From now on, if key energy prices such as fuel, heat, and electricity rise, the original contractor must pay the subcontractor more in proportion to the change.
The Korea Fair Trade Commission said on the 28th that a revision to the Enforcement Decree of the Fair Transactions in Subcontracting Act, centered on this, passed the Cabinet meeting.
When the price of a specific item changes, the scope of "subcontract price indexation items," which adjust subcontract prices as pre-agreed between the original contractor and the subcontractor, has been expanded. Previously, only key materials and supplies were covered, but the revision adds key energy. Accordingly, in the written document the original contractor must issue to the subcontractor, the original contractor must additionally state ▲ key energy subject to indexation ▲ the reference index for key energy expense ▲ the base time point and comparison time point for calculating the rate of change in key energy expense.
The grounds for exceptions to payment guarantees—where payment is secured by depositing the subcontract price with a third-party guarantor such as a mutual aid association—have been narrowed. Currently, exceptions include ▲ small projects of 10 million won or less ▲ agreement on direct payment by the client ▲ use of an electronic payment system, but going forward, ▲ only small projects of 10 million won or less will be exempt.
The scope of those eligible for rewards for reporting violations of the Fair Transactions in Subcontracting Act by original contractors has been expanded. In the past, subcontractors harmed by an original contractor suspected of illegality could not receive rewards even if they reported. Going forward, among harmed subcontractors, those who first submit evidence proving the original contractor's legal violations related to another subcontractor can receive a reporting reward. The upper limit for surcharges on businesses that repeatedly violate the law has been raised from up to 50% to up to 100%.
A Korea Fair Trade Commission (FTC) official said, "The revision to the Enforcement Decree of the Fair Transactions in Subcontracting Act will be promulgated after presidential approval and is scheduled to take effect starting on Aug. 11," adding, "Provisions related to exceptions for payment guarantees will apply to contracts first concluded or renewed after Aug. 11."