The government will toughen penalties for illegal subcontracting. The business suspension period will be expanded to up to 1 year, and the minimum penalty surcharge level will be raised to as much as 24% of the total subcontract amount.
The Ministry of Land, Infrastructure and Transport said on the 11th it will preannounce legislation from the 12th to on the 21st of next month for a partial revision of the Enforcement Decree of the Framework Act on the Construction Industry to strengthen administrative dispositions against illegal subcontracting in construction work and to activate rewards for reports.
The amendment strengthens business suspensions for those who engaged in illegal subcontracting from the current 4–8 months to at least 8 months and up to 1 year. The penalty surcharge will be raised from the current 4–30% to 24–30% of the total subcontract amount. This is the highest level set by the current Framework Act on the Construction Industry (maximum 1-year suspension, maximum 30% penalty surcharge).
In addition, the amendment raises the restriction period for participating in subcontracting for public construction projects when an administrative disposition is imposed for illegal subcontracting from the current 1–8 months to 8 months–2 years. This is the highest level set by the Framework Act on the Construction Industry (up to 2 years).
The amendment also relaxes the requirements for paying rewards for reports on illegal subcontracting and increases the payment amounts. Currently, rewards are paid only to the first person to submit facts about unfair practices such as illegal subcontracting and evidence to prove them. However, under the amendment, a reporter can receive a reward even without submitting evidence.
The maximum reward for reports will also increase from the current 2 million won to up to 10 million won.
The amendment also provides a basis in the processing guidelines for publishing the names of construction businesses with habitual wage arrears. The Ministry of Land, Infrastructure and Transport (MOLIT) is currently operating matters related to the procedures for publishing the names of such businesses under internal guidelines, and this establishes the legal basis.