[One Year of the Serious Crime Punishment Act] Prosecution's Consecutive CEO Indictments... Focus on Unconstitutionality Ruling

Prosecutors: "The person with substantive decision-making authority on safety and health duties is subject to punishment"
"Ministry of Employment focuses on punishing CEOs... Criticism of CSO system erosion"
Legal circles advise "A dedicated organization performing substantive roles is necessary"

[Asia Economy reporters Choi Seok-jin, legal affairs specialist, and Heo Kyung-jun] As the first anniversary of the Serious Accidents Punishment Act (SAP Act) approaches, punishments against corporate CEOs are increasing, but ambiguity regarding the subjects and scope of punishment is causing severe confusion.

There are calls for the Constitutional Court to promptly rule on the constitutionality of the SAP Act through constitutional review requests by courts or constitutional complaints.

According to a comprehensive report by Asia Economy on the 2nd, CEOs of companies where recent serious accidents occurred have been consecutively brought to trial. The Ulsan, Incheon, Chuncheon, Jeju District Prosecutors' Offices, and the Masan Branch of the Changwon District Prosecutors' Office recently investigated cases where workers died at factories or construction sites and have all non-custodially indicted the CEOs responsible for management on charges of violating the SAP Act.

Except for the Ulsan Prosecutors' Office case, all are CEOs of primary contractors who did not directly undertake construction but subcontracted it. The prosecution constructed the charges asserting that the primary contractors' CEOs failed to fulfill the safety and health assurance obligations required by the SAP Act, such as establishing procedures to identify and improve hazardous and dangerous factors to prevent accidents, which was a major cause of the accidents.

Article 4 (Obligation to Ensure Safety and Health of Employers and Persons Responsible for Management) Paragraph 1 of the SAP Act imposes obligations on employers or persons responsible for management to prevent harm or danger to workers' safety and health by ▲establishing and implementing safety and health management systems, including necessary personnel and budget for accident prevention (Item 1) ▲establishing and implementing measures to prevent recurrence in case of accidents (Item 2) ▲implementing improvements or corrections ordered by central administrative agencies or local governments according to relevant laws (Item 3) ▲taking necessary managerial measures to fulfill obligations under safety and health-related laws (Item 4). The specific contents of Items 1 and 4 are delegated to presidential decrees.

Prosecution: "Those with substantive responsibility for safety and health are subject to punishment"… On-site, CEOs prosecuted instead of CSOs

The prosecution views the application target of the SAP Act as 'those with authority over company budgets and personnel decisions related to safety and health tasks.' It does not indiscriminately punish CEOs as the highest decision-makers but targets those who have substantive decision-making authority over safety and health tasks. Depending on the company, the CEO may be subject to punishment under the SAP Act, or the Chief Safety Officer (CSO) may be punished.

The problem is that the SAP Act is ambiguous, so the prosecution cannot uniformly define the subjects of punishment. They must select the subjects according to the case. Even if a company has a CSO, if the CEO approves and executes budgets related to safety and health internally, the CEO falls under the punishment target of the SAP Act.

A prosecution official said, "Whoever oversees authority related to safety and health is the key factor determining the subject of punishment. Even if there is a position responsible for safety, if it lacks authority, the person responsible for management is considered the subject of punishment under the SAP Act."

On the ground, there are criticisms that the Ministry of Employment and Labor, which handles investigations of serious industrial accident cases, focuses on prosecuting CEOs in practice, rendering the CSO system ineffective.

Hong Kyung-ho, a lawyer at Hwawoo Law Firm, said, "The SAP Act defines 'persons responsible for management, etc.' as 'persons who represent and have authority and responsibility over the business or those who are in charge of safety and health tasks equivalent to that.' However, in actual Ministry of Employment and Labor investigations, there is a tendency to prosecute only the CEO, even in cases where the CSO oversees safety and health tasks equivalent to the CEO or where the CSO is registered as a co-CEO." He added, "This undermines the CSO system stipulated by law, and a more progressive review regarding recognition of the CSO in the law's operation process is necessary."

Courts have yet to establish sentencing guidelines… Discussion expected in the 9th Sentencing Commission in the second half of this year

The courts have not yet established sentencing guidelines for the SAP Act and appear unprepared to conduct full-scale trials. The term of the 8th Sentencing Commission expires in April, and the SAP Act is excluded from crimes to be discussed during this period. It is expected that the newly formed 9th Sentencing Commission will include the SAP Act in the list of crimes to be newly set after collecting public opinions, so sentencing guidelines for the SAP Act are likely to be established in the latter half of this year.

Currently, the courts are only gathering opinions on issues related to the SAP Act to be handled in trial practice. Since practical precedents related to the SAP Act have not yet accumulated, they are organizing existing research and collecting views from various sectors.

At the academic conference on 'SAP Act and Trial Practice Issues' held last August, opinions diverged on who should be the responsible subject and how far the scope should be limited. Since the courts have not yet clearly established the subjects and scope of punishment, confusion is expected to continue for the time being.

In the legal community, since there are no precedents from the courts and the prosecution's investigation standards are unclear, companies are advised to establish dedicated safety and health organizations and organize management systems to prepare for any situation. However, it is anticipated that only substantive dedicated safety and health organizations can reduce legal management risks.

Oh Tae-hwan, head of the Labor Group at Hwawoo Law Firm, said, "Dedicated safety and health organizations should not function merely as formal entities but must be assigned roles and responsibilities (R&R) appropriate to their actual roles and functions." He added, "Especially if linked with the CSO system, where the CSO manages and supervises the dedicated organization on an ongoing basis in the position of a person responsible for management, it can significantly reduce the legal and managerial risks of companies under the SAP Act."

Changwon District Court reviewing request for constitutional review in the Duseong Industrial case… Potential violations of clarity and equality principles

Meanwhile, many in the legal community believe that a constitutional ruling on the SAP Act's unclear punishment standards and excessive penalties is urgently needed.

So far, no cases challenging the constitutionality of the SAP Act have been filed with the Constitutional Court. Duseong Industrial, the first company indicted under the SAP Act and currently on trial, applied for a constitutional review request at the Changwon District Court last October, but the court has not yet decided whether to accept the request.

The court intends to decide on whether to accept the request after hearing the defense's arguments on the SAP Act's constitutionality at the trial session scheduled for the 18th of this month.

Even if the court rejects the request, Duseong can immediately file a constitutional complaint with the Constitutional Court regarding the unconstitutional provisions of the SAP Act under the Constitutional Court Act, so it is highly likely that the Constitutional Court will begin reviewing the SAP Act's constitutionality in the first half of this year.

The Hwawoo legal team, including former Constitutional Court Justice Ahn Chang-ho as an advisory lawyer, argued in their constitutional review request to the Duseong Industrial trial court that Article 4 Paragraph 1 and Article 6 punishment provisions of the SAP Act, which stipulate the obligation to ensure safety and health of employers and persons responsible for management, and Article 15, which imposes civil liability up to five times the damage amount, violate constitutional principles of clarity, prohibition of excessive punishment, and equality, thus are unconstitutional.

Lawyer Hong said, "For criminal punishment, the principle of legality requires clarity, but the SAP Act only stipulates that 'persons responsible for management, etc.' must take measures to establish and implement safety and health management systems, including necessary personnel and budget for accident prevention, making the provisions vague and unclear."

He continued, "Also, in cases where a worker dies, the SAP Act prescribes imprisonment of one year or more (up to 30 years) or a fine of up to 1 billion KRW, whereas the Industrial Safety and Health Act imposes imprisonment of up to seven years or a fine of up to 100 million KRW for the same accident, and the Special Act on Traffic Accident Handling imposes imprisonment of up to five years or a fine of up to 20 million KRW for fatal accidents caused by drunk driving. Compared to these, the SAP Act's penalty system lacks fairness and balance and violates the principle of prohibition of excessive punishment, making it unconstitutional," he added.