24 November, 2015
In response to the frequent and often disastrous work-related accidents (the devastating explosion in Tianjin Port is a recent example), the government of the People's Republic of China (PRC) has been making efforts to enhance work safety. Following the enactment of latest amendments to the PRC Work Safety Law last year, the PRC State Administration of Work Safety published the draft Regulations on the Implementation of the PRC Work Safety Law (Draft Regulations) on 11 September 2015, to solicit the public opinions. The Draft Regulations provide for more specific work safety requirements on companies in order to prevent work safety accidents.
More onerous obligations on employers
Under the Draft Regulations, the "person in charge” at each company is required to report the company's work safety conditions at a shareholders' meeting and to the employee representatives' congress on an annual basis, and shall accept their supervision.
Enhanced corporate governance and human resources requirements are imposed on certain companies, including companies engaging in the production or storage of hazardous chemicals, fireworks or firecrackers, mining companies and metal smelting companies. Such companies must establish a work safety committee chaired by their respective persons-in-charge – the committee is responsible for coordinating and solving significant work safety issues. Companies are also required to:
- where the workforce exceeds 100 persons: establish a work-safety department and appoint at least 2 full-time work safety specialists or work safety specialists representing no less than 1% of their total workforce (whichever is greater); or
- where the number of workforce is less than 100 persons: appoint at least 1 full time work-safety specialist; and
- have at least 1 certified safety engineer, the number of which shall be no less than 20% of the number of work- safety specialists.
Hidden risk screening and elimination rules
The current Work Safety Law generally mandates companies to set up internal rules for screening and eliminating hidden risks which might result in work safety accidents. Hidden risks essentially refers to the dangerous status of a property, any employee's unsafe acts and defects in management that may cause work safety accidents, resulting from the company's violation of provisions of the work safety laws or other factors in the course of the company's business operation. The Draft Regulations give more detailed guidance relating to the screening and elimination of such hidden risks by companies, pursuant to which companies must:
- setup the rules on screening and elimination of hidden risks ,implement remedial actions and contingency plans and eliminate the identified hidden risks in a timely manner;
- analyse and assess major hidden risks of work safety accidents according to the standards formulated by the State Administration of Work Safety;
- evaluate the remediation actions taken in respect of major hidden risks and produce a report, either by the in-house work safety specialist or external work safety service agency, after such major hidden risks have been remediated; and
- report to the Administration of Work Safety on the remediation actions.
Under the Draft Regulations, companies failing to comply with the above requirements will be subject to a fine up to RMB 30,000, and their direct person-in-charge or other direct responsible person may also subject to a fine in the amount of RMB 10,000 or less.
Special requirements for sensitive operations
Companies with sensitive operations (ie where the work safety accidents are more likely to occur such as where there are oil and gas storage tanks or factory buildings at risk of dust explosions) are subject to special requirements stipulated in the Draft Regulations. For instance, for those companies which have oil and gas storage tanks:
- they must delimit the area of oil and gas storage tank and setup clear signs and necessary barriers;
- temperature,pressure and liquid levels must be in compliance with the design controlling index, to ensure safety cut-out devices and alarm systems under normal conditions of application;
- facilities in oil and gas storage tank areas must comply with explosion protection requirements; and
- the operator must operate the oil and gas tanks in accordance with the operating rules, and entities without relevant qualifications and untrained persons are prohibited from working in the areas where oil and gas storage tanks are placed.
Work safety insurance
The latest Work Safety Law encourages the companies to maintain work safety liability insurance. Under the Draft Regulations, the government will require companies engaged in the production or storage of hazardous chemicals, fireworks or firecracker, mining companies or metal smelting companies to maintain work safety liability insurance. For other companies, the work safety liability insurance is optional although recommended. Companies who maintain work safety liability insurance can be exempted from the payment of work safety risk deposits.
For further information, please contact:
Karen Ip, Partner, Herbert Smith Freehills
karen.ip@hsf.com
