Labor Sector's 'Tilted Playing Field'... "64.8% of Criminal Penalty Items Target Employers"

Federation of Korean Industries Analyzes 432 Criminal Penalty Items in 37 Employment Ministry Laws
"Penalties Should Be Changed to Fines and Excessive Sentences Compared to Overseas Should Be Adjusted"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chae-seok] Among ten criminal penalty items related to employment, labor, welfare, and safety laws, six are targeted at business owners, according to a recent investigation. As labor regulations tighten, pressure on the business community has increased, leading to many difficulties.

On the 26th, the Federation of Korean Industries (FKI) released the results of an analysis of criminal penalty provisions in 37 laws, including 34 laws under the Ministry of Employment and Labor and 3 laws related to employment, welfare, and safety from other government departments. It was found that penalties such as imprisonment and fines were imposed for a total of 432 acts. Among these 432 cases, 280 cases, accounting for 64.8%, explicitly named business owners or employers as the subjects of punishment.

"Labor Standards Act, Industrial Safety and Health Act, etc. Target Business Owners and Employers"

First, among the 37 laws, 24 laws have at least one criminal penalty provision targeting business owners or employers. Among these, eight laws including the Minimum Wage Act have all 42 criminal penalty items targeting business owners.

Among other criminal penalty items, the law with the highest proportion of penalties targeting business owners is the Labor Standards Act at 93.2% (68 out of 73 cases). Following that are the Wage Claim Guarantee Act at 92.3% (12 out of 13 cases) and the Industrial Safety and Health Act at 92.0% (81 out of 88 cases). The Labor Standards Act and the Industrial Safety and Health Act are considered essential management matters, thus attracting significant attention.

In terms of the number of criminal penalty items, the Industrial Safety and Health Act leads with 88 cases, followed by the Labor Standards Act with 73 cases.

"Average Imprisonment of 2.8 Years... Application Rate of Dual Punishment Provisions at 92%"

The FKI also claims that sentencing standards are quite severe. The average imprisonment term for companies or individuals punished due to employment and labor-related issues is 2.8 years, and the average fine is 27.4 million KRW. CEOs fear imprisonment the most, and there are many complaints that the penalties are harsh.

Among fines, the case of a fatal accident under the Serious Accidents Punishment Act amounts to 1 billion KRW, the highest amount recorded. For imprisonment, violations of personal information protection obligations under the Framework Act on Employment Policy or the Wage Claim Guarantee Act carry the longest sentence of 10 years.

Among criminal penalty items, 397 cases apply the "dual punishment provision," which punishes both the perpetrator and the corporation simultaneously, accounting for 91.9% of the total 432 cases. Typically, the dual punishment provision imposes a fine on the corporation equal to that imposed on the violator, but under the Serious Accidents Punishment Act and the Industrial Safety and Health Act, the corporation is fined 5 to 10 times the violator's fine.

The FKI also pointed out that there is a constitutional risk in the dual punishment provision. In 2007, the Constitutional Court ruled that "dual punishment provisions without exemption clauses are unconstitutional." Since then, amendments to include exemption clauses in the dual punishment provisions have been underway, but Article 30 of the Minimum Wage Act's dual punishment provision remains unamended. The exemption clause states that "a corporation or individual shall not be punished if they have not neglected reasonable care and supervision to prevent the violation."

"Possibility of Enhanced Punishment Such as Combined Imprisonment and Fines"

There are also voices that the burden is heavy due to many enhanced punishment provisions under employment and labor laws. The laws include provisions that allow ▲ combined imprisonment and fines, ▲ imposition of attendance orders along with imprisonment or fines, ▲ increasing existing penalties by half, and ▲ imposing punitive damages up to five times separately from penalties.

In particular, the Serious Accidents Punishment Act, which targets business owners or management officials, not only imposes fines or imprisonment for violations but also allows ▲ application of dual punishment provisions ▲ combined fines and imprisonment ▲ punitive damages up to five times ▲ increased penalties by half for repeated accidents ▲ orders to complete safety and health education (with fines for non-compliance).

"Mass Production of Corporate Criminal Records... Need to Alleviate Excessive Punishments"

The FKI acknowledged that it is natural for many penalty items to target business owners due to the nature of employment and labor legislation. However, even considering this characteristic, Korea's sentencing is heavier than that of major foreign countries. Regarding this, the FKI argued, "Excessive imposition of penalties by administrative agencies to achieve regulatory goals risks unnecessarily producing criminal records without providing substantial benefits to victims or workers," and emphasized the need for improvement.

Yoo Hwan-ik, head of the FKI's Industrial Headquarters, stated, "If companies are punished mainly with excessive penalties, efforts to create quality jobs, maintain employment, and create safe workplace environments may be discouraged. Since the government is working on improving economic penalties, it is necessary to reform laws and systems to ensure that substantial benefits reach workers and industrial accident victims and to promote free corporate activities."

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