Labor ministry proposes wage-payment rules for construction, shipbuilding contractors

The labor ministry said it opened public consultation on revisions to the Labor Standards Act's enforcement decree that would require construction and shipbuilding contractors to separately pay wage costs to prevent wage arrears among subcontracted workers in multilevel contracting structures.

The revisions follow enactment of the Labor Inspector Duties Act and amendments to the Labor Standards Act, the ministry said. The wage-payment system is scheduled to take effect Jan. 1, 2027.

Contractors would separately pay the wage portion of contract payments each month, verify whether subcontractors have paid workers and bar wage funds from being used for other purposes.

In construction, the requirement would cover public and private contract projects lasting more than 30 days, where multilevel subcontracting is common. Covered work would also include electrical, information and communications, firefighting and national-heritage repair projects commissioned by national or local governments and public institutions.

"The separate wage-payment system is a key measure for preventing wage arrears suffered by subcontractor workers, particularly because of multilayered contracting structures. We will make every effort to reduce wage arrears at worksites, including by requiring contractors to verify whether subcontractors have paid wages," Kim Young-hoon, the labor minister, said.

For shipbuilding and ship repair, coverage would start with contracts for an individual vessel valued at least 50 billion won ($35.7 million), then extend over three years to projects valued at least 24 billion won ($17.1 million) and 12 billion won ($8.56 million). Subcontractors working only for one contractor during a project would be treated as operating at that contractor's workplace.

The decree would also remove procedures for on-site inspections and receiving notifications of violations that are now covered by the Labor Inspector Duties Act, and rename labor inspectors as labor supervisors.

Public comments will be accepted in the 40-day consultation, which runs from Aug. 20 through Sept. 29.