Korean labor law: Industrial Accident Compensation and Extinctive Prescription System
Korean labor law: Industrial Accident Compensation and Extinctive Prescription System
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A. Concept
?‘Extinctive prescription’ refers to expiration of a right that has not been exercised. The principle is that the law does not protect those who ‘sleep’ on it. This means that if people have a right they can exercise but do not for a certain period of time, they will not be able to exercise it, so that the state of legal tranquility already established will be maintained. Most extinctive prescriptions in labor law start at three years. A concept similar to the extinctive prescription under the LSA is ‘exclusive period.’ After expiration of an exclusive period, no further legal appeal can be made. Since it aims at the rapid establishment of legal relations, exclusive period differs from extinctive prescription.[1]
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B. Benefits under the IACI Act
Rights protected by the IACI Act shall extinguish unless they are exercised within 3 years of when the right to claim compensation for a work injury or disease begins. However, the right to receive disability benefits, survivor benefits, funeral expenses benefit, compensation pensions for pneumoconiosis, and survivor’s pensions for pneumoconiosis will expire within five years if not exercised (enacted Dec. 13, 2018, Law No. 15665). The insurance benefits of the IACI Act can be divided into the following three categories: ① Claims for continuous insurance benefits, ② Claims for lump sum insurance benefits, and ③ Claims for pension benefits. Each type of pension insurance benefit has a different point when the extinctive prescription kicks in.
?Claims of continuous insurance benefits include claims to medical care benefits and work suspension benefits. Medical care benefits are paid when a worker is injured or becomes sick in relation to work, and in principle is paid as reimbursement of actual medical expenses (Article 40 of the IACI Act). That is, the period before the extinctive prescription for the right to claim this insurance benefit kicks in begins the day after the cost of medical treatment is paid, not when a worker’s occupational injury or illness first occurs.[2] Since the work suspension benefit is paid for a period that a worker who has been injured or sick cannot work, the extinctive prescription begins the day after the worker first becomes unable to work?so they can receive medical treatment (Article 52 of the IACI Act).
?Claims for lump-sum insurance benefits include claims to lump sum payments of disability compensation, survivor compensation, or an allowance of some sort. A lump sum disability compensation payment shall be paid to a worker who has been injured on the job or suffered from a work-related illness, and whose disability continues after recovery. A disability benefit is provided when a worker has completed his/her treatment and the disability is fixed (Article 57 of the IACI Act). Survivors' compensation is paid in the form of a pension in principle, but if there is no legal beneficiary, a lump sum compensation is possible. The period before the extinctive prescription kicks in begins on the day after the relevant worker has died (Article 62 of the IACI Act). Funeral expenses are only paid when they have actually occurred (Article 71 of the IACI Act).
?Pension insurance benefits include pensions for disabilities and survivors, with payment beginning the first month after the month in which the reason for payment occurred. In the case of noise-induced hearing loss, the Labor Welfare Corporation's Guidelines for Work Disabilities previously claimed that the 3 years’ limitation begins "when leaving the noisy workplace," but the court ruled that it could be considered to have begun at the time of "healing" instead.[3] As a result, in 2016, the Ministry of Employment and Labor changed the extinctive prescription for noise-induced hearing loss so that the calculation date begins from diagnosis. Therefore, in recent cases, the court has ruled that "the extinctive prescription for a person diagnosed with noise-induced hearing loss after a long absence from the noisy workplace cannot be considered to have come into effect even if he/she has applied for a disability benefit after three years have passed from the time of diagnosis." [4]
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C. Suspension of the Extinctive Prescription
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1. Concept
Termination of the extinctive prescription is the occurrence of the factual condition on which the extinctive prescription is based. The reasons for termination of the extinctive prescription are: (i) A request for trial (Article 170 of the Civil Act); ② Participation in bankruptcy proceedings (Article 171); ③ Issuance of a payment order from the court (Article 172); ④ A summons for reconciliation (Article 173); ⑤ Unilateral attendance at the court(Article 173); ⑥ Notification by registered mail (Article 174): claim for money in the case of monetary bonds, if the request is made based upon the registered mail, it is only valid for 6 months if a court filing or application for bankruptcy was not made; ⑦ Foreclosures, provisional attachment, provisional dispositions (Article 176) ⑧ Approval (Article 177): meaning that the debtor has confirmed a debt to the creditor.
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2. Details
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(1) Details of reasons for suspension
Since wage bonds have a 3-year extinctive prescription, if an employee has not filed a claim during the 3-year period leading up to extinctive prescription, the claim can no longer be made. However, in the event of a trial claim, seizure of the wage bond, or provisional attachment, if the employer agrees to the wage bond, extinctive prescription shall not occur. If the employer writes a memorandum on the unpaid wages and pays part of those unpaid wages, extinctive prescription shall be suspended.[5]
If the worker informs his/her employer of the unpaid wages by means of registered mail, this shall be the reason for a six-month suspension of extinctive prescription (Article 174 of the Civil Act). However, the notification letter shall have the effect of ceasing the extinctive prescription for six months, unless the worker requests a trial, participates in bankruptcy proceedings, responses to reconciliation, has seizure or accepts a provisional disposition.[6]
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?(2) Relationship to the IACI Act
In accordance with the IACI Act, a worker’s filing of a claim that he/she has an occupational injury or illness can terminate the extinctive prescription, which will affect all claims related to industrial accident compensation insurance benefits (Article 113 of the IACI Act). In general, submitting a complaint to the Ministry of Employment and Labor regarding unpaid wages will not be considered a trial claim. However, if an industrial accident application is filed with the Labor Welfare Corporation, it shall be regarded as a trial claim which can terminate extinctive prescription. As a precedent, a worker filed an application for occupational accident compensation benefits, but was rejected. Then after he did not apply for review within 90 days after the rejection, the corporation dismissed his late claims due to extinctive prescription. However, the Supreme Court recognized that the claim for insurance benefits pursuant to Article 36 (1) of the IACI Act as a reason for termination of extinctive prescription, separate from the reason for the extinctive prescription under the Civil Act.[7]
[1] Supreme Court ruling on Sep 20, 1996 96da25371
[2]?Hwang, Won-hee, "Calculating when the extinctive prescription occurs for work-related accident benefits", Labor Law Review, 27, Apr 2013, Korean Comparative Labor Law Association, p. 382; Supreme Court ruling on Dec. 17, 2008, 2006da35865
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[3] Supreme Court ruling Sep 4, 2014: 2014doo7374; Park, Jong-Tae, "Review of Standards for Recognition of Occupational Hearing Impairment," Monthly Labor Law, May 2017.
[4] Seoul Administrative Court ruling on Apr 20, 2017: 2017goodan 50655.
[5] Supreme Court ruling on Jun 10, 2010: 2010da8266.
[6] Ha, Kap-rae, 「Labor Standards Act 」, 28th edition, 2016, Jongang Kyungjaesa, p. 315.
[7] Supreme Court ruling on June 15, 2018: 2017da9119?