[One Year of the Serious Accident Punishment Act] SMEs Say "Strong Punishment Is Not the Only Solution"... Urgent Need for Government Support

Rapid Legislation in 7 Months
Most Companies Unaware of Mandatory Requirements
Complaints of Labor Shortages and Wage Burdens

[Image source=Yonhap News]

"There are numerous ambiguities even in the Serious Accident Punishment Act guidelines distributed by the government." "This law instills vague fears among executives rather than preventing serious accidents."

When asked about the Serious Accident Punishment Act (SAP Act), small and medium-sized enterprise (SME) owners expressed such complaints. Yang, who is in charge of safety and health at an automotive parts company, pointed out, "Not only the SAP Act provisions but also the guidelines issued by the Ministry of Employment and Labor contain many ambiguous contents that depend on interpretation."

◆‘Hastily made in 7 months’... "Unprecedented worldwide"= Although it has been one year since the SAP Act was enforced, the field remains in confusion. The biggest reason is that the law itself was rushed through without dialogue or deliberation with the industry, swayed by public opinion. From mid-2020, lawmakers from both ruling and opposition parties began proposing bills related to serious accidents. This was in response to increasing calls for accountability over major industrial disasters such as the Sewol ferry disaster, humidifier disinfectant damage, the death of Kim Yong-gyun, and the Icheon logistics center fire. As opinions advocating for strengthening employer responsibility and safety management systems gained traction, the SAP Act was passed in the National Assembly plenary session in January 2021, just seven months after the first bill was proposed. The law includes strong punishment provisions, such as imprisonment for more than one year or fines up to 1 billion KRW if a management official fails to fulfill safety and health obligations resulting in a fatal accident.

An SME industry official criticized, "The SAP Act is a law unprecedented worldwide," adding, "The political sphere pushed the law through at lightning speed, riding on public opinion without in-depth discussions between labor and business sectors." He further stated, "Although the SAP Act has been enforced, the number of industrial accident fatalities has rather increased, indicating that strong punishment alone is not the answer." Another SME owner lamented, "The inclusion of the word ‘punishment’ in the law’s title means the focus is more on punishment than accident prevention," adding, "It instills vague fears among business operators." He compared it by saying, "In criminal law, instigating murder is punishable by imprisonment from one to ten years, and this law imposes a similar level of punishment." Sampo Industry, which is under prosecution investigation with its chairman summoned as the first case under the SAP Act, is tense. A Sampo official said, "Since the prosecution investigation is ongoing, it is difficult to make any special statements," and added, "We do not know what conclusion will be reached."

◆"Unclear mandatory regulations"... Lack of personnel and resources= Although one year has passed since the law’s enforcement, much remains to be done. SMEs lack the capacity to invest resources for accident prevention and even lack awareness of the law. Less than 40% of companies properly know what safety and health obligations management officials must fulfill. According to a survey conducted in November last year by the Korea Federation of SMEs and the Korea Employers Federation targeting 1,035 companies on ‘awareness of SAP Act enforcement,’ only 38.8% of respondents answered that they ‘fully know’ the safety and health obligations of management officials. 39.8% said they ‘partially do not know,’ and 21.4% said they ‘do not know.’ The two organizations analyzed, "The reason for the lack of proper recognition of mandatory obligations is that the legal requirements are very broad and unclear."

86.4% of respondent companies answered that their ability to respond to SAP Act obligations is ‘insufficient or unknown.’ Only 13.6% said their response capability was sufficient. By company size, 77% of SMEs with fewer than 300 employees and 54.5% of large companies with more than 300 employees responded that their response capability was insufficient. Especially, SMEs cited a lack of professional personnel and excessive cost burdens as difficulties. SMEs, which suffer from chronic labor shortages, face a double burden of difficulty in hiring professional staff and feeling the burden of labor costs even if they do hire. Yang also handles various duties such as sales and marketing in addition to safety and health tasks. He said, "It is true that ‘money’ is needed to prevent industrial accidents, but it is unreasonable to impose cost burdens on SMEs struggling with low operating profit margins," adding, "It is urgent to prepare various government supports such as facility improvements and consulting."