[Editorial] 5% Industrial Accident Surcharge on Operating Profit: Profit Size Cannot Measure Accident Liability, Calculation Sta

- Rather than merely strengthening ineffective punishment, concerns about overlapping sanctions and management uncertainty must also be resolved.

- Industrial safety policy should shift away from post-accident, sanction-centered measures toward prevention and incentives for tangible reductions in accidents.

The Ministry of Employment and Labor announced that the revised Occupational Safety and Health Act, which allows fines of up to 5% of operating profit to be imposed on companies that repeatedly cause fatal industrial accidents, was promulgated on October 27. The amended law stipulates that if, within one year from the law’s effective date, three or more workers die from industrial accidents due to violations of safety and health obligations, a fine of up to 5% of the company’s average operating profit over the previous three years may be imposed. However, using operating profit as the standard for calculating fines risks undermining fairness in sanctions and increasing concerns over overlapping penalties under existing laws and greater management uncertainty.

Preventing industrial accidents and protecting workers’ lives are fundamental responsibilities that companies must fulfill. It is also necessary to hold companies strictly accountable when repeated violations of safety measures result in grave loss of life. However, whether stronger punishment actually leads to a reduction in industrial accidents is a separate issue, and both the effectiveness of sanctions and their economic ripple effects must be taken into account.

Above all, a fundamental review is needed as to whether operating profit is an appropriate basis for calculating fines. Even when companies violate the same safety obligations and accidents of the same scale occur, the amount of the fine can vary greatly depending on operating profit. Yet operating profit reflects only a company’s profitability; it does not directly indicate the level of safety management or the seriousness of the violation. A system that imposes larger fines on more profitable companies may provoke controversy over fairness in sanctions and will be difficult to shield from criticism that it prioritizes a company’s earnings over actual responsibility for the accident.

The proportionality of the fine criteria is also problematic. The amended law allows fines of up to 3 billion won even when a company has no operating profit, when operating profit is difficult to calculate, or when 5% of operating profit falls short of 3 billion won. This combination of a profit-linked rate and a separate fixed upper limit may create imbalances in the sanction burden across firms and may also reduce the financial capacity needed for investment in improved safety facilities and expanded staffing.

It is also necessary to guard against excessive expansion of administrative discretion in the process of calculating fines. Factors such as the seriousness of the violation, the circumstances of the accident, the company’s implementation of safety measures, and efforts to prevent recurrence should be comprehensively considered, but specific standards for aggravating and mitigating sanctions must be made clear. Only when companies can reasonably predict the level of sanctions can fairness in enforcement and acceptance of the policy be secured.

The problem of overlap with sanctions under existing laws must also be resolved. When an industrial accident occurs, companies may face not only criminal liability under the Occupational Safety and Health Act and the Serious Accidents Punishment Act, but also administrative sanctions and civil liability for damages. Even if the legal nature of fines differs from criminal punishment, overall proportionality should be reviewed and procedural rights guaranteed so that the burden of sanctions for the same accident does not accumulate excessively.

Uncertainty at worksites stemming from the expanded right to stop work should also be minimized. Since the grounds for stopping work are being broadened from cases of imminent danger to cases where danger is merely anticipated, vague standards of judgment could cause unnecessary confusion and disputes over workplace operations. The Ministry of Employment and Labor should set forth in subordinate regulations concrete provisions on objective standards for assessing danger, the scope of work stoppages, and procedures for promptly resuming work after safety measures have been taken.

Industrial safety policy should place greater emphasis on preventive systems that remove risk factors in advance rather than on sanctions imposed after accidents occur. Small and medium-sized enterprises, in particular, face heavy cost burdens in securing safety equipment and professional personnel, so it is difficult to expect meaningful improvement through across-the-board regulatory tightening alone. The Ministry of Employment and Labor should combine technical support with institutional incentives to strengthen companies’ autonomous safety management capabilities and encourage preventive investment.

The revision of the Occupational Safety and Health Act has now moved beyond legislation into the stage of concrete institutional design. In the process of preparing subordinate regulations, the Ministry of Employment and Labor must closely review the fairness of sanctions based on operating profit and ensure the reasonableness of fine calculation, the proportionality of overlapping sanctions, and the clarity of work stoppage procedures. The success of industrial safety policy should be judged not by how much in fines has been collected from companies, but by how substantially industrial accidents have actually been reduced.

2026. 10. 28.

Center for Free Enterprise (CFE)

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Original title: [논평] 영업이익 5% 산재 과징금, 이익 규모가 사고 책임 척도 될 수 없어 산정기준부터 재검토해야

Author: Center for Free Enterprise (CFE)

Date: 2026-10-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=comment&pn=1&idx=29691