August 12, 2022

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The Legal System

Foreign Businesses Seek Clarification of New Work-Accidents Law – The Chosun Ilbo (English Edition): Daily News from Korea

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Foreign businesses here have asked for urgent clarification of a new accidents-at-work law that severely punishes employers if their staff are injured in the course of their duties.

The law, which came into effect on Jan. 27, is an attempt to respond to Korea’s poor record of work safety and holds executives personally liable for workplace accidents, with penalties of up to W1 billion or one year in prison (US$1=W1,211).

The legislation has been welcomed by labor advocates, but business owners worry that the badly drafted law could deter businesses from investing or establishing roots in Korea.

On March 30, the Chosun Ilbo’s Asian Leadership Conference hosted a webinar about the law’s prospects with James Kim, the chairman of the American Chamber of Commerce in Korea; David Park, an attorney at law firm Yoon & Yang; and Sean McLaughlin of consulting firm Cadmus Group.

The law replaces Korea’s previous workplace safety law, which was widely agreed to be ineffective. But is the new law any better?






From left, Sean McLaughlin, David Park and James Kim

The new law “subjects companies and high-level personnel to stronger punishment and addresses legal loopholes that previously allowed top management to shift responsibility to hired third parties,” Park admitted.

These included subcontractors, whose ubiquity in Korean industries is one of the reasons why the country’s workplace accident rate is so high. Under the old law, the main contractor was often able to dodge responsibility and let the subcontractor take the fall. Activism was galvanized in 2018, when 24-year-old contract worker Kim Yong-kyun was crushed to death by machinery at a thermal power plant in Taean, South Chungcheong Province.

But experts worry about vagueness surrounding key terms in the new law, especially its ambiguous definition of terms that translate as “chief manager” or “responsible executive” and “required measures,” according to a survey of 121 foreign firms in Korea by the Korea Enterprises Federation.

“There’s been a lot of controversy due to the ambiguous definition of ‘responsible executive,'” said Park. “The law is also still quite unclear at this stage as to what obligations companies must fulfill to avoid punishment.”

Some small and medium-sized enterprises are particularly concerned because a big fine could ruin them. Larger firms are better equipped to respond to the legislation, Park pointed out.

Kim also warned that the law may discourage foreign companies from sending CEOs or senior executives to Korea. “At AmCham, a top priority is to make Korea a regional headquarters in Asia — to attract both foreign CEOs and Korean CEOs,” Kim said. “But now we hear a lot of worries about becoming subject to the law.”

The law differs significantly from American workplace protection, MacLaughlin pointed out, and these differences could lead to further confusion for foreign businesses. In the U.S., criminal charges against individual business owners rather than the company are “very, very rare,” McLaughlin said, because they are largely a question of who can pay compensation.

The scope and scale of the Korean penalties are also larger than are those of equivalent American laws.

Some businesses are hoping that the law will be revised to be more specific in its terminology and requirements, especially in light of president-elect Yoon Seok-youl’s promise to be more business-friendly.

“I don’t think there will be major revisions, because the law is still in its early days, but there is potential that the new administration could tweak the enforcement degree, to clarify gray areas and to make it more practical,” Park said.

The three speakers agreed it is too early to judge the effectiveness of the law at preventing accidents. McLaughlin said he is hopeful that Korea can bring work-related accidents down. He noted that while the U.S. 50 years ago had similar workplace safety problems as Korea today, it has since made large strides.

“It will be interesting to see, as the law is implemented over a longer period of time, what sorts of impacts it has and what sort of takeaways other countries take from Korea’s implementation of this law,” he said. “The U.S. has seen a pretty dramatic reduction in workplace fatalities and injuries, but this has been a pretty stable decline over 40 to 50 years.”

For many, the success of the law — which punishes both accidents that occur during manufacturing and accidents that occur because of poorly-designed industrial projects — is certainly important. This January, an apartment collapse in Gwangju killed six workers and injured another because the builder was cutting corners. In June last year, another building collapsed on the roadside during demolition in the same city, killing nine people and injuring several others.

McLaughlin said he is hopeful that the law in principle provides an opportunity for companies to prioritize workplace safety.

“These are fundamentally important actions that companies need to be thinking about in terms of workplace safety and health,” he said. “So there is now an opportunity for these firms to put that front and center and show that they’re taking it seriously.”

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