[Choi Seok-jin's Law & Biz] The Serious Accidents Punishment Act Facing Constitutional Review Draws Attention from Business and Labor Sectors

Busan District Court Appeals Division Requests First Constitutional Review
Punishment Provisions for 'Business Owners and Management Officials'
Violation of Principles of Prohibition of Excess, Clarity, Equality, and Responsibility Pointed Out
Prosecutions Increasing, but Few Imprisonment Sentences
Management: "Shifting Result Responsibility to Prime Contractors"
Labor: "Prosecution Too Passive... Law Must Be Stricter"
"Legislative Amendment Needed to Introduce Administrative Sanctions Instead of Criminal Punishment"

The court has requested a constitutional review from the Constitutional Court, stating that the punishment provisions for 'business owners or management officials' under the Serious Accidents Punishment Act (Serious Accidents Punishment Act) violate the Constitution, three years after the law's enforcement.

Previously, the Korea Federation of Small and Medium Business had filed a constitutional complaint claiming infringement of fundamental rights regarding the same provisions, but this time, the judiciary, which holds the final interpretative authority over the law, has pointed out its unconstitutionality, marking a significant difference.

According to the Constitutional Court Act, a ruling of unconstitutionality on penal provisions has retroactive effect, so even those who have already received a final guilty verdict can file for retrial and receive relief.

Busan District Court Appeals Division Requests Constitutional Review

On the 13th of last month, the Criminal Division 4-3 of the Busan District Court (Presiding Judge Kim Do-gyun, Judges Seong Ik-kyung and Kim Ji-cheol) decided to request the Constitutional Court to determine the unconstitutionality of three provisions of the Serious Accidents Punishment Act.

The provisions judged unconstitutional by the court are Article 4, Paragraph 1, Subparagraph 1, which stipulates the obligation of business owners or management officials to take necessary measures to prevent accidents; Article 5, which imposes the obligation on business owners or management officials who subcontract or outsource to third parties to take measures prescribed in Article 4 to prevent serious industrial accidents; and Article 6, Paragraph 1, which severely punishes business owners or management officials who violate these obligations and cause a serious industrial accident resulting in at least one death with 'imprisonment of one year or more or a fine of up to 1 billion won.'

The case in question involved a serious accident that first occurred in Busan in 2022, where a worker belonging to a subcontracted company performing internal insulation work on a parking tower died during the work. At that time, the representative A of the company that subcontracted the work was indicted for violating the Serious Accidents Punishment Act, sentenced to six months imprisonment with one year probation in the first trial, and appealed; the second trial court accepted A's request for a constitutional review.

Violation of Principles of Prohibition of Excess, Clarity, Equality, and Responsibility

In the decision, the court stated, "There are substantial reasons to recognize that the legal provisions in this case violate the constitutional principles of prohibition of excess, responsibility, equality, and clarity."

The court said, "Holding subcontractors or others who entrust work to more specialized parties criminally liable to an excessive degree for all serious accidents occurring in the relevant process directly contradicts the legal principles of subcontract and delegation contracts, nullifying their significance."

It added, "The constitutional principle of market economy centers on freedom of contract and private autonomy, which act as guiding principles governing the judicial order. Reckless attempts to regulate these principles shake the foundation of the legal order, disrupt the system, and can endanger the entire market economy for trivial interests, thus requiring extreme caution."

Furthermore, the court noted, "It is difficult for business managers to know every detail of all processes in the entire workplace, and even if they have professional or technical knowledge, it is physically impossible to directly control all processes. Nevertheless, if only the occurrence of serious accidents is considered and harsh criminal liability is continuously imposed on business managers, it is only a matter of time before most managers bear criminal responsibility, which could lead to the removal of competent managers from the field or even abandonment of the business itself."

Additionally, the court pointed out that ▲ the punishment provisions are disproportionate as they significantly increase penalties compared to the same elements of the crime of manslaughter under the Industrial Safety and Health Act, ▲ punitive damages are a much more effective remedy for accident victims, ▲ it is unfair that subcontractors or negligent actors in workplaces with fewer than five employees, who are exempt from the Serious Accidents Punishment Act, are punished less severely than the contracting party, and ▲ the use of vague concepts delegated entirely to presidential decrees violates the principle of clarity.

Possibility of Consolidation with Constitutional Complaints at the Constitutional Court

There have been several previous requests for constitutional review by defendants facing trial for violations of the Serious Accidents Punishment Act, including the first prosecution case of Duseong Industry. However, this is the first time a court has recognized unconstitutionality and requested a constitutional review from the Constitutional Court.

Meanwhile, the Constitutional Court has been hearing two constitutional complaints regarding the Serious Accidents Punishment Act, and since the subjects and issues largely overlap with this constitutional review case, there is a possibility that the cases will be consolidated for joint hearing and ruling. A Constitutional Court official said, "Including this constitutional review request, three cases are currently pending. Whether to consolidate or conduct parallel hearings will be decided by the panel after deliberation."

When a trial court requests a constitutional review of the law applied to a defendant during a criminal trial, the trial is suspended until the Constitutional Court's decision. However, the effect of the constitutional review request applies only to the case at hand, so other trials proceed as usual.

If the Constitutional Court rules the law unconstitutional, the basis for punishment disappears, and all ongoing cases will be acquitted. Even if a guilty verdict has been finalized, the penal provisions become invalid retroactively, allowing for acquittal through retrial.

Of course, the Constitutional Court may recognize unconstitutionality but limit retroactive effect through a constitutional discordance decision to maintain legal stability and set a deadline for legislative amendment. However, in the past, when the Constitutional Court issued a constitutional discordance decision on penal provisions under the Assembly and Demonstration Act, courts allowed retrials as if it were a simple unconstitutionality decision.

Annual Increase in Prosecutions... Low Rate of Imprisonment

According to statistics from the Supreme Court and the Supreme Prosecutors' Office, the number of prosecutions for violations of the Serious Accidents Punishment Act since its enforcement in January 2022 has increased annually: 11 cases (12 defendants) in 2022, 23 cases (45 defendants) in 2023, and 40 cases (63 defendants) in 2024. As of March this year, there have been 16 prosecutions.

As of the end of March, there were 40 first-instance guilty verdicts and 20 finalized guilty verdicts for defendants charged with violating the Serious Accidents Punishment Act, with most sentences being probation or fines, and only two cases resulting in imprisonment.

According to the Ministry of Employment and Labor, all 15 management officials related to 15 cases finalized and reported to the ministry by the end of last year were found guilty, but only one was sentenced to one year imprisonment, while the other 14 received probation.

Labor vs. Management: Divergent Positions

Considering that the statutory penalty for punishing management officials for serious industrial accidents is imprisonment of 'one year or more (up to 30 years),' the relatively light sentences handed down can be seen as quite lenient.

Workers and labor organizations argue that fatal accidents at construction sites and elsewhere have decreased since the law's enforcement and demand stricter application of the law. They particularly criticize the prosecution for being reluctant to apply the Serious Accidents Punishment Act to owners or CEOs of large corporate groups.

On the other hand, businesses, especially small and medium-sized enterprises, express dissatisfaction, saying that they are effectively held responsible for accidents caused by subcontractors' negligence, which they cannot directly control.

Large corporations with financial resources can consult law firms in advance to prepare for judicial risks related to serious accidents, placing them in a relatively advantageous position compared to small and medium-sized enterprises.

A prosecutor experienced in investigating violations of the Serious Accidents Punishment Act said, "At accident sites, some places try to comply with the law's standards, while others appear to have done nothing. Therefore, large company management officials are less likely to be indicted, and workplaces with fewer than 50 regular employees inevitably bear a heavier burden."

"Legislative Amendment Needed to Introduce Administrative Sanctions Instead of Criminal Punishment"

Attorney Jo In-seon, head of the Serious Accidents Center at law firm YK, said, "The legislative intent of the Serious Accidents Punishment Act to promote workplace safety awareness and prevent risk outsourcing is very important and a value that should be socially upheld. However, methodologically, it would be more desirable to amend the law to adopt administrative sanctions such as fines, as seen in foreign cases, or to conduct in-depth reviews of workplace safety diagnostics and awareness improvement when applying for lifting work stoppage orders, rather than imposing criminal punishment on management officials."

He added, "If such amendments cannot be made immediately in the short term, it will be necessary to revise the law to comply with the principles of legality and prohibition of excess, and to ensure consistency with provisions limiting the responsibility of contractors under civil law, thereby aligning with the principles of clarity and prohibition of excess."