By Liu Ting and Song Miao King & Wood Mallesons‘ Commercial & Regulatory group
In accordance with the provisions of the Work Safety Law, where a production and business operation entity violates work safety rules, in addition to corresponding administrative penalties to be imposed on the entity, the directly responsible person in charge and other directly liable persons are also subject to administrative penalties. Meanwhile, for the crimes related to work safety in the Criminal Law of the PRC, i.e. the crime of negligently causing serious accident, the crime of major labor safety accident, the crime of failing to report or reporting false information about safety accident, the directly responsible person in charge and other directly liable persons of the production and business operation entity are those to be held accountable. So, how to determine the persons responsible for work safety in enterprises?
The Work Safety Law modified in 2014 has no explicit provisions on the identification of the person responsible for work safety in an enterprise. However, it is further provided in some local or departmental regulations. For instance, it is stipulated in Article 3 of the Provisions on the Work Safety Management of the Chief Persons in Charge, Project Leaders, and Full-Time Work Safety Management Personnel of Construction Enterprises that the chief person in charge of an enterprise means a leader who has the power to decide on issues relating to the enterprise’s production and operating activities and the work safety. Article 14 further provides that the chief person in charge shall be fully responsible for the work safety of the enterprise. In addition, it is specified in Article 6 of the Provisions of Shandong Province on the Responsibilities and Liabilities of the Production and Business Operation Entity Relating to Work Safety that the chief person in charge of a production and business operation entity may refer to chairman of the board, general manager, investor in case of individual operation and other persons who have actual control of such entity.
Thus, the law enforcement and judicial departments will not just target on the legal representative as the chief person in charge during the identification. In practice, if the legal representative of an enterprise is nominally appointed and does not have any power of decision-making, the law enforcement and judicial departments will turn to find out the persons who have actual power to decide and manage during the production and operation (e.g. chairman of the board, general manager), and identify them as “the chief persons in charge”.
However, the situations in practice are usually more complicated than those indicated in the laws. After further research on the responsible party of work safety, the judicial and law enforcement departments find that in addition to the above, it is also possible that the person who has the actual decision-making power with respect to production and management does not assume any position in the enterprise. Under this circumstance, the person is unlikely to be held accountable through application of the provisions relating to “chief person in charge”.
On June 23rd, 2017, the Letter Regarding Request for Comments on the Work Safety Law of the PRC (Amendments Proposal) was issued, which proposed to adjust and modify some provisions of the original Work Safety Law. Article 5 of the published Work Safety Law of the PRC (Amendments Proposal) (hereinafter as “Proposal”) further specifies that the chief person in charge of a production and business operation entity (including legal representative, actual controller, the same below) is the first person responsible for the work safety of this entity, and shall assume the overall responsibility and liability for the work safety of the entity.
The Provisions of Shenzhen on the Responsibilities and Liabilities of the Production and Business Operation Entity Relating to Work Safety (Draft for Comments) (hereinafter as “Draft for Comments of Shenzhen”) issued on 8 February 2017 also extends the scope of responsible persons stipulated in the Work Safety Law of 2014. In Article 9 of the Draft for Comments of Shenzhen, the chief person in charge and the actual controller of a production and business operation entity are jointly identified as the first persons responsible for the work safety of the entity. In accordance with the interpretation of Article 56 of the Draft for Comments of Shenzhen, the chief person in charge of a production and business operation entity refers to the person who assumes overall responsibility for the production and business operation of this entity and has the decision-making power over the production and business operation, including the chairman of the board and manager (general manager, CEO or other person in charge who actually performs the duties of a manager in the production and business operation entity) of a limited liability company and a corporation, as well as the factory director, manager (including the actual controller) of a production and business operation entity in non-corporate form. The actual controller refers to the person who, through investment, agreement or other arrangement, does not directly dominate but can indirectly control or actually control the behavior of the production and business operation entity. The abovementioned provisions of the Draft for Comments of Shenzhen not only distinguish entities in corporate or non-corporate forms in the determination of chief person in charge, but also include the persons holding actual control power through other forms in practice into the scope of supervision, which prevent relevant responsible persons from avoiding responsibilities of work safety management through circumventing the law.
The Proposal and the Draft for Comments of Shenzhen merely further define the first person responsible for work safety of an enterprise. However, the responsible persons for any specific issue of non-compliance or work safety accident, namely the “directly responsible person in charge” and “other liable persons” still need to be determined in accordance with the particular situations of the business operation and work safety management of an enterprise. Therefore, enterprises are advised to clearly identify relevant responsible persons in the following ways:
- Tease out and improve the organization structure, reporting and working mechanisms and specify responsibilities and liabilities relating to work safety management of the enterprise；
- Define the specific job responsibilities of all departments and positions under the organization structure of work safety management；
- Define the scope of authorization of each department and position under the organization structure of work safety management；
- Persons of each position under the organization structure of work safety management must regularly sign Responsibility Statement Regarding Work Safety Management to clarify respective responsibilities and obligations;
- In the performance appraisal of persons related to work safety management, the performance and achievements relating to work safety management should be taken into account.