Industrial Accident Compensation

Chapter 2. Criteria for Determining an Incident as an Industrial Accident/Illness and related Cases

Section 2. Handling Fatalities from Industrial Accidents and related Cases - II. Occupational Fatalities and Follow-up Actions

II. Occupational Fatalities and Follow-up Actions

A. Summary

If an employee dies from an occupational accident, the employer must follow the procedures required by law and take actions deemed appropriate for the victim’s family. When occupational fatalities occur at the workplace, the police will immediately begin investigating, while the company shall be required to begin discussing compensation and other necessary issues with the family so that funeral services can be conducted without delay. In relation to the above issues, I would like to look at one occupational fatality and the resulting actions taken by the employer, as a way to explain measures that companies can prepare in advance of any such tragedy.
Company A (hereinafter referred to as “the Company”) operates a warehouse at Suwon Airfield. At 8:20 in the morning on September 6, 2013, Employee A (hereinafter referred to as “the Employee”) was in a warehouse guiding a forklift carrying air conditioning equipment. The air conditioner slipped off the left side of the forks and fell on the Employee, which caused serious injury. He was taken to Ajou University Hospital in Suwon, where he died during emergency treatment. At this news, the Company called the police immediately to report the death. Once confirming the Employee had died, the police visited the accident site to begin their investigation. The Company called this labor attorney (who provides regular legal advisory services) in the afternoon of September 6, and requested answers to three urgent questions related to the procedures they were to follow in handling this accident.
The first question was “What recommendations do you have regarding overall handling of this occupational fatality, and the surviving family?” The second question was “While the Company handles this case through Industrial Accident Compensation Insurance, do we have other legal liabilities like civil claims or criminal charges?” The third question was “What process do we need to follow to have Industrial Accident Compensation Insurance cover this case?” [For reference, the Employee was a senior citizen, 72 years of age, with a monthly average wage of KRW 1,719,340, and a daily ordinary wage of KRW 56,065]. This article will discuss the responses given to the Company’s questions.

B. Handling Occupational Fatalities & the Surviving Family
First of all, as occupational fatalities are regarded as serious occupational accidents, the company shall immediately report it to the district Labor Office. The on-site manager shall begin discussions with the surviving family for funeral arrangements while the personnel team shall prepare to deal with the related corporate responsibilities. The following information details the major issues companies who face this tragedy must deal with: reporting a serious occupational accident, handling the surviving family, methods for compensating surviving family and calculating those industrial accident compensation benefits, and civil compensation for damages.

1. Immediate reporting of a serious occupational accident
In the case we are looking at, the Company shall immediately report the fatality to the police and the district Labor Office as this is a serious industrial accident. Should a company fail to report within 24 hours, a fine of up to KRW10 million will be levied.


□ Reporting Incidence of Industrial Accidents (Article 10 of the Occupational Safety and Health Act: a fine up to KRW 10 million will be levied for failure to report.)
○ When an occupational death, injury or illness requiring medical treatment for four days or longer occurs, the employer shall report to the district Labor Office through an Occupational Accident Report Form within one month: Provided, that this shall not apply if medical care benefits, survivors' benefits, or pensions for surviving family members have been applied for during that same period.
○ When an occupational accident falls under one of the following serious occupational accident categories, the report shall be made immediately:
1. If the occupational accident results in the death of one or more employees;
2. If the occupational injuries of two or more requiring medical treatment for 3 months or longer has occurred at the same time; and
3. If the occupational injuries or illness of ten or more employees occur at the same time.

2. Handling the surviving family
The surviving family requested three items in a text message as required before conducting funeral services. The first was confirmation by the Company that the accident would be covered by Industrial Accident Compensation Insurance. Second was an agreement on the Company’s responsibility in addition to industrial accident compensation and its related schedule. Third was an advance payment by the Company for medical expenses and funeral service fees. The Company responded in the following manner, and a three-day funeral service was held on September 8th (two days after the accident) on the basis of this response.

The company offers its response to the following items regarding your request by text message:
1. Coverage by Industrial Accident Compensation Insurance: The company promises to handle this case through Industrial Accident Compensation Insurance, and will take care of it as soon as possible upon receipt of the necessary information from you.
2. The company’s responsibility besides industrial accident compensation and its related schedule: If the company must be responsible for something more, we will accept that responsibility. We promise to meet and consult with the surviving family along with the company’s appointed labor attorney and the surviving family’s representative (or the surviving family’s appointed labor attorney) on the date that the surviving family schedules.
3. Advance payment for medical expenses and funeral service fees: We are afraid that we are unable to pay the expenses in advance due to the fact that the fatality occurred suddenly and the funeral is scheduled for this weekend. Please cover the costs first and then we will reimburse you as quickly as possible. If the surviving family wishes, we will provide reimbursement for the medical expenses and funeral services on Monday, September 9th, the earliest time available for bank transactions.

3. Calculating industrial accident compensation (survivors’ pension and funeral expenses)
Surviving family members can request survivors’ benefits and compensation for funeral expenses in accordance with the Industrial Accident Compensation Insurance Act, so it is desired for companies to calculate the benefits in advance. Compensation for occupational fatalities includes expenses for medical treatment and funeral services, and survivors’ benefits. Lump sum payments for survivor’s benefits in this case equaled KRW 72,884,500, and for funeral expenses KRW 9,300,770, for a total of KRW 82,185,270. The details for compensation through Industrial Accident Compensation Insurance are as follows:
○ Survivor’s benefits: 1,300 days’ average wages;
Options for receipt of payment: 1) 100% pension or 2) half pension and half lump sum. In this case, the total lump sum was calculated as KRW 56,065 × 1,300 days = KRW 72,884,500.
(1) 100% pension (the Employee’s daily average wage was KRW 56,065)
① Basic pension: KRW 56,065 × 365 days × 0.47 = KRW 9,617,950 per year
② Addition for Basic Pension: KRW 56,065×365days×0.05×1=KRW 1,023,186
(Up to four surviving family members can be added for additional basic pension: The victim’s directly dependent family members – spouse, parents aged 60 or older, and children aged 19 or younger)
If the 100% pension is chosen, the total sum of ① and ② is KRW 10,641,136. As this amount is divided into 12 months, the monthly payment would be KRW 886,761.
Half pension and half sump sum payment
Lump sum: KRW 72,884,500 x 50% = KRW 36,442,250
50% pension: KRW 886,761 x 50% = KRW 443,380
○ Funeral expenses: 120 days’ average wages (Minimum: KRW 9,300,770 ~ Maximum KRW 13,051,700). The calculation in this case was KRW 56,065 x 120 days = KRW 6,727,800. As this calculated amount is less than the minimum funeral expenses, the minimum amount, KRW 9,300,770, shall be paid.
Should the Employee’s surviving wife die while the monthly pension payments made total less than the lump sum payment would have been, the remaining money shall be paid out in a lump sum to the next closest surviving family.

4. Civil claims on compensation for damage
When an employee dies from an occupational accident, as occurred in this case, the employer shall file for compensation through Industrial Accident Compensation Insurance, and then will be exempt from responsibility for such compensation. However, in cases where employer negligence (for example, a failure to take adequate safety precautions), results in the employee’s death, the employer may also have civil liabilities to the victim’s surviving family, in addition to industrial accident compensation.
Civil compensation for damages refers to all damages the victim suffered from proximate causal relations to the company’s negligence. The judicial ruling divides such coverage of compensation for damages into three parts: direct damage, indirect damage and emotional damage. Direct damage due to occupational fatality would be medical and funeral expenses, while indirect damages would include the lost monthly wages for the period from death to retirement age and the lost severance pay due to early retirement; Emotional damages would be compensated by payment for consolation. Generally speaking, if the employee is younger or is less at fault than the employer, it is better for the family to choose civil compensation, as civil compensation for damages may far exceed the amount claimed for industrial accident compensation. However, in this case, as the victim was 72, lost monthly income would be significantly less, and lost severance pay would not occur, so only emotional damages would need to be decided.
For occupational fatalities, the Occupational Safety and Health Act regulates only medical care benefits, survivors’ benefits, and funeral expenses. It does not include consolation payments, which means that such payments cannot be covered by industrial accident compensation. However, any benefits received for industrial accident compensation do not affect the right to claim civil compensation for emotional damage, meaning companies are not exempt from the responsibility to compensate for such damage. Accordingly, when an accident can be blamed on employer negligence, the surviving family can receive industrial accident compensation and claim civil compensation for emotional damages. The court will determine the amount of consolation payment in consideration of the victim’s age, the degree of negligence, the amount of compensation received, etc.

C. Other Legal Responsibilities for Employers, such as Civil Claims & Criminal Charges While Claiming Industrial Accident Compensation

1. Industrial accident compensation and civil claims for compensation
In cases where the employer is not at fault, the victim (or victim’s family) can only receive industrial accident compensation according to the Industrial Accident Compensation Insurance Act, but they cannot claim compensation for damages through the Civil Act for illegal actions by the employer. However, if the employer is determined to be at fault for the accident, then the victim (or the victim’s family) can claim compensation for damage through the Civil Act for illegal actions by the employer, according to the degree of fault. Provided, that industrial accident compensation awarded can be deducted from any such claims.

2. Industrial accident compensation and claims for criminal damage compensation
If there exists a direct offender-victim relationship in an occupational fatality, the surviving family can seek compensation for criminal action against the individual offender. The company in this case will not be the subject of the claim, but may still be the target of an intensive audit by the labor inspector for compliance with industrial safety rules according to the Occupational Safety and Health Act, as the workplace suffered a serious industrial accident. If, during this audit, the company is found to have violated any of the safety rules, it would have criminal charges filed against it. Accordingly, workplaces suffering a serious occupational accident shall need to have made thorough preparations to ensure they are not in violation of the safety rules found in the Occupational Safety and Health Act.

Article 66-2 (Penal Provisions) of the Occupational Safety and Health Act: A person who has caused the death of a worker in violation of Article 23 (Safety Measures) (1) through (3), or Article 24 (Health Measures) (1) shall be punished by imprisonment for not more than seven years or a fine not exceeding 100 million won.

D. Covering an Accident through Industrial Accident Compensation Insurance

Industrial accident compensation is commissioned to and handled by the Employee Welfare Corporation by the Ministry of Employment and Labor. Surviving family members shall apply to the district office of the Employee Welfare Corporation for the benefits by filling out the form, “Application for Survivors’ Benefits and Funeral Expenses” 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 apply for industrial accident compensation within one month from the date the accident occurred, or can submit an Occupational Accident Report Form to the district Labor Office. For accidents that are very clearly occupational, as was the case for the accident described here, 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 à Confirmation of illness details à Analysis of relationship between working environment and illness à Confirmation of advisory medical doctor’s opinion à Approval or rejection by the Occupational Illness Deliberation Committee.

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

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