The Amendment to the Construction Industry Basic Act Takes Effect from the 28th
From now on, construction companies that receive contracts or subcontracts for construction projects ordered by the state, local governments, and public institutions must separate the construction payment into subcontract payments, construction worker wages, material and equipment payments, etc., and claim and receive payments through the payment system.
On the 27th, the Ministry of Land, Infrastructure and Transport announced that the revised Framework Act on the Construction Industry and its Enforcement Rules, which strengthen the payment procedures for public construction projects and were amended last July, will be enforced starting from the 28th.
The newly enforced revised laws specify in more detail the procedures for claiming and paying construction payments through an electronic payment system. The purpose is to prevent the misuse or non-payment of construction payments such as subcontract payments and construction worker wages.
Although the Framework Act on the Construction Industry has required construction payments to be claimed and paid through the payment system and prohibited the misuse of subcontract payments, construction worker wages, and material and equipment payments, problems have continued to be raised.
If construction payments are claimed and received as a lump sum for the entire construction company without separating them by detailed items, there remains a possibility that the construction company may misuse or withhold payments that should be paid to subcontractors, construction workers, and material and equipment suppliers.
Accordingly, the Ministry of Land, Infrastructure and Transport has strengthened the payment claim and payment procedures so that from the stage of claiming construction payments, the portions to be received by subcontractors, construction workers, and material and equipment suppliers are separated, and payments are made to each recipient through designated accounts that the construction company cannot arbitrarily withdraw from within the system.
If the separation of construction payment claims and payments is properly carried out according to the revised laws, the effect of direct payment by the ordering party through the system procedure will occur. This will fundamentally block the possibility of various construction payments and wages being withheld by the construction company at intermediate stages.
Park Hyo-cheol, head of the Fair Construction Promotion Team at the Ministry of Land, Infrastructure and Transport, said, "This revised law is an institutional improvement to prevent situations where workers work hard but do not receive payments or wages," and added, "We will manage the system to ensure it settles well and cooperate with related organizations to continuously improve the related system."
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