News

Home > Policy > News > News

MOEL preliminarily announces amendments to IACI-related laws which aim to strengthen protection for vulnerable workers and small workplaces

Download  Attachment Download

Oct. 25, 2017


-Small workplaces, including workplaces ordinarily employing less than one worker and small construction projects, will be covered by industrial accident compensation insurance (IACI).


-The differential discount rates between large companies and SMEs under the merit rating system will be abolished to get rid of the unequal premium discounting that favors large companies.


-Even accidents that occur while the worker deviates from his/her commuting route or interrupts his/her commuting journey will be recognized as work-related if the deviation or interruption is made to perform the activities necessary for daily life, such as doing the school run for his/her children.


-The system of requiring workers to attach their employer's seal when claiming medical care benefits under industrial accident compensation insurance will be abolished. 


The Ministry of Employment and Labor (MOEL, Minister Kim Young-joo) has preliminarily announced amendments to the Enforcement Decrees and Enforcement Regulations of the Industrial Accident Compensation Insurance Act and the Act on the Collection, etc., of Premiums for Employment Insurance and Industrial Accident Compensation Insurance which would strengthen protection for, and eliminate discrimination against, vulnerable workers and small workplaces (pre-announcement period: Oct. 25~Dec. 3, 2017).


The main contents of the amendment bills are as follows:


<1> Expanding the coverage of IACI


(Workplaces excluded from IACI coverage so far)Workplaces ordinarily employing less than one worker and less than 20 million won construction projects (floor area of 100m2 or less) carried out by unlicensed constructors, which have so far been excluded from IACI coverage, will be covered by IACI from July 1st 2018.
As a result, about 190,000 vulnerable workers in small workplaces are expected to enjoy the benefits of IACI.


(Self-employed people running a one-person business) Currently, self-employed people in six occupational areas*, who are at high risk of industrial accidents, can opt into IACI coverage (although they have to pay insurance premiums out of their own pockets). According to the amendment bill, self-employed people in eight manufacturing industries**, including manufacture of fabricated metal products and motor vehicle maintenance, will be added to the list.


*Passenger transport service operator, cargo transport service operator, construction machinery business operator, quick delivery service courier, replacement driver and artist


** Manufacture of basic metal products; manufacture of fabricated metal products; manufacture of electronic components, computer, radio, television and communication equipment and apparatuses; manufacture of medical, precision and optical instruments, watches and clocks; manufacture of electrical equipment; manufacture of other machinery and equipment; manufacture of precious metals and ornamentations; and motor vehicle maintenance


As a result, about 56,000 self-employed persons who run a small one-person business are expected to become eligible to sign up for IACI coverage.


<2> Easing the burden of proof in cases of work-related diseases


If a disease is to be recognized as work-related, the claimant (victim or his/her surviving family member) should prove that there is a significant causal relationship between his/her work and disease. However, it is difficult for claimants who are not medical experts to establish such a causal relationship, so it has been argued that the burden of proof falling on victims of work-related diseases needs to be eased.


Hence, the amendment establishes a clear legal basis for applying the principle of 'presumption of causation'* in judging whether there is a significant causal relationship between work and disease in order to ease the burden of proof on victims of work-related diseases.


*If the criteria for recognition (automatic recognition), including the duration of work (exposure) and the amount of exposure, are satisfied, the disease will be recognized as work-related as long as there is no counterevidence. Even in cases where the criteria are not fully satisfied, the disease will be recognized as work-related if medical causation is established.


<3> Improving the merit rating system in terms of scope of application and differential increase/decrease rates


Currently, the merit rating system which allows IACI premium rates to be increased or decreased according to an individual workplace's insurance balance ratio* applies to workplaces with 10 employees or more (construction projects with a value of at least 2 billion won in the case of the construction industry), and the increase/decrease rate varies from ±20% to ±50% depending on size of workplace. 


* A balance ratio is a ratio calculated by dividing the total insurance benefits paid to an individual workplace due to industrial accidents over the past three years by the total insurance premiums paid by the workplace during the same period. It is an indicator of the degree of accident occurrence.


**(Current)±20% for workplaces with 10~29 employees, ±30% for workplaces with 30~149 employees, ±40% for workplaces with 150~999 employees, and ±50% for workplaces with 1,000 employees or more


Insurance premium discounts are mostly given to large companies, and it has been pointed out that such premium discounts cause companies to conceal industrial accidents because their premium rates would go up if they reported industrial accidents.


Hence, the scope of application of the merit rating system was adjusted to include only workplaces with 30 employees or more (construction projects with a value of at least 6 billion won in the case of the construction industry), and the differential increase/decrease rates were unified into ±20% which will apply regardless of size of workplace. 


*(Current) amount of discounts given to all workplaces (in 2016): 1.5576 trillion won; amount of discounts given to workplaces with 1,000 employees or more: 728.2 billion won (46.8% of the total)


*(Revised) amount of discounts given to all workplaces: 623.8 billion won; amount of discounts given to workplaces with 1,000 employees or more: 260.8 billion won


The revamped merit rating system will be applied to IACI premium rates for 2019 and beyond. The unified increase/decrease rate would lead to a fall in the amount of discounts and thus to lowering of IACI premium rates across all workplaces, which would mean a reduction in the burden of IACI premiums on small workplaces.  


<4> Defining the specific scope of accidents occurring during ordinary commuting


The amendment stipulates the specific scope of 'accidents occurring while commuting to and from work via ordinary routes or methods', which is delegated by the revised Industrial Accident Compensation Insurance Act promulgated on October 24th.


If an accident occurs while the worker deviates from his/her ordinary commuting route or interrupts his/her commuting journey, it will not be recognized as  work-related. However, if the deviation or interruption is made to perform the activities necessary for daily life, the accident will be recognized as work-related.


The activities necessary for daily life are clearly defined as follows: purchasing daily necessities; receiving job-related education or training; exercising one's right to vote; taking one's children or a disabled person to school and bringing them home from school or entrusting them to the care of someone else; seeing a doctor; and caring for a sick family member.


Meanwhile, taxi drivers and quick delivery service couriers whose work starts at their place of residence would get the same level of compensation despite having to pay additional insurance premiums even if the provisions regarding commuting accidents applied to them. Considering this, the amendment makes an exception for such workers, allowing them not to pay insurance premiums associated with commuting accidents.  


<5> Abolishing the requirement for workers to attach their employer's seal when claiming medical care benefits under IACI


Currently, workers are required to obtain confirmation of their accident details from their employer who is the policy holder when claiming medical care benefits under industrial accident compensation insurance. However, it has been argued that this requirement constrains workers from asking for compensation for industrial accidents.


Hence, the requirement for workers to get their accident details confirmed by their employer will be abolished to remove any constraint that might prevent workers from asking for compensation for industrial accidents, and the Korea Workers' Compensation and Welfare Service (COMWEL) will check accident details directly with employers. 


Employment and Labor Minister Kim Young-joo said, "We will continue to reform irrational and problematic practices and systems to transform industrial accident compensation insurance into one that can give practical help to workers suffering from industrial accidents."


She added, "I hope that these legislative amendments will drastically improve industrial accident compensation insurance as a social safety net so that its effects can be felt at the workplace level."


The pre-announced amendment bills can be seen on MOEL's website (www.moel.go.kr) or the homepage of the Republic of Korea's electronic official gazette (www.mois.go.kr).

Last Modifide Date   :   Fri December 1, 2017
Back to top