LABOR LAW GUIDE

Chapter 19 The Four Types of Social Security

Section 2: Industrial Accident Compensation Insurance (1/2)

Ⅰ. Concept

Industrial accident compensation insurance(hereinafter, the IACI) is a social insurance system in which the government provides occupationally ill and injured employees with compensation to be paid by his/her employer under the Labor Standards Act. Under this system, individual employers are obligated to make a given rate of contribution to the insurance fund and, in return, are exempted from paying compensation for occupationally ill or injured employees. The government uses this fund to compensate employees for work-related injuries and illnesses.
IACI premiums are fully paid by the employer, and are calculated by multiplying the total income of all workers in the workplace by the insurance rate announced by the government according to the business’ risk level. In applying the industrial accident insurance premium rate for the same business, if the premium benefits to workers exceed 85% or less than 75% of the previous three years of premium payments, the premium rate applied to the business is determined up to 50% higher or lower for the next business year. As a result, industrial accident insurance premiums may increase the following year if a lot has been paid out in IACI benefits, which will affect the company’s intention to apply to IACI as it can expect higher premiums.
Insurance benefits shall be paid at the worker’s(or survivor’s) request if a worker at a workplace covered by IACI has an injury, illness or accident requiring at least four days of medical care. Types of insurance benefits include nursing care, leave of absence, sick compensation pensions, disability, survivor, nursing care, funeral expenses, and vocational rehabilitation.

Ⅱ. Application

1. Working places

This Act shall be applicable to all businesses or workplaces, with the exception of those prescribed by Presidential Decree, in regards to the risk ratio, scale, place, etc. of the business.
The employer of a non-compulsory business may also choose to take out or terminate insurance with approval from the Korea Labor Welfare Corporation.



2. Separate insurance for overseas dispatch employees

For an overseas dispatch employee(excluding a short-term visitor), the employer shall take out insurance separately with the Labor Welfare Corporation. Even if the employee concerned is subject to the four social security insurances and income tax in Korea, he/she will not be eligible for the industrial accident compensation if he/she is not additionally insured for IACI.

Ⅲ. Covering an Accident through Industrial Accident Compensation Insurance

Industrial accident compensation is commissioned to and handled by the Employee Welfare Corporation under the Ministry of Employment and Labor. The ill or injured employee shall apply to the district office of the Employee Welfare Corporation for the benefits by filling out the form, Application for Medical Care Benefits and receiving the employer’s confirmation signature on the form. In cases where a serious industrial accident has occurred, the employer shall report to the Ministry of Employment and Labor immediately, while for minor industrial accidents, the employer shall submit an Occupational Accident Report Form to the district Labor Office within one month from the date the accident occurred. For accidents that are very clearly occupational only two or three weeks are necessary to receive confirmation as an industrial accident and related compensation. However, for occupational illnesses, it will take a minimum of two months for confirmation as an industrial illness. The procedures for determining whether an accident or illness is occupational are: Application for medical care benefits ? Confirmation of illness details ? Analysis of relationship between working environment and illness ? Confirmation of advisory medical doctor’s opinion ? Approval or rejection by the Occupational Illness Deliberation Committee.

Ⅳ. Criteria for Determining an Incident as an Industrial Accident

1. General criteria

1) Accident compensation is rendered in case of injury, disease, handicap, death, etc. caused by a work-related accident.

2) Article 37 of the Presidential Decree to the Industrial Accident Compensation Insurance Act(IACI Act) stipulates that a work-related accident shall reveal causality between the work and the accident.

3) The accident shall not be caused by the employee’s intentions, self-injury, criminal behaviors, etc. However, if an employee who has received mental treatment due to work stress or whose normal abilities to recognize, select, or control themselves has been affected by work(as determined by medical diagnosis) commits suicide, it shall be admitted as a work-related accident.

2. Considerations for work-related accidents

In general, a work-related accident is distinguished between those caused by
work and those related to work. In practicality neither one can be overemphasized nor excluded. Accordingly, an accident is recognized as an industrial accident if it has work-related causes.

(1) Related to work

If an accident occurs when preparing for work, at work, or after work under the employer’s supervision or management, then it can be said to have been caused by a reason related to work performance.

(2) Caused by work

If there is considerable causality between the employee’s work and the accident that occurred, it is recognized as an industrial accident. The causality shall be verified by the plaintiff. The cause and effect shall not only be verified in terms of medical or physical science, but also by considering all given facts such as the employee’s health at the time of employment, materials at the work place, working hours, contact with other workers, etc. If the employee has not been engaged in the work concerned, it shall be admitted that the accident has not been caused by work. However, if the employee has been engaged in the work concerned, the accident may have been caused by work.

3. Work-related accidents

The following suggests concrete criteria:
① When the accident takes place while the employee performs contractual duties under supervisory control and management of the employer, or when the accident occurs due to defects in facilities or management;
② An accident which happens while the worker is commuting to and from work;
③ An accident that happens while the worker is participating in or preparing an event organized by the employer or an event following the directions of the employer;
④ An accident which happens during recess hours due to an act that can be seen as under the control of the employer; and
⑤ Other accidents which happen in relation to work.

4. Work-related diseases

The following suggests concrete criteria:
① An illness which occurs due to the handling of, or exposure to, elements, including physical agents, chemical substances, dust, pathogens, and physically straining work, which could harm a worker’s health while he/she is performing his/her duties;
② An illness which occurs as a result of a work-related injury; and
③ Other illnesses which occur in relation to work.
According to Article 5(1) of the IACI Act, occupational accident includes any illness caused by his/her duties, with verifiable causality between the employee’s work and the illness. Although there is no direct relation between the main cause of the illness and work performance, if occupational fatigue or stress at least overlaps with the main causes of the illness, causing or deteriorating it, it is assumed that there is causality between them. The cause and effect shall not only be verified in terms of medical or physical science. If it is assumed that there is considerable causality between the work and the illness in considering all given facts, this shall be regarded as verification. In cases where the basic and potential illness that is no problem carrying out normal work duty has become suddenly deteriorated faster than natural speed of deterioration due to heavy workload, it is also regarded that there was verification. Whether there is causality between the work and a death shall be estimated not by the health and physical conditions of the employee concerned, but of an average employee.


Ⅴ. Insurance Benefits

When an employee of the employer covered by IACI suffers an occupational injury or illness which requires 4 days or more of medical treatment, or dies from a work-related cause, the IACI benefit shall be paid at the request of the employee(or his/her surviving family member). IACI benefits include medical care benefit, suspension benefit, injury-disease compensation annuity, disability benefit, survivors’ benefit, nursing benefit, funeral expense benefit, vocational rehabilitation benefit(newly created on July 1, 2008). If an employee is given the industrial accident compensation insurance benefit due to an industrial accident, the employer responsible for compensating the employees for the damage incurred by the accidents under the Labor Standards Act. The employer is also excused from civil liabilities within the range of the insurance benefit.

1. Medical care benefits

Medical care benefits shall provide for the total medical care expenses and be available at any medical institution insured by the Corporation, or at any institution designated by the Corporation, provided that, in cases of great disadvantage, expenses spent for medical treatment may be paid in lieu of the actual medical care.

2. Suspension benefits

Suspension benefits shall be provided for the period in which an employee is unable to work due to medical care needed from injury at work or contracting an occupational illness. The amount to be paid for a day shall be limited to 70% of the average wage. If the period of medical leave is three days or less, no payment shall be given.

3. Disability benefits

If a worker still remains handicapped upon completion of treatment received for an occupational injury or illness, the employer shall provide the handicapped worker, according to the level of disability, compensation equivalent to the sum of average wages multiplied by the number of days provided in the table(Attachment to the IACI).

4. Survivors’ benefits

Survivors’ benefits shall be paid to the surviving family of the worker who has died from a work-related cause. The benefits are 1,300 days of average wage, which can be rendered in either of the following two methods: ① 50% paid in a lump sum and 50% in pension; or ② 100% paid in pension.

5. Funeral expenses

Funeral expenses shall be paid for a deceased worker killed by a work-related accident. An additional payment equivalent to 120 days’ worth of the worker’s average wage shall be provided to the entity performing the funeral service.

6. Nursing benefits

Nursing benefits shall be paid to those who receive medical care benefits pursuant to Article 61 as 1st or 2nd degree seriously disabled persons and to those who receive actual nursing services for constant or frequent nursing needs after treatment.

7. Lump sum compensation

If a worker who receives medical care benefits is also paid an injury-disease compensation annuity after three years of receiving medical care, then the employer may terminate the worker’s service upon the fourth year as prescribed in Article 84 of the Labor Standards Act, in accordance with the provisions of the proviso of Article 23 ② of the LSA(Article 80 of the IACI).

8. Injury-Disease compensation annuity

If a worker who has received medical care benefits continues to be in a state that meets all the requirements described in the following subparagraphs, after two years have passed since the start of the medical care, he/she shall be paid an injury-disease compensation annuity instead of wage replacement benefits(Article 66 of the IACI). Such a state includes.
① The injury or illness remains uncured;
② The degree of invalidity caused by the injury or illness meets the standards for invalidity grades prescribed by Presidential Decree;
③ The worker has not been employed because of the need for medical care.

9. Vocational rehabilitation benefit (newly created July 1, 2008)

For a worker who receives disability benefits or needs vocational training to be employed, expenses required for the training and vocational training allowance are subsidized.

For further questions, please
call (+82) 2-539-0098 or email bongsoo@k-labor.com

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