Primary Contractor Approval Procedure to Be Abolished for Construction Payments...Wages and Equipment Costs to Be Paid Directly

Ministry of Land, Infrastructure and Transport Announces Legislative Notice for Amendment to the Enforcement Rules of the Framework Act on the Construction Industry

The procedure requiring the approval of the primary contractor when construction payments received from the client are transferred to subcontractors or workers will be eliminated. Regulations will also be revised so that wages for workers and payments for materials and equipment are paid directly to individual workers or equipment suppliers, bypassing the subcontracting construction companies.

The Ministry of Land, Infrastructure and Transport announced that it will issue a legislative notice for the amendment to the Enforcement Rules of the Framework Act on the Construction Industry, which includes these changes, from December 19, 2025, to January 28, 2026. In order to prevent management burdens for small and subcontracting companies and delays or non-payment of workers' wages due to late payments of subcontracting fees, the ministry plans to improve the electronic payment system. As part of this amendment process, the government will upgrade the Subcontract Keeper System, which is used in more than 99% of public construction projects, and implement the new payment method starting March 30, 2026.

The removal of the primary contractor’s approval procedure for paying subcontracting fees is based on the judgment that the appropriateness of the claim has already been reviewed at the time the primary contractor requests payment from the client, making a second review unnecessary. Currently, the primary contractor must confirm the validity of the subcontractor’s claim before making the payment. However, the Ministry of Land, Infrastructure and Transport has observed that, in practice, primary contractors frequently delay payment approvals under the pretext of this review process.

There will also be a legal basis for paying wages and material or equipment costs directly to individual workers or suppliers, without passing through the subcontracting construction company. Once the regulations are revised, the period during which construction payments are held in the primary contractor’s account is expected to be minimized. The ministry anticipates that direct payment will fundamentally prevent wage delays caused by account freezes of the primary or subcontracting construction companies.

Cho Sookhyun, head of the Construction Site Compliance Monitoring Team at the Ministry of Land, Infrastructure and Transport, stated, "We will continue to improve related systems to ensure that the purpose of introducing the electronic payment system is fully realized." Bang Hyungjun, director of the Electronic Procurement Planning Division at the Public Procurement Service, said, "We will promptly upgrade the Subcontract Keeper System to ensure the amendment is implemented in a timely manner."