On June 3, the Fair Trade Commission announced that it imposed a corrective order and a fine of 38 million won on City Construction for violating subcontracting laws. The company also received a warning for failing to pay discount fees on promissory notes.
According to the Fair Trade Commission, City Construction issued contracts for 61 projects, including reinforced concrete work, to 44 subcontractors with legal requirements included in the contracts at least one day and up to 310 days after the start of construction.
Additionally, while receiving full cash payments from the client for landscaping infrastructure projects contracted to 144 subcontractors, City Construction paid subcontracting fees in cash ranging from 0% to a maximum of 89%.
City Construction also issued promissory notes to 82 subcontractors with due dates exceeding 60 days from the receipt of goods, failing to pay 79.36 million won in discount fees for the extended period.
However, during the Fair Trade Commission's investigation, City Construction paid the full amount of the unpaid discount fees to the subcontractors, resulting in only a warning for that violation.
The Fair Trade Commission determined that the delayed issuance of contracts violated the written contract issuance obligation under the subcontracting law, and the failure to maintain the cash payment ratio and unpaid discount fees also constituted violations of the law.
This case highlights the need for transparency in the payment process for subcontracting fees, as the cash benefits provided by the client did not adequately reach the subcontractors. A Fair Trade Commission official stated, "We plan to continuously monitor violations of subcontracting laws by primary contractors and impose strict penalties when violations are confirmed."
* This article has been translated by AI.
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