COMPENSATION FOR OCCUPATIONAL ACCIDENTS
Topic 37:
COMPENSATION FOR OCCUPATIONAL ACCIDENTS
Senior Lecturer, Dr. Lê Thị Thúy Hương
SUMMARY OF THE CASE AND COURT DECISION
[Judgment No. 13/2020/LĐ-ST dated September 29, 2020, of the People’s Court of Bình Chánh District, Ho Chi Minh City, regarding a dispute over compensation for an occupational accident and unilateral termination of an employment contract.]
Summary of the Case:
Mr. Trần Xuân began working at P Production Joint Stock Company (hereinafter referred to as “Company P”) on September 15, 2013, with a monthly salary of 6,000,000 VND. The parties did not sign an employment contract, and Company P did not contribute to social insurance or any other benefits for Mr. Xuân.
At approximately 3:00 PM on February 6, 2016 (the 28th day of the Lunar New Year), an occupational accident occurred at the production workshop of Company P’s branch. Mr. Xuân, along with two other employees, Mr. Lý D1 and Mr. Trịnh Văn Q1, entered the workshop to repair a machine under the direction of Mr. Nguyễn Quang (the biological son of Ms. Phạm Thị, the legal representative of Company P, though he held no official role or position within the company).
While repairing and operating the plastic transfer machine, an accident occurred, severely injuring Mr. Xuân. Due to the machine’s strong suction and pressure, one-third of his right arm was crushed and required amputation, resulting in a medically assessed disability rate of 65%. On August 4, 2016, Company P terminated Mr. Xuân’s employment.
Following the accident, Company P provided Mr. Xuân with 16,400,000 VND to cover hospital fees, medication, and other expenses. However, Mr. Xuân deemed this insufficient and repeatedly requested further compensation, which Company P refused. Consequently, Mr. Xuân filed a lawsuit, demanding that Company P pay the following amounts: (1) Compensation for damages due to the occupational accident, based on a 65% reduction in working capacity, totaling 141,000,000 VND; (2) Payment of wages from August 4, 2016, to June 18, 2020, calculated as 6,000,000 VND/month x 45 months = 270,000,000 VND;
(3) An allowance of 56,400,000 VND as stipulated under Article 4 of Circular No. 04/2015/TT-BLĐTBXH dated February 12, 2015, issued by the Ministry of Labor, Invalids, and Social Affairs; (4) Occupational accident benefits in lieu of the social insurance agency, as prescribed by Clause 4, Article 5 of Circular No. 04/2015/TT-BLĐTBXH and Article 43 of the 2014 Law on Social Insurance.
Court Decision:
(1) Company P is obligated to pay Mr. Trần Xuân compensation for the occupational accident corresponding to a 65% reduction in working capacity, amounting to 141,000,000 VND (one hundred forty-one million VND).
(2) The Court rejected Mr. Xuân’s request for Company P to pay wages due to unlawful unilateral termination of the employment contract.
(3) The Court suspended Mr. Xuân’s requests for Company P to pay an allowance and provide occupational accident benefits in lieu of the social insurance agency as per regulations.
COMMENTARY
I. Introduction
When participating in an employment relationship, an employee provides their labor capacity. The law mandates that employers implement measures to ensure the safety, health, and well-being of their employees. However, during the course of work, accidents may occur that affect an employee’s health or even threaten their life. What responsibilities does an employer bear when an employee suffers an occupational accident? Through an analysis of Judgment No. 13/2020/LĐ-ST dated September 29, 2020, of the People’s Court of Bình Chánh District, Ho Chi Minh City (hereinafter referred to as “Judgment 13/2020/LĐ-ST”), the author will clarify the employer’s compensation obligations when an employee experiences an occupational accident.
II. Legal Issues
- Conditions Giving Rise to Liability for Occupational Accident Compensation
Compensation for occupational accidents is the employer’s responsibility toward an employee when an occupational accident or occupational disease occurs during the course of employment. This is a distinctive provision of labor law, fundamentally different from the liability to compensate for harm to life or health in civil relationships.
The occupational accident compensation regime under labor law encompasses a set of regulations regarding the grounds, extent, scope, methods, and measures for compensation. These regulations serve as the basis for the relevant parties to fulfill their compensation obligations when the conditions prescribed by law or agreed upon in the employment relationship are met. Essentially, the basis for applying liability to compensate for harm to life or health is the occurrence of damage, with such damage arising from the labor process.
The 2019 Labor Code has largely removed the detailed provisions on occupational safety and health found in the 2012 Labor Code, retaining only a few principle-based provisions that reference the application of the 2015 Law on Occupational Safety and Health. Consequently, as of January 1, 2021, the Labor Code no longer directly governs issues related to occupational safety and health, including occupational accidents. Instead, employers and employees must rely on the provisions of the 2015 Law on Occupational Safety and Health and its implementing regulations to address these matters.
For an employer’s liability to compensate an employee injured during work to arise, the following conditions must be examined:
(1) The existence of an employment relationship between the injured party (the employee) and the employer, based on an employment contract.
In Judgment 13/2020/LĐ-ST, the Court determined that an employment relationship existed between Mr. Trần Xuân and Company P. Although no written employment contract was signed between Mr. Xuân and Company P, certain indicators confirm the existence of an employment relationship.
First, there was paid work. Mr. Xuân and Company P signed a probationary contract for him to work at Company P. Although Company P did not proceed to sign a formal employment contract with Mr. Xuân after the probationary period as required by law, in practice, Mr. Xuân continued working at Company P and received payment for his work. Thus, the first indicator in this case is satisfied.
Second, the employee received a salary for performing the work. Salary is typically the sole or primary source of income for an employee. Mr. Xuân, through his work, received monthly payments (evidenced by payroll records). This demonstrates that, in essence, Company P was the employer and Mr. Xuân was the employee.
Third, there was management, supervision, and direction by the employer over the employee. In practice, the work was performed under the guidance and control of the other party; it involved interaction with the work of other employees within the enterprise’s organization; it was carried out solely or primarily for the benefit of another party; it had to be performed personally by the employee;
it was conducted within specific working hours, at a designated workplace, or at another location with the consent of the party requesting the work; it persisted over a certain period with continuity; it required the employee’s readiness to work; and it necessitated the provision of tools, materials, and machinery by the party requesting the work. In this case, Mr. Xuân was subject to the direction and work requirements of Company P, as evidenced by arrangements for overtime work and instructions from his immediate superiors.
(2) The incident is determined to be an occupational accident.
According to the International Labour Organization (ILO), an occupational accident is an injury arising out of or in the course of work, which may result in fatal or non-fatal consequences. This definition is broad and reflects a strong commitment to protecting the rights and interests of employees to the fullest extent. Each country, depending on its specific conditions and practices, may adopt different definitions of an occupational accident.
In Vietnam, the concept of an occupational accident closely aligns with the ILO’s definition. An occupational accident is defined as an incident that causes injury to any part or function of the body or results in the death of an employee, occurring during the labor process and directly related to the performance of work or labor duties [Clause 8, Article 3 of the 2015 Law on Occupational Safety and Health].
This can be summarized into three fundamental characteristics of an occupational accident:
First, the event classified as an accident must occur unexpectedly and be unforeseeable, meaning the precise time and place cannot be anticipated. In this case, the accident involving Mr. Trần Xuân was sudden and unexpected; he could not have foreseen or predicted the time or location of the incident to take preventive measures.
Second, it is only deemed an occupational accident if it is connected to the employee’s work process, occurring within a specific time and place that can be precisely identified. Evidence in this case, including witness testimonies, demonstrates that Mr. Xuân was at the workshop at the request of Company P to perform work duties, fulfilling this criterion.
Third, the accident must cause injury to any part or function of the body or result in the death of the employee, occurring during the labor process and directly tied to the performance of work or labor duties. The key distinction between an occupational accident and a random incident lies in whether the accident is linked to the execution of the employee’s job or duties. An incident is only classified as an occupational accident if it occurs while the employee is fulfilling labor obligations as prescribed by law, the employer’s internal regulations, or agreements in collective labor agreements, employment contracts, or similar arrangements.
Other incidents are considered random accidents, and the employee’s rights are addressed under the sickness insurance regime. In this case, given the established employment relationship and the fact that Mr. Xuân was working at the employer’s request, the accident that occurred during this time and caused harm to his health fully satisfies the conditions to be classified as an occupational accident.
It is noteworthy that, although legal provisions consider the employee’s fault in determining the scope and extent of the employer’s compensation liability, employees are inherently in a weaker position than employers within the employment relationship. The primary goal of employees in entering an employment contract is remuneration—wages—and they are typically in a subordinate, vulnerable position. Therefore, regardless of whether the employee is at fault, if their actions were intended to serve or complete assigned tasks for the employer’s benefit, the law still mandates that the employer compensate the employee to ensure a certain level of protection for the employee’s interests.
- Determination of Compensation Items and Levels in Cases of Occupational Accidents Involving Employees
Under the provisions of the 2015 Law on Occupational Safety and Health, when an employee suffers an occupational accident, the employer is obligated to ensure the following benefits:
First, the employer must provide an advance payment for first aid, emergency care, and treatment costs for an employee affected by an occupational accident or occupational disease.
Second, the employer is responsible for covering medical expenses. This includes paying co-payment amounts and expenses not covered by health insurance for employees enrolled in health insurance; covering the costs of medical examinations and assessments to determine the level of reduced working capacity for cases where the reduction is below 5%, if the employer refers the employee for such an assessment by a Medical Assessment Council; and fully paying all medical expenses from first aid and emergency care to stable treatment for employees not enrolled in health insurance who suffer an occupational accident (or occupational disease).
Third, the employer must pay the full salary to an employee who is absent from work due to an occupational accident (or occupational disease) during the period of treatment and functional rehabilitation.
In addition to these benefits, the employer is liable to compensate an employee who suffers an occupational accident not entirely due to their own fault, at the following minimum levels:
(i) At least 1.5 months’ salary for a reduction in working capacity from 5% to 10%, with an additional 0.4 months’ salary for each additional 1% reduction in working capacity from 11% to 80%;
(ii) At least 30 months’ salary for an employee with a reduction in working capacity of 81% or more, or to the relatives of an employee who dies due to an occupational accident or disease.
In cases where the occupational accident is caused by the employee’s own fault, the employer must still provide an allowance equivalent to at least 40% of the aforementioned levels, corresponding to the employee’s level of reduced working capacity [University of Law, Ho Chi Minh City (2022), Textbook on Labor Law, Trần Hoàng Hải (editor), 1st reprint, Hong Duc Publishing House].
However, not all instances of an employee suffering an accident at work entitle them to compensation or allowances from the employer.
Article 40 of the 2015 Law on Occupational Safety and Health explicitly specifies cases where an employee is not entitled to benefits from the employer if the accident occurs at or outside the workplace due to: (i) A conflict between the victim and the person causing the accident, unrelated to the performance of work or labor duties; (ii) The employee intentionally harming their own health; (iii) The employee’s use of drugs or other narcotics in violation of legal regulations; (iv) The employee being subject to dismissal under Clause 1, Article 125 of the 2019 Labor Code in such circumstances [Article 40 of the 2015 Law on Occupational Safety and Health].
In summary, the Court’s determination in this case that an occupational accident occurred to Mr. Trần Xuân and that Company P is liable to compensate him for the damages is entirely well-founded. An occupational accident is an unexpected incident occurring during the labor process that causes death or injury or impairs the normal functioning of any part of the human body [Clause 1, Article 12 and Clause 3, Article 13 of Decree No. 45/2013/NĐ-CP dated May 10, 2013].
Mr. Xuân suffered an accident while working at Company P under its direction, and the fault for the occupational accident was not entirely his own. Therefore, Company P is obligated to compensate Mr. Xuân in accordance with Article 38 of the 2015 Law on Occupational Safety and Health.
III. Conclusion
The right to protection of health and life is one of the fundamental personal rights of individuals. Violations of a person’s life or health not only cause direct harm to the individual but also result in adverse emotional and material impacts on their loved ones, and even broader negative consequences for society as a whole. Particularly in cases where an employee suffers an occupational accident, labor law clearly stipulates the employer’s responsibility to compensate for losses to the employee’s life and health.
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