Reasons for Proposal
The current Act has safeguards in place for subcontractors, who are relatively disadvantaged in construction, by requiring contractors who receive advance payment in construction to pay the amount to subcontractors, making it obligatory to use the electronic procurement system to invoice or provide various construction payments, and allow the disclosure of constructors who have not made subcontract payments worth 30 million won or more.
In this regard, it is not clear whether the scope of advance payment payable to subcontractors by contractors includes construction machinery lease payment, and the scope of construction payment, for which the electronic procurement system must be used, and the method and procedure of using the system are not specific, creating confusion in construction sites about the applicability of the current Act.
Furthermore, to eliminate the habitual failure to delay subcontract payments and protect the rights and interests of construction workers, some argue that it is necessary to lower the cut-off amount for disclosing the list of constructors habitually delaying payments and specify the constructors’ responsibility to comply with applicable labor laws.
In addition, as it is becoming increasingly common to hire foreign workers in construction sites, some suggest that it is needed to manage whether constructors hire foreign workers through a legitimate procedure.
In this regard, by amending the current Act to update provisions applicable to contractors’ obligations to pay subcontractors advance payment and the invoice and provision of construction payment based on the electronic procurement system, this Act aims to improve various unfair practices in construction sites and protect the rights and interests of subcontractors and construction workers.
Details
A. Specify compliance with applicable labor laws, including requiring constructors to directly provide wages to construction workers (Article 7 paragraph 3).
B. Include construction machinery lease payment in the scope of advance payment payable by contractors to subcontractors, specify that the scope of construction payment which must use the electronic procurement system includes advance payment, progress payment, completion payment, and early payment, and require the method and procedure of using the system to be determined by Ordinance of the Ministry of Land, Infrastructure and Transport (Article 34 paragraphs 4 and 9).
C. Include constructors habitually delaying payments worth 10 million won or more in the list to be disclosed (Article 86-4 paragraph 1).
D. Require the central or local government, or public institutions prescribed by Presidential Decree to check whether contractors and subcontractors lawfully hire foreign workers in accordance with applicable laws (Article 87-3 newly inserted).
