Subcontracting Abuse Over 2 Years May Result in Fines Up to 1.5 Times

Members of the "Countermeasures Committee for Subcontractors Suffering from Abuse by the Three Major Shipbuilding Companies" urged the government to actively intervene in remedying the damages caused by the abuse of subcontractors by the three major shipbuilding companies in front of the Blue House fountain on the 30th. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] If a subcontractor is subjected to 'gapjil' for more than two years, the penalty surcharge can increase up to 1.5 times.

The Fair Trade Commission announced that starting from the 1st, it will implement the revised "Notice on Criteria for Imposing Penalty Surcharges on Businesses Violating the Subcontracting Act" containing this provision.

According to the revision, if a violation of the Subcontracting Act or its effects continue for a long period, the penalty surcharge can be imposed up to 1.5 times the original amount.

If the violation lasts for more than one year but less than two years, the penalty surcharge increases by 10% or more but less than 20%, and if it continues for more than two years, it increases by 20% or more but less than 50%.

If the wrongdoing is corrected and the damage to the subcontractor is remedied, previously the penalty surcharge could be reduced by up to 20%, but under the revision, it can be reduced by up to 30%.

Evaluation criteria have also been established to calculate penalty surcharges reflecting the characteristics of the violation.

Malicious violations mainly targeting one or two companies, such as technology misappropriation, retaliatory measures, and illegal acts, are assessed for penalty surcharges based on the type of act, extent and scale of damage, and unfairness. In cases of violating obligations unrelated to monetary damage, only the type of act, scope of damage, and unfairness are considered.

For other violations by the original contractor, penalty surcharges are calculated by considering the type of act, scope of damage, extent and scale of damage, and unfairness.

The Fair Trade Commission stated, "The deterrent effect against malicious acts targeting a small number of companies or long-term violations will increase, and the incentive for businesses to voluntarily correct themselves will also rise, which is expected to lead to prompt damage relief and improvement of transaction practices."