Small business owners soon subject to Korea's industrial accidents law

Industry

Published: 25 Jan. 2024, 18:47

Small business owners soon subject to Korea's industrial accidents law

People Power Party lawmakers chant, calling for an extension of the grace period of the Serious Accident Punishment Act on small businesses with fewer than 50 employees, holding signs that read ″Small businesses will all be gone,″ and ″Respond to the [small businesses'] teary pleas,″ during the party's general meeting on Thursday at the National Assembly in western Seoul. [JUN MIN-KYU]

Small businesses will be subject to the industrial accidents law starting Saturday, despite President Yoon Suk Yeol’s call for an extension of the rule’s grace period, as lawmakers at the National Assembly failed to reach an agreement for the plenary session on Thursday.

Korean businesses seek more time on industrial accident law

The Serious Accident Punishment Act, which was enacted for bigger businesses in January 2022, holds employers liable for fatal on-site accidents caused by insufficient safety measures. Employers can face a one-year minimum prison term or a fine of up to 1 billion won ($750,000).

Though larger companies have been subject to the law since 2022, smaller businesses, categorized as those with less than 50 employees, were exempt from the rule for two years due to a lack of human resources and cost concerns.

Earlier on Thursday, President Yoon Suk Yeol urged lawmakers to “do [their] best to pass the revision on the Serious Accidents Punishment Act during the plenary session today,” in a message through a presidential spokesperson, saying that “while there is no doubt that a worker’s safety should always come above all else, we also need to consider the struggles that 830,000 small business owners and those in the small- to medium-sized enterprises [SMEs] are going through.”

However, as the ruling and opposition parties failed to reach an agreement, the proposed revision — which would extend the grace period for an additional two years — could not make it to the National Assembly’s plenary session on Thursday.

As a result, about 837,000 small businesses, including local mom-and-pop stores, will be newly subjected to the rule starting this Saturday. Some 8 million employees will be affected.

Both parties are shifting the blame, as the ruling People Power Party (PPP) points fingers at the opposition Democratic Party (DP) for making small business owners who are struggling to make ends meet even more vulnerable, while the DP blames the PPP as well as the government for not being prepared for the expiration of the grace period beforehand.

Korea’s major business lobbies expressed their strong disappointment after the proposal for the revision fell through.

“While the Serious Accident Punishment Act was enacted to punish the employer, which is unprecedented anywhere in the world, it has been causing chaos in the field with even large companies struggling to abide by the law,” the Korea Enterprises Federation (KEF) said in a statement released on Thursday.

“As the law will now be applied to small businesses, which are struggling to establish safety management systems due to a lack of professional manpower and financial resources, there is a concern that this may lead to an increased number of criminals, shutdown of businesses and unemployment rather than prevention of industrial accidents,” the KEF said.

According to the KEF’s survey, 87 percent of 1,053 small businesses with fewer than 50 employees said that they would not be able to meet the stricter legal requirement before the grace period expires.

The business lobby urged the National Assembly to come up with new measures to further delay the law’s implementation and support small businesses.

Meanwhile, the labor unions welcomed the latest development.

“We welcome the expansion of the Serious Accident Punishment Act’s implementation,” the Korean Confederation of Trade Unions said in a statement. “This lays the minimum legal foundation on which workers’ life and safety can be protected.”

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]