On January 8, 2021, the National Assembly passed new legislation titled the Major Accident Punishment Act (MAPA) as part of its initiative to demand greater accountability from corporate actors in the event of a large-scale accident. The MAPA’s legislative objective is to set forth more specific parameters on the management’s responsibility to ensure occupational health and safety and impose greater sanctions to ensure compliance with the law.
We summarize the key provisions under MAPA and discuss its implications as below:
- Key Provisions under MAPA
| Provisions | Summary | ||||||||||||||||
| Purpose | l The MAPA seeks to prevent major accidents and protect lives of the public and workers by setting forth penalties against business owners, managerial responsibility holders, public servants and corporate entities who are responsible for causing harm to human lives by acting in breach of the obligations to ensure safety and health in the course of operating business, public facilities, public transportations or handling hazardous materials or commercial goods. | ||||||||||||||||
| Definitions | l “Major Accident” is divided into two categories: (i) Major Industrial Accident and (ii) Major Public Accident.
l An accident is recognized as a “Major Industrial Accident” if it involves: (i) death of at least one (1) person; or (ii) injuries to at least two (2) persons or more requiring at least six (6) months of recovery; or (iii) at least three (3) persons or more experiencing the same type of work-related illness attributable to the same cause within one year period l An accident is recognized as “Major Public Accident” if it is caused by any manufacturing/design defect or negligence in production, installation or management of specific material, products, public facility or means of transportation and it involves (i) death of one (1) person or more; or (ii) injuries to at least ten (10) persons requiring at least two (2) months of recovery; or (iii) at least ten (10) persons or more experiencing the same type of work-related illness requiring at least three (3) months of recovery attributable to the same cause within one year period. |
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| Expanded Occupational Safety/Health Requirement | l The duty to ensure occupational safety and health is assigned to (i) business owners or (ii) managerial responsibility holders.
l “Business owner” is a person/legal entity who owns a business or operates a business through services provided by others. l “Managerial responsibility holder” (MRH) means: (i) a person authorized to represent and oversee the business or a person responsible for the occupational safety and health of such business; and (ii) head of central administrative agencies, municipalities and other public institutions. |
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| Scope of Application | l The MAPA shall not apply to business owners or MRHs working under proprietors or businesses with less than five (5) regular* employees.
*Under Korean law, “regular” employees refers to the employees working at the business on a regular basis, regardless of the type of employment. |
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| Duty to Ensure Occupational Safety and Health | l The MAPA requires both business owners and MRHs to ensure occupational safety and health to prevent major accidents (see 2. New Obligations under MAPA for details).
l The MAPA mandates are additional to the existing statutory requirements under the Occupational Safety and Health Act (OSHA). |
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| Duty to Ensure Occupational Safety and Health in Outsourcing Arrangement | l The duty to ensure occupational safety and health (see above) may continue to apply even in cases where the business engages a third-party service provider (e.g., contractor, subcontractor). (see 4. Expanded Scope of Duty in Outsourcing Arrangements for details).
l If the serviced company is responsible for controlling, managing or operating a work location or facility/equipment used by a third party contractor, the serviced company’s business owner or MRH must comply with the MAPA requirements with respect to the third party contractor’s employees, and may be held liable for injuries incurred to the third party contractor’s employees. |
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| Criminal Penalty | l Upon the occurrence of a major accident (including any injuries that occurred in the course of outsourcing arrangement; see above), a business owner/MRH may potentially face two (2) sources of criminal liability (detailed below) for their breach of statutory obligations.
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| Punitive Damage | l Plaintiffs injured in a major accident as a result of a business owner/MRH’s intentional or grossly negligent failure to comply with the MAPA’s occupational safety/health requirement may seek punitive damage against the responsible corporate entities up to five (5) times the actual damage. | ||||||||||||||||
| Implementation Period | l The MAPA shall be enacted one (1) year after the date of the announcement.
l As an exception to the rule, the MAPA shall be enacted three (3) years after the date of announcement with respect to the following: (i) Sole proprietors (ii) Employers with less than fifty (50) regular employees (iii) Construction projects with contracted cost less than KRW 5 billion |
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- New Obligations under MAPA
Under the OSHA, representative director(s) or business owners have a statutory obligation to ensure safety and health of employees. However, the representative directors/business owners were also permitted to delegate these onerous responsibilities to a designated “safety/health officer” (e.g. site managers, superintendent).
In contrast, the MAPA imposes more stringent requirements (see below) directly upon business owners as well as MRHs. For the purposes of the MAPA, an MRH is defined broadly as “a person authorized to oversee and represent the business or a person responsible for the workplace safety and health” (including a head of municipalities or administrative agencies).
| OSHA | MAPA | ||
| Business Owner | l Business owners must take measures to ensure occupational safety and health of employees in accordance with the Rules on Occupational Safety and Health Standards. | Business Owner or MRH | l Business owners or MRHs are required to*:
(i) Establish safety/health management protocol (e.g., personnel, budget) to prevent accidents and enforce the protocols (ii) Establish accident response plans in cases of an accident and execute the plans to prevent further accident (iii) Take measures in accordance with orders issued by administrative agencies and municipalities (iv) Take measures required in accordance with the statutory requirements relating to occupational safety and health. *The exact scope of the above requirements is expected to be elaborated in the forthcoming Presidential Decree. |
| Representative Director | l Representative directors are required to:
(i) Create occupational safety and health plans, (ii) Report the plans to the board of directors and; (iii) Obtain the board’s approval. |
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- Greater Accountability for Major Public Accidents
The MAPA extends its regulatory impact to public disasters – e.g., the toxic humidifier disinfectant incident or the Sewol ferry incident – by including “major public accident” within the scope of the term “major accident”. Thus, in addition to the existing regulatory framework, the MAPA creates another statutory basis to impose standards of care upon business owners and MRHs as well as grounds to impose stricter penalties against an act of negligence in the creation, production, distribution and supply of products/facilities that are being sold to or used by the public.
- Expanded Scope of Duty in Outsourcing Arrangements
Under the MAPA, business owners and MRHs may be held liable for major industrial accidents incurred to employees of a third-party contractor if the serviced business is responsible for controlling, managing or operating the work location or facility/equipment that caused the injury. Further, by assigning the burden of occupational safety/health obligations to business owners and MRHs, the MAPA seeks to prevent major public accidents that may occur as a result of negligence in the production, design, distribution or management of commercial goods or materials. While the MAPA mandates may appear similar to the latest OSHA mandates, the MAPA mandates are broader in their scope because the OSHA mandates are applicable only to 22 designated hazardous workplaces.
| OSHA | MAPA | |
| Obligation to Ensure Occupational Safety and Health in Outsourcing Arrangement | l A serviced company is required to ensure occupational safety and health of a third-party contractor’s employee(s) if:
1) The employee(s) works at a serviced company’s place of business; or 2) The employee(s)’s workplace is designated or provided by the serviced company and the workplace falls within a list of 22 hazardous workplaces |
l A serviced company is required to ensure occupational safety and health of a third-party contractor’s employees in accordance with MAPA if* the serviced company is responsible for the control, operation, management of the third party contractor’s facility, equipment or location.
*The ownership of the workplace is irrelevant in this determination.
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- Greater Penalty for Major Accidents
The MAPA entails stricter penalties against parties responsible for a major accident. In the event of a fatal major accident, the accused may face a minimum of one (1) year in imprisonment as a baseline punishment, and the amount of criminal fine may reach KRW 1 billion for an individual offender (or a maximum of KRW 5 billion if the accused is a corporate entity). Given the hefty penalty provisions, we anticipate that the element of causation will be a point of contention in MAPA litigations/proceedings, and the courts will carefully examine whether the accused person/entity’s breach of the statutory duty resulted in the major accident in question.
- Implications and Recommendations
The MAPA is the legislature’s response to the years of public outcry for increased corporate accountability in major accidents and is expected to impact all industries across the board. Specifically, we believe that the ramifications of the MAPA will be significant in the following aspects:
- Lack of Clarity in Statutory Language. The exact scope of a managerial responsibility holder (MRH) will likely stay ambiguous for the time being until we see a sufficient number of MAPA cases to establish precedents and enforcement guidelines. Accordingly, we anticipate that all types of decision-makers – e.g., major shareholders, representative directors and CEOs – would remain exposed to MAPA-based complaints and potential investigation at least for the foreseeable future.
- Investigative Jurisdiction. We anticipate that both the Ministry of Employment and Labor as well as the National Police Agency will be given the investigative jurisdiction over MAPA-cases, depending on the nature of the accidents. Given that both law enforcement agencies may exercise jurisdiction over MAPA-cases, it is imperative for companies to form a comprehensive and unified response plan from the early stages of the investigation to establish a sound defense.
- Timing. The MAPA is scheduled to enter into effect one (1) year from the date of the announcement. As such, businesses are strongly encouraged to develop an understanding of the MAPA requirements as well as the enforcement rules that will be forthcoming throughout the year and reflect the regulatory development in personnel and budget management.
In the wake of the latest major legislation, Lee & Ko organized a team of experts dedicated to helping clients with MAPA-related issues across all aspects – from a comprehensive compliance review to dispute resolutions. With extensive experience and a successful track record in the field of industrial accidents, we are eager to provide comprehensive legal service tailored to the needs of each client. We have also attached our unofficial translation of MAPA to aid your understanding of its implications. Should you have any questions in this area of law, please do not hesitate to contact Lee & Ko.
If you have any questions regarding this article, please contact below:
Jae Deog Bae (jaedeog.bae@leeko.com)
Tong Keun Seol (tongkeun.seol@leeko.com)
Yong Moon Kim (yongmoon.kim@leeko.com)
For more information, please visit our website: www.leeko.com