On December 1, 2014, the amendments to the Workplace Safety Law (“Law”) of the People’s Republic of China (“PRC”) came into effect. The amended Law heightens the government’s regulation and control over workplace safety and aims to prevent and reduce workplace accidents. The amended Law is applicable to all businesses engaged in production and operational activities within Chinese territory and carries significant implications for employers with operations in that jurisdiction.
Below is a summary of the most important changes brought about by the amendment to the Workplace Safety Law with implications for employers:
Administrative Body or Personnel in Charge of Workplace Safety
The Law, originally enacted in 2002, required companies engaged in mining, construction, or the production, selling or storage of hazardous substances, regardless of their size, to establish an administrative body within the company or hire a full-time employee to manage and monitor workplace safety. The amendment extends this requirement to companies engaged in metal smelting and road transportation, also regardless of their size.
The 2002 Law also required production companies not engaged in the above-mentioned industries to establish an administrative body within the company or hire a full-time employee to manage and monitor workplace safety, if such company had 300 or more employees. Exempted from this rule were companies with fewer than 300 employees. Such companies were allowed to hire a part-time employee as workplace safety monitor or entrust the duty to engineering technicians equipped with relevant professional technical qualifications to provide such services.
The amended Law, however, removed the exemption and lowered the threshold: Such companies (i.e., production companies not engaged in the above-mentioned industries) with 100 or more employees must comply with this requirement. Those with fewer than 100 employees are allowed to hire either full-time or part-time personnel for these positions.
Further, the amended law prohibits companies from retaliating against the personnel in charge of managing workplace safety. Companies are, therefore, prohibited from terminating the employment or reducing the salary or benefits of the personnel appointed to manage and monitor workplace safety, when the adverse employment action is intended as retaliation for the lawful performance of their job duties. Under the law, companies engaged in mining, metal smelting, and the production, selling or storage of hazardous substances are required to inform PRC’s authorities of any appointment or dismissal of the company’s workplace safety management personnel.
Mandatory Trainings and Record-Keeping Requirements
The 2002 Law required covered companies to provide employees with training on the relevant workplace safety policies, rules and procedures. Under the amended Law, companies covered under the law must provide “dispatched employees” with education and training on safe operating procedures and skills applicable to the employee’s position.
“Dispatched employees” are individuals hired by qualified staffing firms and dispatched to work in the staffing firms’ client companies. Under this arrangement, the staffing firm is the legal employer of the dispatched employee. The staffing firm and its client company – where the dispatched employee is placed – are parties to a “labor dispatching agreement.” Staffing firms are also required to provide the necessary workplace safety education and training for their employees.
Similarly, the amended Law also requires covered companies to provide the relevant workplace safety education and training to any interns who are hired from secondary vocational schools or colleges. The schools are also required to provide such educational and occupational training to student interns.
In addition, the amended Law imposes a new record retention requirement. Specifically, covered entities are now required to maintain record of the workplace safety education and training that they provide to their employees and interns. The record should include information concerning the date and time the training was provided, content, participants, and evaluation results of the training.
Workplace Safety Funds
A new requirement established by the amended Law is that all covered entities must set aside special funds to be used exclusively for improving workplace safety and work conditions. Further, the funds that were actually expended to comply with this requirement must be included as costs in the company’s accounting system.
The specific rules for setting aside, utilizing, monitoring and managing the workplace safety funds will be formulated by the State Council’s Finance Department and the Workplace Safety Administrative Department, after the State Council gathers the opinion from other departments.
Significantly Harsher Penalties on Offenders
The Amended Law imposes significantly harsher penalties than its 2002 predecessor, for violation of any workplace safety requirements. Under the 2002 Law, fines for entities violating relevant workplace safety requirements were capped at RMB100,000 (currently an equivalent of USD$15,980) or five times the income earned from illegal operations. Under the amended Law, enterprises responsible for any serious workplace safety accidents will be subjected to fines ranging from RMB200,000 to RMB20,000,000 (currently an equivalent of USD$31,959 to USD$3,195,909), depending on the resultant losses.
Moreover, if the person in charge of a production and business operation entity is found to have failed in his or her duty to ensure workplace safety, thereby causing a workplace accident, that person will be fined between 30 and 80 percent of his or her annual income, depending on the resultant losses.
The amendments to the Workplace Safety Law, which are now in effect, represent the most extensive and punitive revisions to the Law in the past 12 years. All covered entities are expected to work with competent regulatory authority to build a standardized regime to regulate and improve workplace safety and work conditions. Employers with operations in China should therefore implement comprehensive policies, rules and procedures that will comply with this law.