Government Confused by Ambiguous Standards... Lawsuits Expected to Surge

[Image source=Yonhap News]

Inclusion of Government-Supplied Material Costs Fluctuates

SMEs Struggle Compared to Large Corporations

Uniform Punishment Standards Could Be Fatal

[Asia Economy Reporters Kim Min-young, Kim Hye-min] On the 26th, one day before the enforcement of the Serious Accident Punishment Act, the construction industry, which will be most affected by this law, remains in confusion. The ambiguous regulations are not just one or two, making it difficult to determine how to apply them on site. Since there are no precedents to refer to yet, they have to rely on the government's (Ministry of Employment and Labor) arbitrary interpretations, but even these do not provide clear answers.

◆Government Also ‘Floundering’ Over Standards= The Serious Accident Punishment Act, which will be enforced on the 27th, applies to construction sites with a regular workforce of 50 or more or a construction amount of 5 billion KRW or more. The construction industry unanimously agrees that the criterion of 5 billion KRW in construction amount itself is unclear. At a briefing held on the 13th for construction companies, the Ministry of Employment and Labor, the competent authority, mentioned the "total construction amount including government-supplied material costs." However, in the FAQ on Serious Industrial Accidents related to the Serious Accident Punishment Act published by the Ministry on the 18th, the construction amount criterion was specified as the amount contracted by the subcontractor (contractor) excluding government-supplied material costs, which caused further confusion. There is confusion starting from the definition of the construction amount that serves as the basis for punishment.

An official from the Korea Construction Association said, "After inquiring on behalf of member companies to the Ministry of Employment and Labor, we received the answer that 'the amount including government-supplied material costs is correct,'" adding, "Even the government, which determines the level of punishment, failed to present a consistent standard, causing confusion."

Responsibility is also unclear in cases of accidents at construction sites with joint subcontracting contracts. A representative from Company A said, "If it’s a fine, it might be enough to pay according to the share ratio, but if an accident occurs where the CEO must serve prison time, who would accept responsibility as their own?" and lamented, "The more detailed the discussion, the harder it is to prepare on site."

Unclear standards for safety budgets and personnel allocation are also cited as difficulties. Minister of Employment and Labor An Kyung-duk recently stated, "It is impossible to uniformly set budgets or personnel allocation depending on the industry or type of workplace." In response, the field is struggling over the appropriate budget size.

A representative from Company B said, "If the cause of an accident is found to be a lack of safety budget, it is difficult to determine whether it is the fault of the contractor who only allocated that amount of safety budget or the fault of the client who did not request additional costs," pointing out, "Detailed guidelines are needed."

◆Small and Medium Enterprises Struggle Due to Lack of Funds and Manpower= Compared to large companies that can prepare 'generously' beyond the legal standards, it is natural that smaller construction companies, which must at least meet the legal requirements, face greater difficulties.

A representative from a small construction company said, "Large construction companies have already established related organizations internally to prepare, but small companies find it difficult to respond at all."

Lee Eun-hyung, Senior Researcher at the Korea Construction Policy Institute, said, "Although the law aims to raise awareness of safety management, confusion is inevitable during its actual application on site," adding, "The fact that punishment is applied under the same standards regardless of whether it is a large or small company, and that there are no exemption provisions even if safety management is strengthened at the expense of profits, can be fatal for small and medium enterprises."

There are also complaints that if lawsuits surge following the enforcement of the Serious Accident Punishment Act, only law firms will benefit. A representative from the law firm Yulchon said, "Ambiguous provisions will ultimately only increase related lawsuits."