The Serious Accidents Punishment Act

The Serious Accidents Punishment Act is broadly divided into serious industrial accidents and serious civil accidents.

Serious industrial accident : an accident affecting workers that occurs at an industrial site

• 1 or more deaths
• 2 or more people injured in the same accident requiring 6 months or more of treatment
• 3 or more people with occupational diseases from the same hazard within 1 year

Serious civil accident : a casualty among the public caused by raw materials, manufactured products, public-use facilities, public transportation, and the like

• 1 or more deaths
• 10 or more people injured in the same accident requiring 2 months or more of treatment
• 10 or more people with illness from the same cause requiring 3 months or more of treatment

Under the Serious Accidents Punishment Act, if a business or workplace substantially owns, possesses, or leases raw materials, manufactured products, facilities, or equipment, or carries out production, manufacturing, sale, or distribution through them, it is recognized as having a duty to control the hazards and risk factors arising from those facilities and products.

The party bearing this management duty ordinarily includes the representative director and the responsible managing officer holding representative authority, and executives who substantially hold decision-making authority over safety and health work are also included among the ‘responsible managing officers’ under the Serious Accidents Punishment Act.

If a serious accident occurs, a safety officer, CSO, or similar person who substantially oversees the safety and health system may be subject to punishment even if that person is not the representative director.

For both serious industrial accidents and serious civil accidents, where a breach of the duties imposed on business owners and responsible managing officers is found, criminal punishment and administrative dispositions such as an administrative fine are imposed.

• Fatal accident : imprisonment of 1 year or more, or a fine of up to 1 billion won (imprisonment may be imposed concurrently)
• Injury or illness accident : imprisonment of up to 7 years, or a fine of up to 100 million won
• Recurrence of an accident within 5 years : the sentence may be increased by up to one half
• Joint penalty provision : a fine on the corporation or institution (up to 5 billion won for death, up to 1 billion won for injury or illness)

If a serious industrial accident occurs, the responsible managing officer of the corporation or institution must complete safety and health training.

If the responsible managing officer fails to complete safety and health training without justifiable grounds, an administrative fine is imposed.

• First violation : 10 million won
• Second violation : 30 million won
• Third or later violation : 50 million won

However, the administrative fine may be reduced by up to one half (excluding delinquent payers).

• The violator suffered significant loss of property due to a natural disaster or similar cause
• A serious crisis to the business due to worsening business conditions
• The violation resulted from minor carelessness or error
• The violator made efforts to correct and resolve the state of violation of the law
• Other consideration of the degree and motive of the violation

In addition, the administrative fine may be reduced by about half for workplaces with fewer than 50 full-time workers, construction projects with a contract value of less than 5 billion won, and the like.

Workers, members of the public, and others harmed by a serious accident may bring a claim for damages against the business owner based on a tort under the Civil Act.

In this case, the owner bears liability for damages not exceeding 5 times the amount of loss.

The following matters are taken into account in calculating the amount of damages.

• The scale of the harm that occurred
• The degree of intent or gross negligence
• The type and content of the breach of duty
• The duration and number of breaches of duty
• The economic benefit the business owner gained as a result
• The financial condition of the business owner, corporation, or institution
• Efforts toward relief for victims and prevention of recurrence

When a serious accident occurs, the business owner must stop the relevant work and take measures to evacuate workers.

The owner must also report to the Minister of Employment and Labor without delay, and even where an unavoidable reason arises, must report immediately once that reason ceases.

If, despite a serious accident having occurred, a person damages the scene or obstructs the cause investigation, that person is subject to imprisonment of up to 1 year or a fine of up to 10 million won.

In addition, failing to report a serious accident or filing a false report results in an administrative fine of up to 30 million won.

The core of the Serious Accidents Punishment Act is that it requires not ‘formal procedures’ but ‘substantial preventive measures and continuity of management.’

Accordingly, for a business owner and responsible managing officer to put in place an effective response system, the following measures are necessary.

1) Making the dedicated safety and health organization substantive

The effective management that the law requires is not satisfied by placing a nominal ‘dedicated body.’

Safety and health managers, health managers, occupational physicians, and the like should be assigned beyond the statutory minimum, and given an independent budget and authority so that safety measures are reflected in the day-to-day work of each business unit.

2) Standardizing the procedure for identifying and improving hazards and risk factors

The risk assessment process and the measures to improve hazards and risk factors should not end as a ‘one-time inspection,’ and the procedure should be reflected in internal regulations so that an improvement order and budget execution are possible immediately when a warning sign is detected.

3) Strengthening management of partner companies and subcontractors

An accident at a subcontractor or partner company may result in liability for the principal contractor.

The Enforcement Decree of the Serious Accidents Punishment Act requires that, in the course of contracting, service, and consignment, the contractor evaluate the principal's ability to take safety and health measures and, on that basis, appropriately reflect the construction period and management costs.

4) Strengthening product and manufactured-goods management to prevent serious civil accidents

Measures to prevent civil accidents caused by product defects cannot be limited to the responsibility of the quality control team alone.

A company should strengthen hazard assessment from the production and design stages and prepare recall and pre-inspection procedures, and it should operate internal guidelines that allow immediate reporting and action when a risk arises.

5) Making the emergency response manual specific for when an accident occurs

If a serious accident occurs or there is an imminent danger, a manual covering worker evacuation, work stoppage, immediate rescue measures, and measures to prevent further harm must be in place.

Conducting regular drills so that all staff are familiar with the manual is also advisable.

To comply with the Serious Accidents Punishment Act, which compels commitment and practice from top management, and ultimately to prevent the criminal punishment and damage to corporate reputation that a serious accident can cause, investment in an internal safety and health management system should be combined with ongoing advice from outside specialists.

If you need advice on maintaining the substantial standard required by the law on an ongoing basis, please request a consultation with a lawyer of our firm's Industrial Safety and Serious Accidents Group.

A serious accident lawyer with experience in many corporate litigation and labor cases, labor attorneys, and evidence investigation specialists capable of gathering related evidence will devote themselves to the corporate client's case.

▶Identifying the cause of a serious accident

▶Establishing a strategy for recovery measures

▶Responding to subsequent related litigation

▶Accompaniment through criminal investigation procedures and pleading

▶Responding to the media and labor organizations, and settlement with bereaved families