Three construction companies that set unfair special terms shifting industrial safety-related expense and responsibility to subcontractors were sanctioned by the Korea Fair Trade Commission.
The Korea Fair Trade Commission (FTC) said on the 17th that general contractors Dasan Construction Engineering Co., Ltd., KR Industry Co., Ltd., and NC Construction Co., Ltd. set unfair special terms related to industrial safety for subcontractors and decided to impose corrective orders along with a total penalty surcharge of 729 million won and fines of 5 million won. By company, the penalty surcharge is 312 million won for Dasan Construction Engineering and 257 million won for KR Industry. NC Construction was ordered to pay a penalty surcharge of 160 million won and fines of 5 million won.
The Korea Fair Trade Commission (FTC) launched an ex officio investigation in July into the shifting of safety expense and responsibility in the construction industry, and found that the three companies unfairly set transaction conditions that placed all expense and responsibility related to industrial safety on subcontractors.
Dasan Construction Engineering was found to have set 11 unfair transaction-condition clauses, including requiring subcontractors to bear responsibility for all damages arising in the course of work, when it entrusted 311 construction projects to 93 subcontractors over three years starting in July 2022, through contracts and safety management agreements.
The transaction conditions also included that, if a safety accident occurs, the subcontractor bears the settlement expense with the person involved in the accident, and that even when an affiliated worker is injured in the course of work, the subcontractor bears all civil and criminal liability.
Cases of delayed or inadequate issuance of written contracts were also identified. From Apr. 20, 2024, to July 10 last year, Dasan Construction Engineering issued documents to 30 subcontractors between at least one day and up to 112 days after construction commenced. Under the Fair Transactions in Subcontracting Act, in the case of construction entrustment, documents must be issued before starting the contracted work. From July 23, 2022, to July 22 last year, it also issued documents to 93 subcontractors that omitted the method and due date of payment.
KR Industry also specified in the contract's safety management clause, when entrusting 41 construction projects to 29 subcontractors from July 2018 to May 2025, that if an accident occurs the subcontractor assumes all civil and criminal responsibility. It also included a provision that damages to third parties must be handled at the subcontractor's responsibility and expense.
From Feb. 2023 to July 2025, NC Construction, when entrusting 41 projects to 30 subcontractors, set conditions requiring the subcontractor to bear all costs, including compensation fees, in the event of a safety accident, and to assume all civil and criminal responsibility.
An official at the Korea Fair Trade Commission (FTC) said, "We will continuously monitor unfair subcontracting transaction practices such as setting unfair special terms that can cause prime contractors to neglect efforts to ensure industrial safety," adding, "If violations of the law are detected, we will take strict action in accordance with the law and principles."