Case Analysis / Legal Updates

Industrial Accident Compensation Insurance Act | Analysis of a Court Judgment Holding That the Act Is Difficult to Apply to an Employee Who Died While Dispatched Overseas

The bereaved family of a worker who died while dispatched overseas filed a lawsuit against the Korea Workers' Compensation and Welfare Service, seeking payment of survivors' benefits and funeral expenses, but the court did not accept the claim.

The reason was that the worker could not be regarded as a subject of the Industrial Accident Compensation Insurance Act. We will analyze the judgment in detail to explain how this came about.

1. The Industrial Accident Compensation Insurance Act Lawsuit, the Detailed Background

The plaintiffs in this lawsuit were the bereaved family of A, a worker who died while dispatched overseas. A belonged to an affiliate of a domestic large corporation and, under instructions from the company, began working at a local Chinese subsidiary in 2019.

The following year, however, A suddenly collapsed while working and, although taken to a hospital, ultimately died. The cause of death was myocardial infarction.

A few months later, A's bereaved family claimed survivors' benefits and funeral expenses from the Korea Workers' Compensation and Welfare Service, but the Service did not accept the claim.

The reason was that, for A to be covered by the domestic Industrial Accident Compensation Insurance Act, voluntary enrollment as a worker dispatched overseas was required, but A was neither a subject of voluntary enrollment nor had the workplace applied for it.

A's bereaved family therefore filed a lawsuit against the Service seeking revocation of the disposition of non-payment of survivors' benefits and funeral expenses.

The Industrial Accident Compensation Insurance Act Lawsuit, the Plaintiffs' Arguments

During the trial, A's bereaved family argued that A fell within the scope of the Industrial Accident Compensation Insurance Act, on the grounds that A had moved to China under the company's instructions while working domestically and that the local Chinese subsidiary likewise carried out its business in accordance with the headquarters' decision-making.

They also emphasized that A received work instructions from the headquarters and that A's salary was likewise determined by the headquarters' annual salary contract.

Their position was that the place of work was merely China, while A was in fact affiliated with the domestic headquarters and worked under its instructions, so A could be covered by the industrial accident insurance.

2. The Industrial Accident Compensation Insurance Act Lawsuit, the Court's Determination

The court did not accept the arguments of A's bereaved family.

The court's determination was that the local Chinese subsidiary was a company established under Chinese law and therefore had a separate, independent existence.

The court further explained that A was subject to the rules of employment of the local Chinese subsidiary, was paid by the local Chinese subsidiary, and paid individual income tax in China.

The court also rejected the argument that A had worked under the direction of the headquarters.

According to the court, there were no specific circumstances showing that A had regularly reported work to the Korean headquarters or received direct instructions from it.

In addition, although the headquarters did provide A with certain benefits, such as welfare points, the court added that this was merely a policy intended to prevent employees from avoiding work in China or to encourage such work.

The Industrial Accident Compensation Insurance Act Lawsuit, the Relevant Statutes

Industrial Accident Compensation Insurance Act, Article 122 (Special Provisions for Workers Dispatched Overseas)
(1) Where an insured person under Article 5 (3) and (4) of the Premium Collection Act dispatches a person to engage in work in a business carried out in an area outside the Republic of Korea (excluding areas prescribed by Ordinance of the Ministry of Employment and Labor), if the insured person applies to the Service for insurance enrollment and obtains approval, the worker dispatched overseas may be deemed a worker employed in the insured person's business within the territory of the Republic of Korea, and this Act may be applied accordingly.
(2) The wage amount that serves as the basis for insurance benefits for a worker dispatched overseas shall be the amount determined and publicly notified by the Minister of Employment and Labor, taking into account the wage amount of workers in the same occupation employed in that business and other circumstances.
(3) Matters necessary for the payment of insurance benefits to workers dispatched overseas shall be prescribed by Ordinance of the Ministry of Employment and Labor.
(4) Matters concerning the calculation of insurance premiums, the application for and approval of insurance enrollment, the reporting and payment of insurance premiums, the extinguishment of the insurance relationship, and other necessary matters for workers dispatched overseas to whom this Act applies under paragraph (1) shall be governed by the Premium Collection Act.

“However, where a worker who has established an industrial accident compensation insurance relationship with the business owner of a business carried out within the country is dispatched to work abroad, if, upon a comprehensive review of the actual conditions of that work, the place of work is merely abroad while the worker in substance belongs to the domestic business and works under the direction of the employer of that business, then in such a case the industrial accident compensation insurance relationship established with the business owner of the domestic business must be deemed to remain in effect, and the worker is therefore covered by the Industrial Accident Compensation Insurance Act; otherwise, where this is not the case, the Industrial Accident Compensation Insurance Act does not apply to a worker dispatched abroad.” (See Supreme Court, Decision of April 29, 2010, 2009 Du 22829)

3. The Industrial Accident Compensation Insurance Act Lawsuit, Daeryun's Strategy

As the number of companies expanding overseas increases, legal disputes over whether industrial accident coverage applies to workers dispatched overseas have likewise become frequent.

In particular, because whether the industrial accident insurance applies may differ depending on whether an overseas assignment is a ‘business trip’ or a ‘dispatch,’ disputes over this point often arise in court.

This precedent holds that, even where a company has a domestic enterprise as its headquarters, a worker cannot be recognized as a subject of the Industrial Accident Compensation Insurance Act if the worker was affiliated with a separate overseas corporation and received salary and work instructions from it.

In the case of the Industrial Accident Compensation Insurance Act, the situations to which it applies are varied and the relevant legal principles are also intricate, so difficulties may arise at the litigation stage.

At Daeryun Law Firm LLP, a team of attorneys with extensive practical experience and expertise provides high-quality legal services in labor and industrial accident matters.

If you have any questions regarding the Industrial Accident Compensation Insurance Act or other labor and industrial accident laws, you are welcome to contact Daeryun Law Firm LLP at any time.

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