OSH Act Amendment Promulgated... Punitive Surcharges and Work-Stoppage Rights: Enforcement Decree Is the Key Battleground

Surcharge reduction criteria and review committee composition emerge as key issues
Labor and management clash over criteria for work-stoppage rights

An amendment to the Occupational Safety and Health Act containing key measures from the “Comprehensive Labor Safety Plan” announced by the government in September last year was promulgated on October 27. Punitive surcharges for workplaces with repeated fatal accidents and subcontracted workers’ right to demand work stoppages from prime contractors now have a legal basis. However, all the details have been delegated to presidential decrees, focusing attention across industrial sites on the subordinate legislation. In the six months remaining before the law takes effect, labor and management are expected to step up their contest for influence.

Surcharges of up to 5% of average operating profit over three years... Criteria for reductions and review committee composition emerge as flashpoints

The provision in the amendment that most concerns the business community is the surcharge for workplaces with “multiple or repeated fatal accidents.” If three or more people die within one year of the law taking effect as a result of violations of safety and health obligations, the company concerned may be fined up to 5% of its average operating profit over three years. Depending on a company’s size and operating profit, the surcharge could range from hundreds of billions to several trillion won.

Companies with no operating profit or for which it is difficult to calculate operating profit are not exempt from surcharges. The amendment sets a minimum threshold, allowing surcharges of up to 3 billion won even when a company has no average operating profit over three years, it is difficult to calculate that figure, or 5% of its operating profit amounts to less than 3 billion won. However, as the specific surcharge amounts and criteria will be set out in subordinate legislation, the requirements for reductions and the composition and operation of the Surcharge Review Committee are expected to become key issues.

The Korean Construction Workers Union, affiliated with the Korean Confederation of Trade Unions (KCTU), is holding an all-out rally in front of Namdaemun in Seoul on the 22nd, demanding collective bargaining agreements with prime contractors in the construction industry. Yonhap News Agency

The key issues are the requirements for reductions and the composition of the Surcharge Review Committee. The amendment allows surcharges to be reduced not only based on a company’s size and number of violations, but also on the “extent of its efforts to prevent industrial accidents and keep them from recurring,” leaving the specific criteria to subordinate legislation. The business community says that measures such as establishing safety and health management systems and records of investment in safety budgets should be broadly recognized as grounds for reductions. Labor groups, on the other hand, are calling for a strict cap on reductions, arguing that the provision could become a loophole allowing companies to use paper-only safety investments to avoid surcharges worth hundreds of billions of won. Debate is also expected to intensify over the composition of the Surcharge Review Committee—which will make the final decision on whether to impose a surcharge—including the proportions of labor, management and experts, as well as how it will operate.

Criteria for work-stoppage rights also disputed... Government begins revising subordinate legislation over six months

The “right to stop work” granted to workers at both prime contractors and subcontractors is also a point of contention. Previously, workers could stop work and evacuate only when there was imminent danger, but the amendment extends that right to situations in which danger is “anticipated.” It also establishes a basis for subcontracted workers to directly demand that a prime contractor’s employer stop work. The business community is concerned that vague criteria could lead to abuse, delaying construction and triggering disputes over delay penalties. Labor groups question whether the right will be effective, arguing that if the criteria are too narrowly defined, workers worried about repercussions may give up evacuating as a precaution.

Immediately after the amendment was promulgated, the Ministry of Employment and Labor began gathering input from labor and management and revising the enforcement decree and enforcement rules. The Safe Workplace Committee and the whistleblower reward program will take effect on January 28 next year, three months after promulgation. Key regulations—including the imposition of surcharges, the expansion of work-stoppage rights, and the authority to request the cancellation of registration for workplaces that have been suspended from business at least twice—will take full effect on April 28 next year, six months after promulgation. Choi Jun-seon, professor emeritus at Sungkyunkwan University Law School, said, “There is no disagreement over the principle of protecting subcontracted workers, but vague criteria for assessing danger could lead to conflicts between labor and management over the abuse of work-stoppage rights or the burden of costs.” He added, “Specific and objective assessment guidelines that reflect the characteristics of each industry should be established, along with safeguards acceptable to both labor and management.”

This content was produced with the assistance of AI translation services.