The employer must guarantee the wages of the contract workers, and in the case of a contract business, the subcontractor and the immediately preceeding contractor must jointly pay the wages.
Wage guarantee for contract worker
- For those employees who are employed on a subcontract or other similar basis, the employer shall guarantee certain amount of wages in proportion to their work hours. (Article 47, 「Labor Standards Act」)
※ Any of the employers who does not guarantee certain amount of wage shall be punished by a fine not exceeding 5 million won. (Subparagraph 1, Article 114, 「Labor Standards Act」)
Joint responsibility for wage payment in contract business
- Where a project is executed based on at least one tier of contracts, if a subcontractor (where the project is executed based on one tier of contract, referring to a contractor) fails to pay wages to employees for causes attributable to the immediate upper tier contractor (where the project is executed based on one tier of contract, referring to a contractee), the immediate upper tier contractor shall be liable for the wages jointly and severally with the subcontractor concerned. (Main text of Article 44(1), 「Labor Standards Act」)
- Provided, that where a cause attributable to the immediate upper tier contractor occurs due to that of his or her upper tier contractor, such upper tier contractor shall also be jointly and severally responsible. (Proviso to Article 44(1), 「Labor Standards Act」)
- The scope of the attributable causes shall be determined as follows.(Article 44(2), 「Labor Standards Act」 and Article 24, 「Enforcement Decree of the Labor Standards Act」)
· If the contract amount is not paid on the date of payment of the contract amount specified in the contract without justifiable reasons
· If the supply of raw materials specified in the contract is delayed or not supplied without justifiable reasons
· If the subcontractor fails to perform the contract business normally because the conditions of the contract are not fulfilled without justifiable reasons
Penalty for violation (no punishment against will)
- A person who violates the joint and several responsibility for payment of wages for contract work shall be punished by imprisonment with labor for not more than 3 years or by a fine not exceeding 30 million won. (Article 109(1), 「Labor Standards Act」)
- A public prosecution against a personmay not be raised against the clearly expressed will of the person who has suffered the loss concerned. (Article 109(2), 「Labor Standards Act」)
If the construction project is made of two or more construction contracts, the subcontractor and the immediately preceeding contractor must jointly pay wages.
Joint responsibility for wage payment in construction contracts
- When a construction project is being conducted through two or more tiers of contracts (Subparagraph 11, Article 2, 「Framework Act on the Construction Industry」), if a subcontractor that is not a constructor (Subparagraph 7, Article 2, 「Framework Act on the Construction Industry」) fails to pay wages (limited to wages arising from the construction works concerned) to employees he or she has employed, an immediate upper tier contractor shall have joint and several responsibility for payment of wages to employees employed by the subcontractor. (Article 44-2(1), 「Labor Standards Act」)
- In this case, the lowest tier constructor falling under the same subparagraph among the upper tier contractors shall be deemed the immediate upper tier contractor.(Article 44-2(2),「Labor Standards Act」)
Direct payment exception for the immediately preceding contractor in the construction contract
- Where a concluded contract for construction work falls under any of the following subparagraphs, an immediate upper tier contractor shall directly pay the employees employed by a subcontractor an amount of money equivalent to wages (limited to wages arising from the construction works concerned) that the subcontractor shall pay at the request of employees employed by such subcontractor, within the obligation extent of the subcontract cost the immediate upper tier contractor shall pay to the subcontractor. (Article 44-3(1),「Labor Standards Act」)
· Where the immediately preceeding contractor and the subcontractor agree on the meaning that the immediately preceeding contractor can directly pay wages to be paid to the workers used by the subcontractor on behalf of the subcontractor, and the payment method and procedure thereof
· When there is a confirmed payment order (Subparagraph 3, Article 56, 「Civil Execution Act」), an execution certificate certifying that the subcontractor's worker has a wage claim against the subcontractor (Subparagraph 3, Article 56, 「Civil Execution Act」), a confirmed decision to recommend implementation (Article 5-7, 「Small Claims Trial Act」), or other equivalent executive authority
· When the subcontractor informs the immediately preceeding contractor that he/she has a wage obligation to be paid to the worker he/she has used, and the immediately preceeding contractor recognizes that there is an obvious reason why the subcontractor cannot pay wages due to bankruptcy, etc.
- When a contract for construction work has been subcontracted down two or more levels from a contractor (hereinafter referred to as "prime contractor") of a person awarding a contract under Subparagraph 10, Article 2, 「Framework Act on the Construction Industry」, where employees employed by a subcontractor (including any subcontractor who has been awarded a sub-subcontract by a subcontractor who has been awarded a contract; hereafter the same shall apply in this paragraph) have a title of debt to such subcontractor, employees may request the prime contractor to pay directly an amount of money equivalent to wages (limited to wages arising from the construction works concerned) which a subcontractor is to pay. (Upper part of Article 44-3(2),「Labor Standards Act」)
· Payment order which has become final and conclusive. (Subparagraph 3, Article 56,「Civil Execution Act」)
· Execution certificate under Subparagraph 4, Article 56, 「Civil Execution Act」certifying that the subcontractor's worker has a wage claim against the subcontractor
· A decision on performance recommendation (Article 5-7, 「Small Claims Trial Act」)
· Other equivalent executive authority
※ The prime contractor shall comply with such request to the extent of the amount of money for which employees are entitled to exercise the subrogation right of a creditor under Article 404, 「Civil Act」 to themselves. (The latter part of Article 44-3(2),「Labor Standards Act」)
- Where an immediate upper tier contractor or a prime contractor has paid the amount of money equivalent to wages to employees employed by a subcontractor, it shall be deemed that the obligation to pay the subcontract price to a subcontractor has expired within such extent. (Article 44-3(3), 「Labor Standards Act」)
Penalty for violation (no punishment against will)
- A person who violates the matters concerning joint responsibility(Article 44-2, 「Labor Standards Act」) for payment of wages in construction business shall be punished by imprisonment with labor for not more than 3 years or by a fine not exceeding 30 million won. (Article 109(1), 「Labor Standards Act」)
- A public prosecution against a person who violates may not be raised against the clearly expressed will of the person who has suffered the loss concerned. (Article 109(2), 「Labor Standards Act」)