"All Industrial Accident Responsibility Shifted to Subcontractors"... 720 Million Won Fine for Three Construction Firms Over Unfair Clauses

Fines Imposed on KR Industry, Dasan Construction Engineering, and NC Construction
Targeting 'Unfair Practices' Amid 47% of Industrial Accident Fatalities Concentrated in Construction

In the construction industry, where industrial accidents are frequent, the Fair Trade Commission (FTC) has uncovered an unfair subcontracting practice in which prime contractors shifted all safety management costs and responsibilities onto subcontractors. The FTC has imposed strict sanctions on three construction companies that included unfair contract clauses making subcontractors bear full responsibility in the event of an accident.

"All Civil and Criminal Liability Is Yours"…17 Unfair Clauses with 'Toxic Provisions' Uncovered

On May 17, the FTC announced that it had issued corrective orders and imposed a total fine of 729 million won in surcharges and a 5 million won penalty on three general construction companies—KR Industry, Dasan Construction Engineering, and NC Construction—for including unfair clauses related to industrial safety in their subcontracting agreements.

An investigation found that these companies set unreasonable contract terms such as "The subcontractor shall bear all civil and criminal liability in the event of an accident" or "The subcontractor is responsible for all safety accident compensation costs." In particular, Dasan Construction Engineering even transferred the cost of settlements with accident victims to subcontractors and, in the case of industrial accident claims, deducted those costs from progress payments. The FTC uncovered a total of 17 unfair contract clauses: 3 at KR Industry, 11 at Dasan Construction Engineering, and 3 at NC Construction.

The construction companies also ignored the most basic obligation under the Subcontracting Act: issuing written contracts. Dasan Construction Engineering repeatedly issued contracts as late as 112 days after construction had begun, while NC Construction was penalized for issuing documents that omitted essential information regarding subcontract payment linkage.

Half of Fatal Workplace Accidents Occur in Construction…FTC Launched 'Ex Officio Investigation' Last July

This measure reflects the ongoing reality of frequent fatal accidents at small-scale construction sites, where safety management standards are poor. In fact, out of 605 industrial accident fatalities in 2025, nearly half—286 deaths (47.3%)—occurred in the construction sector.

The FTC determined that prime contractors neglecting safety management obligations and shifting costs to subcontractors—by exploiting their superior bargaining position—is a major cause of industrial accidents. Starting in July of last year, the FTC has conducted a rigorous ex officio investigation targeting the construction sector. This sanction is the first outcome of those efforts.

The FTC stated, "We will continuously monitor the setting of unfair contract clauses that allow prime contractors to neglect safety management efforts," adding, "We will continue to respond strictly, in accordance with the law and principles, whenever violations are detected."

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