Liability for accidents in the workplace is regulated by several laws such as the Social Security and General Health Insurance Code 5510 and the Labour Code 4857.
Based on the Social Security Code, a 'work accident' is an event that, immediately or consequently, physically or emotionally disables the insured person:(1)
"a) While the insured person is in the workplace;
b) Due to a task conducted by the employer, or if the insured person works in his/her own name and account due to a task conducted by him/her;
c) During time periods when the insured working person and who is affiliated with the employer is sent to another place on duty other than the workplace;
d) During the convalescing period of an insured female worker pursuant to the labor legislation;
e) During work-related transportation in a vehicle provided by the employer, and the insured person is harmed bodily or psychologically, immediately or later as a result of an incident connected with that vehicle."
This provision sets forth the requirements for determining what legally constitutes a work accident. All accidents that occur during the performance of a task related to work, or during transportation to or from work, thus constitute a work accident. Opinion has previously been divided on work accidents in terms of employer liability. While some have argued that such liability should be based on the fault of the employer, others – including the Court of Appeals – claim that workplace accidents sometimes occur due to the dangerous nature of the business activity and in such cases the fault of the employer is irrelevant.
Court of Appeals evaluation
The Court of Appeals has broken away from this otherwise consistent jurisprudence in cases where the causal link between the incident and the work cannot be established. This causal relationship may be deemed non-existent in cases where there is clear fault or negligence on the part of the employee or any other third party, or in the event of force majeure. The Court of Appeals performs a case-by-case analysis in order to determine whether one of the parties was at fault in the occurrence of the accident. Under the Code of Obligations, in cases where more than one party is at fault, even on different legal grounds, all parties are held jointly and severally liable.
In cases involving subcontractors, there are more factors to consider. The Labour Code stipulates that only ancillary work and work that requires technological expertise may be assigned to sub-contractors. Thus, in principle, the Labour Code limits employers' options to employ subcontractors. The Subcontractors Regulation, issued in Article 3 of the Labour Code, further emphasises that the primary work of the principal employer cannot be assigned to subcontractors.
The Labour Code stipulates that the principal employer is jointly liable for all of the subcontractor's obligations which arise from the Labour Code, the employment agreement between the parties or the collective bargaining agreement. All subcontracting relationships that do not fall within the scope of the Labour Code and the regulation are deemed fictitious – in which case the principal employer is retroactively deemed to be the employer of the subcontracted employees.
In evaluating relationships, the Court of Appeals does not rely on the bilateral characterisations of the parties. In other words, regardless of the titles chosen by the parties – such as employer and subcontractor, or principal and contractor – the court analyses parties' roles and, depending on such evaluation, decides whether there is a subcontractor relationship as defined by the Labour Code and the regulation.
Thus, when a work accident involves a subcontracted employee, the first issue that needs to be determined is the victim's status – that is, whether he or she is an employee or a subcontractor of the employer. This question may be difficult to answer, as in order for the subcontractor to be deemed an employee of the employer, he or she must work on the premises of the employer or at an extension of the principal employer's workplace, and should have employees (insured persons) working for the subcontractor.
The subcontractor's job description is strictly limited to ancillary work and technological necessities. If a subcontracting relationship violates these restrictions, as set forth by the Labour Code and the regulation, then it will be deemed non-existent and all employees working for the subcontractor will retroactively be deemed to be employees of the principal employer. For instance, while cleaning and security jobs at a workplace are independent jobs which do not constitute distribution of a task originally undertaken by the principal employer, if a certain part of the production process is completed by another legal entity (ie, a sub-contractor), this violates the limits set forth for describing a subcontracting relationship. Thus, the employees of a subcontractor will have the same rights as those of the principal employer.
Accordingly, such persons – both the employees of the principal employer and those of the subcontractor – or their relatives in cases of an employee's death – will have the right to seek damages from the principal employer and the subcontractor. The main claims for damages are pecuniary damages, which include:
- damages arising from the loss of the ability (or reduced ability) to work;
- damages arising from the reduction of future work ability; and
- damages for medical treatment expenses.
If the employee works less because of the work accident, then his or her relatives may seek compensation for loss of support. Regardless of whether the accident results in the employee's death, the employee, or his or her relatives, may seek non-pecuniary damages such as damages for pain, sorrow and suffering.
Possible Social Security Institution action
After an accident, the principal employer may also face legal action from the Social Security Institution (SSI). As regulated in the Social Security Code, if the courts find that the accident in question occurred as a result of the employer's intentional actions or a breach of its legal obligations regarding the protection and safety of employees, the SSI may seek recourse against the employer for the amount paid or due to be paid to the employee or others entitled to such payments under the Social Security Code. In cases where a subcontracting relationship is found to be fictitious, the principal employer will be solely responsible for the claim after the SSI determines that no subcontracting relationship exists because the injured person would be considered an employee of the principal employer.
Depending on the circumstances of the accident, the public prosecutor may also issue an indictment for reckless or negligent injury, as set forth in Article 89 of the Criminal Code. The criminal investigation and the indictment may include action taken against a director of the principal employer. In cases of negligence, the penalty of long-term imprisonment may be converted to a monetary penalty, except where the person has acted with conscious negligence. Under Article 66(1)(d) of the Criminal Code, the statute of limitations is eight years for injury caused through negligence. However, the Criminal Code allows parties in a criminal case to settle a claim for negligent injury. The criminal courts will examine whether the perpetrator (employer) was actually at fault and negligent in not following work security rules when the accident occurred.
The evaluation of work accidents depends on the nature and structure of the relationship between the principal employer and its subcontractors. Regardless of the structure, the principal employer will be held liable for any damages arising from a workplace accident if it is determined that the subcontractor is an employee of the principlal employer. However, in making such a determination, instead of adopting a literal evaluation, the courts will focus on the real intention of the parties. For this reason each case involving a work accident is unique in terms of liability sharing and must be evaluated on a case-by-case basis.
- This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.