Enterprise homeowners dealing with legal responsibility past the office

[Law Talk] Unexposed risks of the criminal law for serious accidents: Entrepreneurs with liability beyond the workplace

Park Chan-keun (left) and David Park

Amid recurring work-related accidents such as the 2018 Taean power plant tragedy, the Icheon 2020 fire incident and the death of a worker in the port of Pyeongtaek in April, societal interest in the need for health and safety in outsourcing agreements has grown steadily.

Given the increasing outsourcing of work across all industries, the vague division of roles and responsibilities between companies and contractors, and the lack of authority for contractors / subcontractors to actually perform the contracted work to control the risks inherent in its use or manage equipment, facilities and facilities that have given rise to concern about the likelihood of occupational accidents.

To address these issues, the Occupational Safety and Health Act (OSHA), Korea’s basic labor protection law, was completely amended in 2019 to include the following: Contractor / subcontractor’s workers’ health not only in all employer’s premises, but also in hazardous workplaces designated by the employer / are provided and are under its control / management.

In addition (ii) impose the obligation on entrepreneurs to select contractors / subcontractors who are able to take preventive measures against accidents at work. In addition, the newly enacted Serious Accident Penalty Act (the Act), which is due to come into force on January 27, 2022, has brought about further changes in occupational health and safety management to prevent serious accidents in outsourcing agreements. The most important points of the law are summarized below.

First, the law requires business owners or responsible officers to put in place comprehensive measures to ensure the health and safety of “workers” in the company or workplace that is “effectively controlled, operated and administered” by such business owner, company or organization. In this context, the Department of Employment and Labor recently issued guidance relating to the “ability of the business owner to identify and manage, improve and control factors of hazard and risk”.

An “employee” that the law is intended to protect, meanwhile, includes employees of the business owner and extends to all persons who, regardless of the type of contract, provide work to perform tasks for the business owner, i.e. subcontracting, outsourcing and consignment (including multi-level subcontracts).

With recent legislative changes, companies are forced to look out for health and safety measures that were previously only owed to their own employees, but now include outsourcing agreements by third parties.

Second, the draft Enforcement Ordinance of the Act, published in July, requires the contractor to develop criteria and procedures for assessing (i) the contractor’s skills and abilities in accident prevention and (ii) reasonable spending and timeframes for health and Security management. The entrepreneur is also obliged to monitor their implementation.

While some of these obligations are already included in OSHA Article 61, there are currently no government sanctions to ensure the selection of a qualified contractor under OSHA. Companies are advised to exercise caution, as a responsible manager can be prosecuted if a causal connection with the occurrence of a serious industrial accident is established with regard to the obligations set out in the draft enforcement order.

The introduction of the law has sparked criticism of the rapid changes in occupational health and safety management in outsourcing agreements. In particular, the use of indefinite legal terms such as “actual control, operation and management” or “reasonable effort and time period” can raise the question of whether such terms violate the principle of clarity required by the Criminal Code. In addition, the fulfillment of a business owner’s obligation to ensure the health and safety of the contractor / subcontractor’s workers may result in such an outsourcing arrangement being misunderstood as illegal shipment.

Despite these concerns, given the growing social interest in health and safety management, the change in direction towards greater responsibility on the part of the entrepreneur is likely to remain unchanged. It is therefore becoming increasingly important for companies to focus on developing measures that, in close cooperation with experts, ensure correct health and safety measures in accordance with the new legislation.

By Park Chan-keun and David Park

Park Chan-keun is a partner at Yoon & Yang with experience in work and employment. David Park is an Australian (New South Wales) / New Zealand lawyer with Yoon & Yang with expertise in corporate law, dispute resolution, and labor law. – Ed.

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