End of Grace Period for Delivery Payment Linkage System... Full Implementation Begins

Unfair Practices Reported to Anonymous Reporting Center and Dispute Resolution Application

The Ministry of SMEs and Startups (Minister Oh Young-joo) announced that the payment linkage system for delivery payments will be fully implemented starting January 1, 2024. The Ministry operated a guidance period until the end of 2023 to ensure the system's smooth establishment on the ground.

With the implementation of the payment linkage system, companies entering into or renewing consignment transactions involving major raw materials must sincerely negotiate matters related to linkage unless they fall under exceptions to the linkage agreement. The consignor company must record the agreed matters in the contract and issue it to the consignee company.

On the 22nd, Choi Jeonnam (Chairman of the Korea Automatic Control Industry Cooperative) gave a greeting at the 'Fair Payment for Delivery Prices Committee' held at the Korea Federation of SMEs in Yeouido, Seoul. Photo by Jo Yongjun jun21@

If the consignor company issues a contract without including matters related to linkage, a fine of 10 million KRW and penalty points ranging from 1.5 to 2.0 may be imposed depending on the type of disciplinary action. Furthermore, if the consignor company evades the application of the linkage system through fraudulent means, a maximum fine of 50 million KRW and 5.1 penalty points may be imposed.

The Ministry of SMEs and Startups, considering concerns from the SME sector about contract splitting and forced non-linkage agreements, plans to identify the current status through the 'Payment Linkage System Anonymous Reporting Center' and the 'Consignment Transaction Survey,' and conduct a 'Special Investigation on the Linkage System' targeting problematic industries and company groups.

Consignor and consignee companies can apply for dispute resolution related to payment linkage through the Comprehensive Portal for Consignment Transactions or anonymously report unfair practices. In the case of the anonymous reporting center, anonymity is guaranteed as reporters do not enter personal information and IP addresses are not collected.

The Ministry of SMEs and Startups will provide online and offline consultations regarding the linkage system and expand support policies. To strengthen support for concluding payment linkage contracts, the Ministry plans to designate additional linkage support centers beyond the current single center and expand the cost verification and consulting project for the payment linkage system to reduce the burden of cost information disclosure on consignee companies and support the conclusion of linkage contracts.

Jung Ki-hwan, Director of the Win-Win Cooperation Policy at the Ministry of SMEs and Startups, stated, "In 2024, to ensure the system’s establishment on the ground, we will expand support for companies concluding linkage contracts and strengthen on-site management and supervision against fraudulent acts to strictly punish violations."

This content was produced with the assistance of AI translation services.