In the event of an occupational accident at an industrial site, whether to apply for workers’ compensation or pursue civil litigation is a decision between the employer and the injured party. However, systems for realizing the rights of workers under workers’ compensation, including the types of compensation and payment methods, often favor receiving compensation through workers’ compensation insurance. Since cases where the employer suffers disadvantages from filing for workers’ compensation are extremely rare, it is advisable for employers to assist injured workers and encourage them to apply for workers’ compensation.
Workers in industrial settings often experience accidents, big and small, despite their best efforts to be careful. In principle, if an injury, illness, disability, or death occurs during work and requires more than four days of medical care, workers can apply for workers’ compensation from the Korea Workers’ Compensation & Welfare Service to receive various compensations such as medical benefits, temporary disability benefits, and permanent disability benefits.
Occasionally, instead of applying for workers’ compensation, some employers may opt for a civil settlement (tort agreement) to compensate the injured party.
The term “civil settlement” is not legally defined, making it difficult to provide a clear definition. However, it generally refers to reaching a “civil agreement” as an alternative to applying for workers’ compensation, where the employer provides compensation (medical expenses, settlement fees, etc.) to the injured worker.
The reason for opting for a civil settlement may include concerns about increased supervision by the Ministry of Employment and Labor, higher workers’ compensation insurance premiums, and potential disadvantages during bidding for additional projects.
The first concern is about the increased supervision by the Ministry of Employment and Labor.
However, despite numerous workplace accidents occurring daily, the Ministry of Employment and Labor does not conduct inspections or supervision solely based on the occurrence of workplace accidents.
The Ministry of Employment and Labor conducts investigations only in the event of “serious accidents.”
Unless it is a serious accident, there is no need to worry about supervision by the Ministry of Employment and Labor. In fact, if an industrial accident occurs and the employer intentionally conceals the incident or engages in a civil settlement with the injured worker without submitting an industrial accident report to the Ministry of Employment and Labor, the employer may be fined or penalized for failure to submit the industrial accident report when the injured worker suddenly applies for workers’ compensation one month after the accident.
Secondly, In the construction industry, there are cases where companies handle incidents internally due to concerns about disadvantages in bidding.
However, prior to 2018, the calculation of the industrial accident rate for construction companies considered the number of injured workers. Since the revision in 2019, only the number of fatalities is considered, so handling non-fatal injury accidents as industrial accidents does not affect bidding.
Some companies require the submission of accident rates issued by the Korea Occupational Safety and Health Agency (KOSHA) as part of their bidding materials. If an accident is registered, submitting a detailed report on the incident and any supplementary measures taken can ensure that the bid is not adversely affected. This is because most subcontractors do not manage their accident rates well or fail to implement proper measures to prevent recurrence after an accident. Providing additional corrective actions for accidents can actually leave a positive impression.
Thirdly, there is concern about the increase in industrial accident insurance premiums.
When a company files for industrial accident insurance, there is certainly a possibility that premiums may increase due to the application of the individual performance rate system. However, it is not guaranteed that premiums will rise. Workplaces that have been in operation for less than three years or have fewer than 30 employees (excluding construction and logging industries) and construction projects with a contract amount of less than 6 billion KRW will not see an increase in insurance rates even if industrial accidents occur.
Additionally, for businesses with more than 30 employees, if the ratio of industrial accident insurance benefits received by employees to the industrial accident insurance premiums paid over the last three years does not exceed 85%, the insurance rates will not increase. Even if it exceeds this threshold, the increase is capped at 20%. Moreover, occupational diseases and commuting accidents do not affect the insurance rate even if industrial accident claims are filed.
From the perspective of the injured worker, it is more advantageous to receive compensation through industrial accident processing rather than a one-time settlement with the employer.
When an industrial accident is processed, the worker is eligible for medical care benefits and temporary disability benefits. Additionally, if the injury results in a permanent disability, the degree of impairment is assessed, and disability benefits are provided according to the disability grade. Furthermore, if the work-related injury recurs or a new injury develops due to the accident, the worker can apply for ‘re-treatment’ or ‘additional disease’ coverage, allowing continued treatment under industrial accident insurance even after the initial treatment is completed.
Reference: Added with citation from a writing by Kang Yu-jin.