A Company Habitually Abusing Subcontractors Faces a 'Heavy Fine Bomb'

Fair Trade Commission Announces Administrative Notice on Revised Guidelines for Penalties Against Subcontracting Law Violators

The Fair Trade Commission will significantly increase the level of fines imposed on businesses that repeatedly engage in power abuse against subcontractors. This move comes in response to concerns that power abuse by the same businesses in subcontracting transactions between large original contractors and small and medium-sized subcontractors, where there is a significant disparity in bargaining power, has not been eradicated.

On the 24th, the Fair Trade Commission announced that it has prepared a draft amendment to the "Notification on Criteria for Imposing Fines on Businesses Violating the Subcontracting Act" and will publicly notify it for administrative comments from today until September 14. The main points include subdividing the weighting steps according to the number of violations when imposing fines on violators and increasing the weighting rates.

The Fair Trade Commission decided to raise the level of fine increases for businesses that repeatedly violate the Subcontracting Act. The weighting rates applied to the number of violations and penalty points reflected in the fine calculation will be adjusted upward from the current 10% to 20% range to a 20% to 50% range, thereby strengthening sanctions against repeated violations. As a result, the weighting rate is expected to increase by 200%.

The Fair Trade Commission judged that the level of fine increases for repeated violations of the Subcontracting Act remains relatively low compared to laws regulating power imbalance transactions such as the Act on Fair Transactions in Large Retail Business (Large Retail Business Act) and the Act on Fair Transactions in Agency Transactions (Agency Act). Currently, the fine increase levels according to the number of violations are as follows: Monopoly Regulation and Fair Trade Act (10?80%), Large Retail Business Act (20?50%), Agency Act (20?50%), and Subcontracting Act (10?20%).

The Fair Trade Commission stated, "Through this amendment to the notification related to the Subcontracting Act, we expect to strengthen deterrence against repeated violations, encourage compliance efforts, and reflect amendments to the Subcontracting Act to prevent confusion in legal interpretation."

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