Going forward, approval procedures for paying construction fees will be streamlined, and direct payments to protect subcontracting payments will be strengthened.
The Ministry of Land, Infrastructure and Transport said on the 18th that it will preannounce legislation from the 19th to Jan. 28, 2026, on a revision to the enforcement rules of the Framework Act on the Construction Industry that improves functions of the electronic payment system.
The revision is intended to ensure that subcontracting payments for construction work are promptly paid to workers and others who actually performed the work. It aims to resolve the management burdens on small and subcontracting construction companies and delays and nonpayment of construction workers' wages caused by subcontracting payments not being made on time.
The Public Procurement Service plans to improve the "Subcontract Guardian" system, which is used in 99% of publicly ordered construction projects, while the revision of the enforcement rules of the Framework Act on the Construction Industry is underway, so that construction payments will be made in accordance with the revised regulations starting Mar. 30 next year.
Under the revision being preannounced this time, the prime contractor approval procedure will first be removed for payment of subcontracting fees. In the process by which the client's construction payment is paid to subcontractors, material and equipment suppliers, and workers via the prime contractor, the prime contractor's approval procedure for paying subcontracting fees will be deleted.
Under the current enforcement rules of the Framework Act on the Construction Industry, when the client pays the construction fee to the prime contractor, the prime contractor must check whether the subcontractor has properly claimed the subcontracting fee and then make the payment.
However, according to the Ministry of Land, Infrastructure and Transport, because the appropriateness of the subcontractor's claim is already reviewed when the prime contractor requests payment from the client, there is no need to require another review at the time of payment, and instead, there have only been cases in which the prime contractor delays approval of subcontracting fee payments citing that review procedure.
Next, direct payment of workers' wages and material and equipment costs will be strengthened. Of the construction fees the client pays to the prime contractor, workers' wages and material and equipment costs will be paid directly to individual workers and material and equipment suppliers without passing through the subcontracting construction company.
In particular, with this revision removing the prime contractor's approval procedure in the construction payment process, the period during which construction payments are deposited in an account in the name of the prime contracting construction company will be minimized. Also, if wages and material and equipment costs are paid without going through a subcontractor's account, wage and material and equipment nonpayment caused by account freezes due to the financial conditions of prime and subcontracting construction companies is expected to be fundamentally blocked.
Cho Sukhyeon, head of the Construction Site Compliance Monitoring Team at the Ministry of Land, Infrastructure and Transport, said, "We plan to continuously refine related systems so that the purpose of introducing the electronic payment system—preventing construction payment arrears and increasing transparency at construction sites—can be properly realized."