Several production accidents have recently returned public attention to the issue of production safety. During China’s prolonged period of rapid economic growth over the past decades, legislation has constantly developed to regulate and protect the workforce. Most recently, on 31 August 2014, China issued the amended Production Safety Law (“2014 Production Safety Law”). This would become the fundamental legislation for production safety, and has come into force on 1 December 2014.

Legal framework

The 2014 Safety Production Law is the central national level legislation outlining general aspects of safety production and which regulates companies’ obligations. In addition, there are further laws addressing specific issues, including the Fire Protection Law and the Occupational Disease Prevention Law. All such national legislation is implemented by the different bodies within central government and local governments, which also formulate implementation regulations.

Beyond the above, companies must also comply with various national and industry standards which regulate working conditions, so as to ensure production safety, and protective clothing, amongst others. In addition, for certain industries (e.g., the chemical industry), companies must obtain special licenses permitting them to operate; meeting production safety requirements is one of the conditions authorities require to be demonstrated before granting such licenses.

Obligations of companies

Under the 2014 Production Safety Law, companies’ obligations concern the following general aspects the facilities and equipment provided, their workforce and funds.

Employers must also assign responsibility for production safety to delegated members of staff.

Facilities and equipment

For companies to build new factories, their designs and construction plans must take into account production safety so as to ensure that the necessary facilities and equipment are in good condition, and ready for use when the project is completed. The same requirement applies in case of any modification of the initial construction project.

Once construction is completed and the plant is operational, companies must provide working conditions in compliance with the applicable national and industry-wide standards. They must conduct periodic internal inspections to ensure the facilities and equipment are functioning and take all necessary measures to minimise the risks of potential accidents occurring in a timely manner.

For companies in certain industries (e.g., offshore oil drilling), certain type of their working equipment may threaten the health of the workforce and, as such, there are additional national and industrial-wide standards which apply to this equipment and must be complied with.

Some companies provide dormitories for their employees. In such instances, the dormitory must be isolated and be in a safe distance away from the place where the workshop, warehouse or store is located and where any hazardous products are manufactured, stored or sold.

Employee protection

Companies are certainly under a direct obligation towards their employees. These obligations include, in general terms:

  • formulating and reviewing internal production safety regulations and operational rules to ensure they effectively implement the applicable laws and regulations as well as national and industry-wide standards;
  • formulating an accident response plan and undertaking regular drills;
  • providing necessary protective articles to the employees;
  • informing the employees of any dangerous aspects in their workplace or any relating to their positions and ensuring that they are aware of measures to prevent accidents and the accident response plan;
  • educating and training their workforce (including dispatched employees and interns) in respect of the statutory rules, internal production safety regulations and operational rules.

In addition to the above general obligations, companies are under further obligations towards those employees who are exposed to hazardous operations which may cause occupational diseases. In defining occupational diseases, there is a national catalogue which provides a comprehensive list.

These further obligations include:

  • informing new employees of the possible occupational hazards and consequences and the prevention measures, etc. before they sign the employment contract. The same applies to employees who change roles to positions which may cause occupational diseases;
  • arranging health checks at a medical institution approved by the government for employees who will perform operations which may cause occupational diseases. Again this would include both new employees and employees transferred from other positions;
  • arranging regular health checks at an approved medical institution for employees who perform operations which may cause occupational diseases;
  • arranging health checks at an approved medical institution before termination of the employment relationship to confirm whether the employee suffers from any occupational diseases.

Companies are specifically prohibited from hiring or arranging for employees under age of 18 to perform operations which may cause occupational diseases, or arranging for employees to conduct hazardous operations if they are more vulnerable to suffer occupational diseases generally or suffer from diseases caused by the specific hazardous operations.

If an employee is diagnosed with an occupational disease, then their employer must release them from the work and make proper arrangements on their behalf. These would include arranging medical treatment and transferring them to other positions upon recovery. Suffering from occupational diseases constitutes a work-related injury and the respective employee is further entitled to benefits and treatment (for example statutory subsidies and protection from termination) as provided by the relevant work-related injury laws and regulations.

Funds

Companies are further required to allocate and maintain necessary funds to provide the necessary working conditions in compliance with law. According to the specific industry such as machinery manufacturing, mines, etc., administrative regulations set minimum amount of the funds. The amount of allocated funds is generally linked to business income or the production volume of the relevant companies, and could amount to millions of Renminbi.

Delegated staff and top management

Depend on their industrial sector and scale, companies are required to either assign staff or set up a department to implement the statutory rules and requirements and manage the production safety matters. These delegated production safety personnel are responsible for:

  • formulating internal rules concerning production safety. For example this would include: production safety management rules, operation rules, emergency plans, etc.;
  • organising production safety training;
  • organising drills; and
  • supervising and ensuring compliance with the statutory and internal rules.

In addition to the delegated personnel, companies’ top management is also laid general managerial and supervisory responsibilities in relation to production safety.

Liabilities

Companies may face civil, administrative or even criminal liabilities for non-compliance. Civil liabilities will include compensation to the employees for losses suffered. Administrative liabilities could include, for example, administrative fines, confiscation of income and an order to cease production. Finally, where a failure in production safety causes an accident, criminal liabilities may also be imposed on a company’s top management and its delegated production safety personnel. This liability could extend to imprisonment for up to 7 years.