China amends work safety laws

While the People’s Republic of China has experienced a prosperous period of economic growth over several decades, it has also had workforce production accidents that caught the public’s interest regarding workplace safety.

One of those accidents was the Qingdao Oil Pipeline explosion of 2013, which killed 62 people. This prompted the passing of legislation on 31 August 2014 to amend the Production Safety Law, which took effect 1 December.

The original Workplace Safety Law was implemented in 2002 to reduce malpractice in the workplace. The new amendment is aimed at addressing problems regarding government regulations and standards that are not implemented properly at the local level, according to Yang Dongliang, the director of the Chinese State Administration of Work Safety. Lack of tough penalties is believed to be the reason for frequent workplace incidents.

The revised Workplace Safety Law places the focus on employers rather than employees, primarily by imposing harsher punishment for offenders. Seventeen new articles make up the amendment and can be categorised in four areas: increased responsibility for companies and management, increased penalties for those companies that break the law, increased penalties for persons in charge and increased powers of the State Administration of Work Safety.

Increased responsibilities

There are three new articles in the Work Safety Law that provide for increased responsibilities for employers doing business in China. Article 19 increases accountability, defining responsible persons and their scope of responsibilities. Organisations are required to establish and maintain systems of accountability within the company. Article 22 is also new, requiring organisations to draft rules, regulations and procedures surrounding work safety and emergency response. Companies must train employees and implement drills as part of their safety management system. Finally, risk management is addressed in Article 38, ensuring that organisations practise accident prevention by identifying hazards and acting on them.

Increased penalties

Fines have been notably increased for all types of incidents, with maximum potential fine now 20,000,000 yuan (US$3.25 million). Fines are determined based on number of deaths, number of severe injuries and amount of economic loss due to the incident. Previously, fines were capped at 100,000 yuan or less than five times the amount earned by the business from the illegal operations.

Persons in charge

Under the existing law, the persons in charge when an accident occurred could be held accountable and a fine imposed ranging from 20,000-200,000 yuan (AU$40,000). The amended law takes this a step further. Now, persons in charge of operations who have failed to ensure company safety can also be fined, between 30-80% of their annual income, in conjunction with business losses. In addition, persons in charge found responsible for “serious” and “extremely serious” incidents can be banned from holding positions in their industry. Serious accidents are defined as those causing economic losses of 50-100 million yuan, 50 to 100 serious injuries or 10 to 30 deaths. Extremely serious accidents are those causing the deaths of over 30 people, the injuries of over 100 people and over 100 million yuan in economic losses (US$16 million). Finally, if a person in charge fails to arrange for immediate rescue operations when an accident occurs, they can be held liable for fines of 60-100% of their previous year’s annual income.

Increased powers

The amended law enhances supervisory powers of watchdog agencies for occupational safety and local governments, particularly those at the township level. Most of China’s workplace incidents occur in rural areas in small businesses. The law also increases fines for employers who fail to provide safety training and ignore hazards after being notified. It allows government regulators to blacklist companies and to suspend operations when necessary by cutting off their power supply if a company is considered unsafe under Article 67.

Companies doing business in China should revisit their policies regarding compliance and accountability, review their safety and health management systems and practices, and update them as needed. Safety management software experts myosh provide more information here