Korea will fine firms with repeat workplace deaths up to 5% of operating profit

The fine is set against operating profit, so its ceiling moves with a company's results. At the 5% maximum ^[1], the 50 billion won cap the People Power Party wanted ^[4] would have started to bind only at 1 trillion won of annual operating profit ^[1]. For every company earning less than that, the refused cap would not have changed the maximum at all ^[1]. Lee Yong-woo of the Democratic Party made the size argument from the other side. "Because it is based on operating profit rather than revenue, suggesting that trillions of won would be imposed distorts the law," he said ^[9]. A 1 trillion won fine at the full rate needs 20 trillion won of operating profit behind it ^[2].

The 5% is a limit, and Lee described how the amount below it gets chosen. "There is a 5% cap, and it is designed so that an appropriate amount is imposed taking into account the degree of the violation and efforts to prevent recurrence," he said ^[8]. The detail will sit in subordinate regulations. "We will do everything necessary, including revising subordinate regulations, so that the new system takes hold at worksites," Employment and Labor Minister Kim Young-hoon said after the vote ^[6]. The reports do not say how the fine is calculated for a company that posts an operating loss in the year of the deaths.

For a shareholder, the two penalties differ in kind. The fine can take at most a twentieth of one year's operating profit ^[1]. A revoked business registration would stop the company from earning the profit the fine is measured against. Rep. Kim Wi-sang of the People Power Party put that risk in sector terms. "If you apply the standards in this revision to recent cases, the country's second-largest construction company by capacity would immediately face registration revocation over a serious accident," he said ^[7].

The decrees could set typical fines well below 5%, leaving a small and mostly symbolic cost; the ministry could apply rates near the ceiling to large earners, putting fines above 50 billion won in play for any firm past the 1 trillion won line ^[1]; or agencies could act on revocation requests against builders like the one Kim described. I think the registration route matters more to valuation than the fine does to earnings, because one is capped at a year's profit and the other is not. The counter-case is procedural. The revision only creates grounds to request revocation from other administrative agencies ^[3], and if those agencies rarely act, the fine becomes the only penalty companies actually pay. A first fine near the ceiling on a large earner would mean the earnings effect is bigger than I am allowing.

The Korea Enterprises Federation argued the fine is stacked on rules that already exist. "Creating yet another fine system, a powerful form of economic penalty, and applying it on top of existing rules amounts to excessive sanctions on employers and is unlikely to prevent industrial accidents," it said ^[12]. Lee's answer to the cost argument was about frequency. "Only a tiny number of companies have had three people lose their lives within a year through violations of their obligations," he said ^[10].