Aluminum processing company B, located in Hwaseong, Gyeonggi Province, has invested a total of 1.2 billion KRW from the second half of this year to install safety sensors on production lines and expand automation systems in preparation for the Serious Accident Punishment Act. They poured more than half of last year's sales (about 2.2 billion KRW) into process improvements. The CEO of Company B lamented, "To avoid the Serious Accident Act, we have no choice but to invest in facilities even if it means going into debt."

Concerns among companies are growing around the Serious Accident Punishment Act, which will be enforced on the 27th of next month. Although the law will apply in a month, many companies have not properly prepared, and even those who have face significant cost burdens. Moreover, confusion continues regarding the scope of subjects and the responsibilities of business owners. This was the reason for the outpouring of concerns from companies at a briefing on preparations for the Serious Accident Punishment Act held on the 15th at the Korea Federation of SMEs in Yeouido, Seoul. The industry consensus is, "Even if we try to prepare, time is insufficient, and we are at a loss about what to do immediately." Although enforcement is imminent, the lack of adequate preparation time raises fears that, contrary to the legislative intent, the law could pose a risk threatening the survival of companies.

SMEs Facing Serious Accident Act Risks

According to the ‘Serious Accident Punishment Act Implementation Preparation and Difficulties Corporate Survey’ conducted in the second half of this year by the Korea Federation of SMEs and the Korea Employers Federation, 66.5% of all respondent companies said it would be difficult to comply with the safety and health obligations of management responsibility officers stipulated by the law by the enforcement date. This figure rose to 77.3% among companies with 50 to fewer than 100 employees. The most common reason cited was "the obligations are unclear, so we don't know what or how to do." Kim Tae-geun (54, pseudonym), CEO of an auto parts manufacturing company in Anseong, Gyeonggi Province, said, "It is right to strengthen measures to prevent safety accidents, but the current enforcement decree places too broad a range of obligations on the CEO, and the related laws are not specific." He added, "Small and medium-sized enterprises, which operate centered on the CEO in case of accidents, may face bankruptcy due to huge fines, punitive damages, and legal fees."

Questions about the effectiveness of the law are also being raised on the ground. Lee Young-sik (pseudonym), a site manager at a construction company in Ulsan, said, "Most subcontractors handle construction sites, but workers often change within days, and it is difficult to provide safety education to foreign workers." He added, "Since the CEO is held responsible, these days owners tend to step back and many companies try to find ways to avoid responsibility if an accident occurs later."

Concerns Over Punishment Abuse Among Large Corporations

Large corporations are also expressing frustration. Even if they have established dedicated safety organizations, ambiguity remains regarding the definition of serious accidents, the scope of responsible parties, and compliance requirements, raising concerns about potential abuse of punishment. This is why large companies have recently been reorganizing their legal teams related to industrial accidents separately from their safety organizations. A representative from a large corporation said, "When an accident occurs on site, the company initially works with the labor union to manage the aftermath, but going forward, they will have to dispute the cause, costs, and issues with workers." He added, "Companies will be unlikely to admit responsibility or manage the aftermath first, so if an accident occurs, each side will likely hire lawyers and engage in intense legal battles."

The fact that top executives could face criminal punishment every time an accident occurs is also a burden. Large corporations are appointing CSOs (Chief Safety Officers) responsible for safety management and accountability through year-end organizational restructuring, but the scope of punishment may extend to top management. An industry insider explained, "Among large corporate groups, changes to holding company structures or the creation of CSO positions responsible for safety management are happening around December." He added, "This is a strategic move to maintain stable management rights and prevent management gaps caused by industrial accidents."

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