The Serious Accidents Punishment Act (the “SAPA”), which imposed the duty to ensure safety and health on businesses’ Responsible Management Personnel (“RMP”), became effective on January 27, 2022 and applies to businesses with at least 50 full-time employees (or a total construction cost of at least KRW 5 billion for construction businesses).However, the scope of the SAPA will be expanded to cover businesses with fewer than 50 full-time employees (or a total construction cost of less than KRW 5 billion for construction businesses) starting from January 27, 2024[1] (proviso of Article 1, Paragraph 1 of the Addenda to the SAPA).

According to the statistics on serious accidents that occurred in 2022, 60.24% of 644 fatalities (i.e., 388 fatalities) occurred at businesses with fewer than 50 full-time employees (or a total construction cost of less than KRW 5 billion for construction businesses). Due to their relatively small size, businesses with fewer than 50 full-time employees (or a total construction cost of less than KRW 5 billion for construction businesses) may not have established a system to sufficiently implement the duty to ensure safety and health. Further, some of these businesses may have decided not to establish such a system, as the need to take safety and health measures was expected to be low given the nature of their businesses (e.g., office work-focused businesses). However, all businesses with fewer than 50 full-time employees (or a total construction cost of less than KRW 5 billion for construction businesses), regardless of the nature or type of their business, must establish a safety and health management system in accordance with the SAPA before January 27, 2024.

Considering the above, we recommend businesses with fewer than 50 full-time employees (or a total construction cost of less than KRW 5 billion for construction businesses) to take the following measures.

  1. Confirm the Applicability of the SAPA and its Scope

All businesses must first confirm whether they would be subject to the expanded scope of the SAPA, and if so, to what extent. The applicability of the SAPA is strictly determined based on the number of full-time employees (or the total construction cost for construction businesses) a business has, meaning that the type or nature of a business has no bearing on its applicability (i.e., businesses engaging in import/sales, office-work-focused businesses (e.g., finance), and local business entities of global companies may all be subject to the SAPA). Thus, as long as a business satisfies the statutory size requirement, it is advisable to analyze potential risks in advance by confirming the extent of its respective business activities that may be subject to the SAPA in light of the type and work scope of its contractors.

  1. Establish a System to Implement the Duty to Ensure Safety and Health

 Upon confirming the applicability of the SAPA and its scope, businesses should establish a system to implement the duty to ensure safety and health. For relatively small businesses, such a system should be established based on (i) the size and characteristics of the business and workplaces (Article 4, Paragraph 1 of the SAPA) and (ii) applicable statutory requirements with respect to safety and health-related personnel, the organization and relevant procedures (record-keeping).

In light of the recent SAPA court decisions, not providing a system to implement the duty to ensure safety and health at all would likely be subject to more severe penalties. Thus, it is necessary to at least establish a system for the implementation of the duty to ensure safety and health prior to January 27, 2024.

Please note that the most commonly cited provisions for a business RMP’s SAPA violations in SAPA cases that have occurred up to date have been the following: Article 4, Item 3 (to establish and inspect work procedures for identifying and improving hazards and risk factors), Item 5 (to establish work performance assessment standards for the person in charge of safety and health management), Item 8 (to establish and inspect the emergency response manual), and Item 9 (to establish and assess the assessment standards of contractors’ accident prevention capabilities) of the SAPA Enforcement Decree. These obligations are considered the key obligations when establishing a safety and health management system, and their violation would likely provide grounds for establishing a causal relationship with a serious accident.

  1. Inspect the System for Responding to Serious Public Accidents

Among the businesses that have already established a system for implementing the SAPA obligations, we noticed that many businesses are less prepared to face serious public accidents, as they focus on establishing a system responsive mainly to serious industrial accidents. In certain situations, businesses may not have sufficiently reviewed whether they would be subject to SAPA obligations in connection with serious public accidents (e.g., involving raw materials, manufactured goods, and public facilities), and what specific measures they would take to ensure compliance if they were subject to the obligations.

Since the impact of a serious public accident may be significant due to the increased level of public interest, it is crucial to review the required obligations and implement measures to ensure safety and health under the SAPA in advance.

Please refer to the above when establishing a system to implement the duty to ensure safety and health prior to January 27, 2024, the date when the expanded scope of the SAPA becomes effective. Further, it is necessary to understand how the law enforcement agencies interpret and enforce the laws and regulations in case of a serious accident in order to continuously improve the system to implement the duty to ensure safety and health based on the most recent investigative trends and precedents.

https://www.kimchang.com/en/insights/detail.kc?sch_section=4&idx=28049

Footnotes

[1] The obligations associated with serious industrial accidents under the SAPA will not apply to businesses with fewer than five full-time employees even after January 27, 2024 (Article 3 of the SAPA and Article 1 of the Addendum to the SAPA).

More from Kim & Chang