Labor ministry proposes separate wage-payment rules for subcontractors

The labor ministry said Wednesday it would establish detailed standards for a separate wage-payment system targeting unpaid wages among subcontracted workers in construction and shipbuilding projects with multiple layers of contracting.

The ministry said it would issue legislative notices Thursday for proposed amendments to the Enforcement Decree and Enforcement Rule of the Labor Standards Act. The revisions would specify the projects covered by the system, standards for determining its application and wage-cost payment procedures.

The ministry said the policy would address wage arrears caused when wage funds are used for other purposes during multilevel subcontracting.

Under the planned system, a principal contractor must separately pay wage costs from the monthly contract amount when making payments to a subcontractor and verify that the subcontractor has paid the funds as wages to its workers.

The arrangement, now limited to public construction projects, will be incorporated into the Labor Standards Act and expand Jan. 1 to public and private construction projects and shipbuilding contracts lasting more than 30 days. Shipbuilding coverage will be phased in over three years, starting with projects with an initial order value per vessel of at least 50 billion won before the minimum falls to 24 billion won and then 12 billion won.

"The separate wage-payment system is a key measure to prevent wage arrears among subcontracted workers affected by multilevel contracting structures," Labor Minister Kim Young-hoon said. "We will do our utmost to reduce wage arrears in the field by requiring principal contractors to confirm whether subcontractors have paid wages."