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 - Ⅲ. Civil Compensation: Extension of Working Age for Manual Workers and the related Legal Impact

Ⅲ. Civil Compensation: Extension of Working Age for Manual Workers and the related Legal Impact

A. Introduction

On February 21, 2019, the Supreme Court issued a ruling that extends the working age of ordinary manual workers from the current 60 to 65. Working age means the maximum age someone is available for employment. The court determines the working age not only after considering social and economic conditions such as the average age of the nation, the economy, and employment conditions, etc., but also after examining a variety of other conditions such as the number of workers in each age group, the employment rate and the labor participation rate (Supreme Court Decision on Apr. 13, 2012, 2009da77198, 77204).
The working age of manual workers went from 55 to 60 through another Supreme Court decision in 1989 and has remained there for the past 30 years. This most recent Supreme Court ruling in February 2019 will bring many changes to society.
In the immediate term, this change will use 65 years of age for calculating civil damage compensation for people who are not salaried workers such as the unemployed, minors, students, full-time housewives and general manual workers. However, considering that the working age of manual workers goes together with the statutory retirement age prescribed by the Elderly Employment Act To accelerate employment of retirement-age people, the Act on the Employment Promotion of the Elderly was enacted on December 31, 1991. This Act became the Act on the Prohibition of Age Discrimination in Employment and Elderly Employment Promotion on March 21, 2008 (hereinafter referred to as “the Elderly Employment Act”).
, which was set at 60 years in 2013, extension of the working age for manual workers to 65 years will influence society in a great number of ways, in terms of not only changing compensation for damages, but also lending momentum to further extending the statutory retirement age. It is especially related to the low birth rate and societal aging in Korea. The proportion of the population aged 65 or older in Korea reached 14.3% in 2018, which makes the nation an “aged” society, and will reach 20% in 2025, when it will be considered a “super-aged” society. According to the United Nations, if the number of those aged 65 or older reaches 7% of a nation’s total population, that nation is considered an aging society; if 14%, it is an aged society; and if 20%, it is a super-aged society; Ha, Kaprae, 「Labor Standards Act」, 28th Ed., Joongang Economy, p. 603; National Statistical Office, 「Future Population Special Estimation 2017-2067」, Mar. 2019, p. 12.


B. Details of the Court Ruling regarding the Extended Working Age of Manual Workers

First of all, let us concretely examine the details of the Supreme Court's decision to extend working age for manual workers. Supreme Court ruling on Feb. 21, 2019.


1. Facts
On August 9, 2015, a 5-year-old boy drowned in a swimming pool. The parents claimed compensation for civil damages for violation by the pool owner and safety manager of their obligation of care. When calculating compensation for damages in first and appellate trials, the courts applied the wages of city daily workers from the time their military service ended for 21 months after the victim would have become an adult, to the age of 60. However, after a public hearing on November 28, 2018, the Supreme Court ruled on February 21, 2019, that it was unable to maintain the case rulings that the working age of manual workers had been accepted until the age of 60, in terms of the actual practices of physical labor, and instead extended the working age of those who provide physical labor to 65 years.

2. Extension of working age for manual workers: effect on society
The Supreme Court’s ruling considers the changes in social and economic conditions in Korea, increased natural longevity, and institutional changes. In general, the decision on the maximum working age for a manual worker is determined by considering three things Do, Jaehyung, “Working age of general manual workers, 「Labor Review 」, Apr. 2019 (vol. 169).
:
(i) biologically possible physical working age
(ii) the age at which manual labor is desired to work, and
(ii) to what extent a society can accept physical labor.
Using these standards, the Supreme Court specified the following seven items.
① At the time of the previous Supreme Court ruling (1989), the average life expectancy in the nation was 67.0 years for men and 75.3 years for women. In 2017, the average life expectancy for men was 79.7 years, and 85.7 years for women.
② At the time of the previous ruling (1989), the per capita GDP of Korea was USD 6,516, and had reached USD 30,000 by 2018.
③ At the time of the 1989 ruling, retirement age for railway, civil engineering, construction, and machine workers was mainly 58, but in 2013, this had been extended to 60 for most civil servants. In the private sector, the mandatory retirement age for all workers was set at 60 on January 1, 2017. According to a press release from the Ministry of Employment and Labor, the average retirement age of workplaces operating retirement age systems as of 2016 was 60.4 years.
④ According to OECD data, the actual retirement age is higher than the official retirement age in Korea. From 2011 to 2016, actual average retirement age was 72.0 years for men and 72.2 years for women, while the average among OECD members was 65.1 years for men and 63.6 years for women. Korea has the highest actual retirement age of all OECD member states.
⑤ The Employment Insurance Act applied to newly-hired persons under the age of 60 at the time of enactment on December 27, 1993, but also applies to those who have been employed or began self-employment at up to 60 years of age since its revision on June 4, 2013, while excluding those who are newly employed or began self-employment after reaching 60 years of age.
⑥ The age at which subscribers will receive national pension payments is gradually extending: to 61 years between 2013 and 2017, 62 years between 2018 and 2022, 63 years between 2023 and 2027, 64 years between 2028 and 2032, and 65 from 2033. As for government employees and teachers and staff at private schools, pension receiving age is 60 years until 2021, 61 years in 2022, 62 years in 2024, 63 years in 2027, 64 years in 2030 and 65 years in 2033.
⑦ Under the various social security laws, the age at which the nation must actively guarantee a livelihood is 65 years of age and older.





3. Supreme Court decision
The Supreme Court dismissed the existing view that the working age of persons who do ordinary manual labor or those who mainly engage in manual labor for their livelihood is 55 years old in the case of an experienced person Here, the empirical rule is that proof of the facts in civil litigation is not a natural scientific proof that there is no doubt, but if there are no special circumstances, that it is necessary for an “ordinary” person to be convinced of the truth beyond any doubt (Supreme Court ruling on Feb. 21, 2018da248909).
(99daka16867). Since then, courts have maintained the view that the working life of a physical laborer must be 60 years by law. However, as the socio-economic structure and living conditions of our country improved rapidly and the legal system improved, the basic views became more difficult to maintain because the circumstances that formed the basis for the above-mentioned empirical rules changed significantly. Now, as long as there are no special circumstances otherwise, it is reasonable to see that it is possible to work up to age 65.

C. Changes in the Legal Environment due to Extension of Working Age for Manual Workers

Compensation for damages for illegal acts includes compensation for direct and indirect damages, and consolation money. The Seoul Central District Court has set a benchmark of KRW 100 million for the deaths as the consolation money for mental compensation for victims of traffic accidents and occupational accidents that occurred after March 1, 2015, without any fault of the victim.
Direct damage refers to illegal activities that result in medical expenses, nursing care costs, funeral expenses, repairs to vehicles, and other expenses for the victim. Indirect damages refer to gains that could have been realized if the illegal act had not been committed. These include lost earnings during the working period and lost severance pay. "Damage Claims Law," Judicial Research and Training Institute, 2008, p. 108.
In this regard, compensation for higher automobile insurance premiums and compensation for civil damages due to work accidents are directly affected.
In the event that an employee dies from an industrial accident, the company defers compensation to industrial accident compensation insurance. However, if the company is deemed partly liable, such as for failing to have sufficient safety measures in place that would have prevented the death of the worker, the company shall be liable for civil damages in addition to industrial accident compensation for the surviving family. The extent of the civil damages shall be the loss of the victim whose death has a significant causal relationship with the company’s negligence, while the scope of damages recognized are categorized as direct damage, indirect damage and emotional damage. In general, if a worker dies, compensation shall cover medical expenses and hospital expenses as direct damage, and lost work income (loss incurred from the time of death to the point of retirement) and a one-time retirement allowance (severance pay due to early retirement) as indirect damage, and emotional damage to the survivors. Lost labor earnings used to be calculated up to the age of 60, but now will be calculated up to 65 years, which increases the amount of civil damage compensation.

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

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