July 14, 2016

How to Comply With China's Revised Workplace Safety Requirements

Workplace safety incidents have been an issue in China throughout the 21st century, a consequence of the rapid growth of the country’s economy, the pursuit of high profits at the expense of safety and lax government oversight into work safety policies, particularly at the local enforcement level. The media has begun to shed light on high-profile incidents –accidents that resulted in the loss of human lives and the destruction of properties—and the pressure has been building for the government to stop workplace accidents and to soothe the public dissatisfaction over work safety administration in China.

The government’s workplace safety guidelines are mainly outlined in two documents. The Standing Committee of China’s National People's Congress (NPC) published the Safety Production Law of the People’s Republic of China in 2002, and the State Administration of Work Safety of the People’s Republic of China (SAWS) published the Measures for the Administration of Contingency Plans for Work Safety Incidents (the Measures) in 2009. These laws, particularly the Measures, set forth specific requirements for companies to formulate contingency plans for work safety incidents and to file those plans with the government. It also specifies penalties to be imposed on companies that fail to comply with the requirement.

Following the Tianjin explosions and Yangtze River ship sinking accident in 2015—which took the lives of 165 and 442, respectively—SAWS revised the Measures, which became effective on July 1, 2016, to strengthen government oversight of work safety incidents. A better understanding of the revised Measures can help a company comply with the requirements set forth therein, prevent the work safety accidents from occurring or stop them in their embryonic stage, and develop an effective system to minimize the damages when accidents occur.

Administration System of Contingency Plans for Work Safety Incidents

The Measures designate SAWS as the authority in comprehensive coordination and oversight of the administration work in relation to contingency plans for work safety incidents. The SAWS counterparts at or above county level of government are in charge of the administration work in their administrative area. Through its manager in charge of safety production, companies should maintain close working relationships with SAWS agents at the county or municipal level to keep abreast of the general practice of policy changes in this area.

Under the Measures, a company has the obligation to formulate contingency plans for work safety incidents. The person in charge of the company is responsible for organizing the formulation and implementation of the emergency plans, and the person in charge of work safety is responsible for the performance of his or her duties based on the division of responsibilities set forth in those contingency plans.

Formulation of Contingency Plans

The contingency plans of a company can be divided into:

  • comprehensive emergency plan,
  • special emergency plan and
  • on-site handling plan

A company should form a working group to formulate the plans and designate a representative to serve as the group leader. The group should invite the persons of other departments of the company involved in contingency plans and persons with on-site handling experience to participate in the formulation of the contingency plans.

In making contingency plans, the group should consider such factors as the sources of danger and characteristics of potential work safety incidents as they conduct risk analysis. For a company facing various types of risks or types of potential incidents, it is required to make a comprehensive contingency plan describing the contingency organization and its functions, planning system, description of the risks of the accidents, early warning and information reporting, emergency response procedure, contingency safeguard measures and administration of contingency plans. For a company facing a certain kind of risks, it is required to make a special emergency plan, which should cover contingency organization and its functions, contingency handling procedure and contingency safeguard measures. When a company uses high-risk sites, equipment and facilities, it is required to make an on-site emergency plan, which should cover matters including provision of emergency work responsibilities, emergency handling measures and matters requiring special attention. If a company faces single and small risk, it may only need to formulate an on-site handling plan.

Review, Publication and Filing of the Contingency Plans

Once emergency plans have been drafted, a company will organize review or argumentation of the plans with the appropriate authorities. Companies in mining or construction that produce, trade, store or use flammable or explosive articles (including fireworks) and hazardous chemicals, or any other large and medium-sized production or operation entities, must organize work safety experts and emergency management experts to review their contingency plans and to prepare a written summary of the review. Other companies must simply demonstrate that contingency plans have been made.

Upon completion of review and argumentation, the contingency plans will be signed by the person in charge of the entity for publication and issued to relevant departments, posts and emergency relief task forces. Companies must also notify neighboring persons that might be impacted by any potential incidents.

Within 20 working days of the publication of contingency plans, the company should file the plans, together with a series of documents, including application forms, review or argumentation opinion of the contingency plans, an electronic copy of the contingency plan, risk analysis results and a list of emergency resources with local SAWS authorities.

The local SAWS authority is required to verify the application materials within five working days upon receipt of the application materials. They then must issue a contingency plan registration form if the materials are complete or notify the applicant to supplement additional information if the materials are incomplete. In the event that the authority fails to process registration or provide any explanation for rejection of the application within the five working days period, the contingency plan is deemed to have been officially filed.

Implementation of the Contingency Plans

Under the Measures, a company is responsible for training employees in all relevant matters of its contingency plan. Based on the characteristics of the incidents and risks, it should organize at least one comprehensive or special contingency plan drill every year and at least one on-site handling plan drill every half-year and make a decision on whether to amend the contingency plan based on the drill results. In the event of material changes in the laws, emergency handling organization and its functions, incident risks faced, new problems revealed in any contingency drill or incident emergency rescue and aids, etc., companies should revise the contingency plan to reflect those changes.

When an incident occurs, companies are required to initiate the contingency plan immediately after the accident, organize the task force to rescue, and report the incident and launching of the contingency plans information to relevant government authorities in charge. Companies should make an assessment of the implementation of the contingency plans and summarize the experience after the incident.

Liabilities for Failure to Comply with the Measures

The revised Measures impose certain administrative liabilities on companies and the responsible persons for failure to comply with the requirements of the Measures. These administrative liabilities include order to make correction, order to stop production and close down for rectification, and fines up to RMB100,000. It is important to note that responsible persons of companies are also subject to fines up to RMB20,000 for non-compliance. While the amount of the fine is relatively small, the adverse impact of stopping production to rectify non-compliant areas can be significant. Moreover, the reputation of the company as a law-abiding and safety production enterprise will be tarnished in the eye of relevant government authorities.

Conclusion

With the rise of the cost of production in China and competition from other low-cost production countries in Southeast Asia, companies in China are facing increasing pressure to cut costs while improving productivity and profitability. The revised Measures reflect the importance attached to safety production by the Chinese government and the will to reduce work safety incidents by setting more stringent requirements on companies. In fighting this battle between productivity and safety, it is important for companies to understand their legal obligation for formulating contingency plans for workplace incidents and comply with the requirements provided in the Measures to avoid liabilities for non-compliance. The establishment of a good contingency plan administration system by a company can help the company and responsible persons defend the charge of dereliction of duty in the unfortunate instance of a workplace accident.

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