Reporting Illegal Subcontracting: Up to 10 Million Won Reward Even Without 'Evidence'... Penalties Raised to Legal Maximum

Ministry of Land Announces Revision to Construction Industry Framework Act Enforcement Decree
Lowering Reporting Barriers and Strengthening Penalties
Business Suspension Extended Up to One Year

The government will increase whistleblower rewards for reporting illegal subcontracting at construction sites by five times and raise the level of penalties to the maximum allowed by law.

The Ministry of Land, Infrastructure and Transport announced on December 11 that it will pre-announce legislation for a revision to the Enforcement Decree of the Framework Act on the Construction Industry containing these measures. The public comment period will run from December 16, 2025, to January 26, 2026.

Reflecting On-Site Voices: "Difficult to Secure Evidence"... Easing Reporting Requirements to Bring Illegal Practices to Light

Kim Yoonduk, Minister of Land, Infrastructure and Transport (center), visited a youth housing construction site in Yongsan-gu, Seoul, on September 18 to directly inspect for illegal subcontracting and other issues. Screenshot from the Ministry of Land, Infrastructure and Transport YouTube channel

The core of this revision is to make the whistleblower reward system more realistic in order to encourage internal reporting.

Previously, whistleblowers could only receive rewards if they submitted concrete evidence along with reports of illegal subcontracting. However, reflecting concerns from subcontractors that it is difficult to obtain documents such as contracts or statements, the requirements have been significantly eased so that rewards can now be given even without submitting such evidence.

This measure is especially significant in that it effectively shifts the burden of proving illegal subcontracting from the private sector to the government. In the past, if a whistleblower could not provide specific physical evidence, it was difficult to even launch an investigation to verify the facts. From now on, the government will be able to initiate investigations and secure evidence based on circumstantial reports alone. This demonstrates the government's strong commitment to eradicating illegal subcontracting, even if it increases the administrative workload.

The incentives for reporting have also been strengthened. The maximum reward amount will be increased significantly from 2 million won to 10 million won.

The government aims to bring these covert illegal practices into the open by reducing the burden on whistleblowers and expanding compensation.

Maximum Penalties: Business Suspension, Fines, and Public Project Participation Restrictions for Illegal Subcontracting

Business Suspension and Fine Level Amendment Proposal. Ministry of Land, Infrastructure and Transport

The level of penalties will be raised to the most severe allowed under current law. The business suspension period for companies found to have engaged in illegal subcontracting will be extended from the current 4-8 months to 8 months-1 year.

Fines will also be significantly increased, with the minimum raised from 4-30% of the contract amount to 24-30% of the total subcontracting payment.

The period of restriction from participating in public construction project bidding for companies sanctioned for illegal subcontracting will also be strengthened. Instead of the current 1-8 months, construction companies will be barred from public construction project subcontract bidding for a minimum of 8 months and up to 2 years.

All of these are the highest level of sanctions that can be imposed under the Framework Act on the Construction Industry.

Amendment to the Subcontracting Participation Restriction Period. Ministry of Land, Infrastructure and Transport

Legal Basis Established for Public Disclosure of Wage Arrears Lists

Additionally, procedures for publicly disclosing the names of construction businesses that habitually delay wage payments will be institutionalized.

A legal basis has been established to allow the selection of review subjects and the explanation procedures for public disclosure, which had previously been operated under internal guidelines, to be enacted as administrative rules.

This is to ensure a clear legal foundation, as the issue is directly related to the rights and interests of construction businesses.

Jo Sookhyun, head of the Construction Site Compliance Monitoring Team at the Ministry of Land, Infrastructure and Transport, stated, "We expect active reporting from internal stakeholders such as construction workers, as well as a stronger commitment from construction businesses to eradicate illegal subcontracting."

Reports of illegal subcontracting can be submitted to the Fair Construction Support Center at the local Land Management Office.

The full text of the amendment can be found on the Ministry of Land, Infrastructure and Transport website under 'Policy Data → Legal Information → Legislative/Administrative Notices,' and opinions can be submitted by mail (Construction Site Compliance Monitoring Team, Government Complex Sejong) or through the website.

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