China: Better Accident Contingency Plans Required of Employers

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By Mark Melnicoe

Aug. 5—Tougher rules governing worker safety in China effective July 1 require companies to create and practice contingency plans in case of accidents.

The State Administration of Work Safety released the amended Measures for the Administration of Contingency Plans for Work Safety Incidents June 3 in the wake of a pair of disastrous events last year—an explosion at the Tianjin port that killed 165 people and the sinking of a cruise ship on the Yangtze River that resulted in the loss of 442 lives.

Weak Government Oversight

The revised measures give more detailed guidance to companies on the writing, implementation, publicizing and filing with the government of contingency plans for workplace accidents. The new rules also hike the penalties for violations.

“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,” Bing Wang, a partner at the Faegre Baker Daniels law firm in Beijing, wrote in an online post July 14. “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.”

Four Main Requirements

According to the Baker & McKenzie law firm, under the revised rules companies must:

  •  form a contingency plan drafting group, whose members are experienced in onsite contingency management, to assess risks and investigate available resources;
  •  publicize and distribute the contingency plan to relevant departments, personnel and rescue teams and provide employees with contingency plan cards giving key information to help rescue teams respond promptly and efficiently to work safety incidents;
  •  inform other companies and people nearby who could be affected by work safety incidents and the planned response to those incidents and
  •  assess the contingency plan on a “regular basis” to determine whether revisions to the plan are necessary (instead of automatically revising the plan once every three years as currently required).

As part of the assessment process, companies must run periodic drills to test their plans.

Penalties Increased

“The amended measures increase fines and extend liability from the company to responsible persons and lower the threshold for violations,” Baker & McKenzie wrote in a June 7 article. “While the range of fines for most noncompliant activities remains 10,000 yuan [$1,500] to 30,000 yuan [$4,500], the fine for failure to draft a contingency plan or to organize emergency drills will increase to 100,000 yuan [$15,000] for the company. Also, the person responsible for these failures can now be fined up to 20,000 yuan [$3,000].”

“As a general matter, Chinese companies do not take the necessary time to formulate contingency plans and practice drills,” Grace Yang, a partner at the Harris Moure law firm in Seattle, told Bloomberg BNA in a July 29 e-mail. “Some prepare such a plan but merely view it as a formality and thus they do not practice drills.”

As to whether last year’s twin disasters could have been averted or mitigated with such rules in place, Yang said yes.

“For example, in the Tianjin port explosion, the damages may have been prevented or minimized if more information on the chemicals, explosives and other hazardous materials in the containers had been recorded and shared with the rescuers so they could have made more efficient rescue plans; contingency plans had been in effect and workable; and there had been regular drills and safety facilities had been in a workable condition,” Yang told Bloomberg BNA.

Poor Safety Record

China is known for its unenviable worker safety record, accidents with high death tolls occurring regularly. Most of those killed in the Tianjin port disaster last Aug. 12 were young, poorly trained firefighters sent to the scene after a fire broke out in a warehouse.

“One of the most obvious safety problems in China, accounting for 28 percent of all recorded accidents, is structural or mechanical failure, such as building or infrastructure collapse or accidents resulting from mechanical repairs and maintenance, etc.,” said a report last year by the China Labor Bulletin, a Hong Kong-based group that advocates for Chinese workers. “Many of these accidents are also directly related to the lack of safety measures and safety training for workers in construction, maintenance, etc.”

Spokesman Li Qiang of the China Labor Group said the new measures should help but will increase costs, especially in certain sectors.

“The legislation will reduce the occurrence of accidents,” he told Bloomberg BNA in a July 30 e-mail, but added the measures “certainly increase costs for the entire manufacturing sector, especially in export companies.”

Caution Urged for Companies

For multinational companies operating in China, caution is the watchword.

“Almost all of our clients take safety regulations very seriously because they are under closer scrutiny than their Chinese counterparts,” Grace Wang told Bloomberg BNA.

“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,” wrote Bing Wang. “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.”

To contact the reporter on this story: Mark Melnicoe in Shanghai at

To contact the editor responsible for this story: Rick Vollmar at

For More Information

For more information on Chinese HR law and regulation, see the China primer.

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