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China: Updates on Amendments to the PRC Work Safety Law

21/07/2015

On 1 December 2014 significant amendments to the PRC Work Safety Law (the "Work Safety Law") came into effect. The amendments of the Work Safety Law further improve the standard of work safety in the PCR which is now comparable to that under the respective national laws and European Union directives in Europe. However, the main issue is how the laws are implemented and enforced in practice.

The amendments mainly focus on companies' responsibilities, safety management and supervision of the safety measures implementation.

  1. In the past, a company was required to establish and improve a work safety responsibility system. However, no clear guidelines were provided. The amendments to the law clarify the obligations of a company.
    1. A company should now specify the persons in charge and determine their duties and assessment standards when setting up a work safety responsibility system. Such personal responsibility – which may lead to personal liability in turn – aims to ensure that safety issues are really assessed and dealt with. A company will also have to establish a supervision and evaluation system to ensure the implementation of the work safety responsibility system.
    2. In order to ensure sufficient investment in the prescribed work safety conditions, a company is required to actually allocate a certain amount for work safety expenses and use such funds solely to improve work safety conditions.
    3. For certain industries, such as companies engaged in mining, metal smelting, building construction or road transportation as well as all companies which have to deal with hazardous substances, a work safety management department will have to be established or full-time work safety personnel engaged. Such requirements apply to companies with business other than the above-mentioned industries only if they have more than 100 employees.
    4. In addition, companies engaged in mining, metal smelting or manufacturing or storing of hazardous substances will have to employ certified safety engineers to conduct the work safety management.
    5. In practice, work safety issues sometimes arise merely because existing safety mechanisms are not applied or not used in the correct way. Therefore, the newly amended law requires that all employees, including not only the regular employees but also seconded employees and interns, should be provided with work safety education and training. Files will have to be kept to record such trainings.
    6. A company is required to set up rules for the screening and elimination of potential work accident risks. Again, files will have to be kept to record the implementation of such rules.
  2. The amended law also enforces the supervision of the government over work safety in companies.
    1. In addition to checking and approving matters involving work safety in accordance with the law, the competent authority is required to prepare annual supervision and inspection plans in accordance with the requirements for different categories and ratings, and to conduct supervision and inspection in accordance with the plan.
    2. The government will also set up a database of violations and disclose serious violations to the public and other relevant authorities.
    3. The authorities may also interfere directly by suspending production, business or construction, seizing or impounding facilities and equipment or hazardous substances which are not properly produced, stored or used in a company. In extreme cases, the authority even has the right to order utility providers to cut a company's electricity supply.
  3. Further, the administrative fines for companies and persons responsible for work safety tasks who infringe work safety provisions have been increased.
    1. According to the amended law, in severe cases, a company may be fined up to 20 million RMB. The minimum fine is RMB 200,000. The amount of the fine will be determined according to the severity of the accident, taking into account the number of deaths and severe injuries as well as the amount of economic losses.
    2. The fines applicable to individuals responsible for work safety tasks have been significantly increased compared to the old law. In the past, such fines were limited to only RMB 200,000 maximum. Now such fines are calculated as a percentage of the individual’s annual income with the applicable percentage ranging from 30% to 80%. As with fines for companies, the exact amount of the penalty imposed on the individual will depend on the severity of the accident.

Conclusion

Work safety is not practiced for its own sake, but to achieve a healthy business environment where healthy employees can create profits. A company should now set up a work safety management system and clearly define the responsibilities within the company. Further, rules for the screening and elimination of hidden risks will be set up and implemented. Companies are well advised to review their existing work safety policies and their implementation in the light of the amended Work Safety Law.

Authors

Jeanette Yu
Jeanette Yu
Partner
Shanghai