Industrial Accident Compensation Insurance Act

The following businesses are not subject to the Industrial Accident Compensation Insurance Act.

1. Businesses eligible for accident compensation under the Public Officials and Soldiers Accident Compensation Act
2. Businesses eligible for accident compensation under the Seafarers Act and the Fishers and Fishing Vessels Accident Compensation Insurance Act
3. Businesses eligible for accident compensation under the Pension for Private School Teachers and Staff Act
4. Household employment activities
5. Individual businesses with fewer than five regular workers among agriculture, forestry, fishery, and hunting businesses

• Insurance solicitors
• Construction machinery operators
• Door-to-door study material instructors
• Golf course caddies
• Parcel delivery drivers
• Quick-service couriers
• Loan brokers
• Credit card membership solicitors
• Designated (substitute) drivers
• Door-to-door salespersons
• Door-to-door inspectors of rental products
• Home appliance delivery and installation technicians
• Cargo truck owner-operators at construction sites, such as water trucks and cargo cranes
• All commercial cargo truck owner-operators
• Software technicians
• After-school program instructors
• Tourism interpreter guides
• Children's school bus drivers

Under the Industrial Accident Compensation Insurance Act, industrial accident insurance is in principle mandatory for all workers.

When an employer uses workers, the employer must file a report of establishment of industrial accident insurance with the Korea Workers' Compensation and Welfare Service within 14 days from the date business commences. (Violation results in an administrative fine of up to 3 million won.)

However, even at a workplace that has not enrolled, a worker may file an industrial accident claim directly without the employer's consent, and the Korea Workers' Compensation and Welfare Service investigates the facts in lieu of employer confirmation to decide whether to approve the industrial accident.

Employers must comply with their obligations to file the establishment report and pay premiums within the statutory deadline so that, even if an industrial accident occurs, legal liability and financial burdens can be minimized.

▶Disadvantages for Employers Found Not to Have Enrolled

• Lump-sum payment of premiums for the period of non-enrollment
• If an accident occurs while not enrolled in insurance, collection of 50% of the insurance benefit amount (the collected amount does not exceed five times the premium)
• Separate administrative fines for failure to enroll in the National Pension, health insurance, and employment insurance

• An accident occurring during work or acts under the worker's employment contract
• An accident occurring due to a defect in, or negligent management of, a facility provided by the employer
• An accident occurring during an event organized or directed by the employer, or during preparation for such an event
• Other accidents arising from natural disasters such as typhoons, floods, and earthquakes, and from sudden situations
• A reasonable causal relationship between the work and the accident or disaster

The burden of proving the causal relationship lies with the worker or surviving family member who seeks to receive insurance benefits.

In addition, the causal relationship should generally be judged based on the health and physical condition of the worker concerned, rather than on an average person.

In this case, a disaster caused by the worker's intentional act, self-harm, or criminal act is not recognized.

Suicide by jumping due to stress caused by work, recognized as a work-related accident

A case in which a worker, after stress accumulated from life abroad and an excessive workload, fell into a state of mental derangement and committed suicide by jumping from a window is recognized as having a reasonable causal relationship with the work. (Supreme Court Decision 99Du3331, June 8, 1999)

If, due to a work-related cause, the following illness or disability arises or the worker dies, this is likewise judged to be a work-related accident.

• Illness from exposure to physical agents, chemical substances, dust, or pathogens
• Illness caused by work that places a strain on the body
• Mental stress caused by workplace harassment, abusive language from customers, and the like

[Types Recognized as Work-Related Illnesses]

• Cerebrovascular and cardiac diseases
• Musculoskeletal diseases
• Respiratory diseases
• Neuropsychiatric diseases
• Lymphatic and hematopoietic diseases
• Skin, eye, and ear diseases
• Liver diseases
• Diseases caused by infection and acute poisoning, and the like
• Occupational cancer

When a worker suffers a work-related accident and gives birth to a child with an injury, illness, or disability, that child is called a 'child with impaired health.'

In this case, medical care benefits, disability benefits, nursing benefits, funeral expenses, and vocational rehabilitation benefits for the child may be received.

The disability grade for a child with impaired health is determined after the age of 18.

For industrial accident insurance, once three years have passed since the insurance relationship was established, the premium rate is increased or decreased by up to 20% according to the insurance benefit-to-premium ratio. (There is no increase or decrease for a benefit-to-premium ratio of 75% to 85%.)

This applies to businesses such as those with 30 or more regular workers, other than construction and logging businesses.

In addition, certain types of businesses with fewer than 50 workers may receive an additional premium reduction of up to 30% if they obtain recognition from the Ministry of Employment and Labor and establish a risk assessment or an industrial accident prevention plan.

However, if a ground such as the occurrence of an accident arises, the recognition is revoked and the premium is recalculated and additionally collected.

In other words, if industrial accidents occur frequently, the premium rate is increased, and this directly leads to an additional fixed-cost burden beyond labor costs.

However, workplaces with fewer than 30 regular workers, those within three years of the establishment of the insurance relationship, commuting accidents, industrial accidents attributable to a third party, work-related illnesses, and accidents caused by force majeure are not reflected in the individual experience rate.

[Examples of Increase and Decrease]

-Premiums paid by the company over three years: 10 million won

-Industrial accident compensation paid to workers over the same period: 15 million won (paid by the Korea Workers' Compensation and Welfare Service) -> Loss ratio calculated at 150%

→ General rate increased by 16.1%

-Premiums paid by the company over three years: 10 million won

-Industrial accident compensation paid to workers over the same period: 1 million won (paid by the Korea Workers' Compensation and Welfare Service) -> Loss ratio calculated at 10%

→ General rate decreased by 18.4%

The Ministry of Employment and Labor publicly discloses workplaces with conditions such as the occurrence of accidents causing two or more fatalities, a fatality rate per ten thousand workers higher than the industry average, concealment of industrial accidents, or failure to report them.

For disclosed workplaces, in public construction bidding such as the construction industry, their pre-qualification (P.Q) score is lowered, which in effect functions as a restriction on bidding.

Under the Industrial Accident Compensation Insurance Act, industrial accident insurance basically replaces the employer's compensation liability.

However, a worker or a surviving family member may additionally file a civil lawsuit if the employer's intent or gross negligence is recognized.

For accidents caused by the failure to install safety devices or by defects in facilities, the liability of the possessor of the structure additionally applies.

Note that when calculating civil damages, industrial accident insurance benefits already received from the Korea Workers' Compensation and Welfare Service are deducted.

Companies must thoroughly manage the following in order to prevent industrial accidents from occurring and, when they do occur, to minimize legal disadvantages.

• Re-examination of the scope of industrial accident insurance coverage and the covered workers for each workplace
• Establishment of a safety and health management system (risk assessment, regular safety training, worker participation)
• Prompt reporting, recording, and preservation when an accident occurs (industrial accident investigation report, etc.)
• Preparation of internal guidelines and training to prevent industrial accident concealment
• Response to the risk of public disclosure as a workplace with frequent accidents – establishment of an accident management process
• Companies participating in public bidding should regularly review management indicators such as the fatal accident rate per ten thousand workers
• Advance preparation of objection and administrative appeal procedures in the event of a premium dispute
• Legal advisory and evidence management to prepare for civil lawsuits by injured workers

The Industrial Accident Compensation Insurance Act is directly connected to a company's ESG management.

In connection with the Serious Accidents Punishment Act and the Occupational Safety and Health Act, preventing safety and health risks and, when an accident occurs, handling it through lawful procedures to protect corporate trust and sustainability is critically important.

Company management must recognize that industrial accident risk management goes beyond premium increases and may lead to greater damage to external reputation and disadvantages in business operations.

Our firm's Industrial Safety and Serious Accidents Group helps minimize unnecessary premium burdens through legal interpretation of complex insurance relationships, including the calculation of industrial accident insurance premiums, and through procedural responses.

In addition, when an industrial accident occurs, we will work to quickly ascertain the facts, claim insurance benefits, and respond to disputes.