[Bills in Focus] Subcontractor protection and wider application of 'lemon law'

Proposed bill: Partial Amendment to the Act on the Promotion of Mutually Beneficial Cooperation Between Large Enterprises and Small and Medium Enterprises

Proposed by Rep. Lee Dong-ju (Democratic Party of Korea)

● There has been a recurring issue where enterprises request technical data from the contractor prior to finalizing the contract and misuse it. Accordingly, this amendment imposes more substantial penalties on enterprises that misuse the technical data of their contractor before issuing a written agreement. It also raises the penalties for non-compliance with improvement requests or corrective orders regarding unfair practices in consignment and commission transactions. Violators now face imprisonment with labor for up to two years or a fine not exceeding 150 million won ($115,100).

Proposed bill: Partial Amendment to the Motor Vehicle Management Act

Proposed by Rep. Kim Min-ki (Democratic Party of Korea)

● Korea’s “lemon law” currently presumes a motor vehicle to have been defective at the time of delivery if a recurring defect is detected within six months of delivery (the “lemon law presumption”), allowing the vehicle purchaser to request a replacement or refund. However, a study of 2,000 arbitration cases between 2019 and March 2023 has shown that defects that occur between six months and one year after the purchase also account for a large percentage of the total number of defective vehicles. Therefore, this amendment extends the time frame for the lemon law presumption for motor vehicle defects from six months to one year.

Pending bill: Partial Amendment to the Trade Union and Labor Relations Adjustment Act

Proposed by Rep. Lee Eun-ju (Justice Party)

● The current act has been criticized for limiting trade union activities and causing financial difficulties for trade unions and workers due to its narrow definition of workers and industrial disputes. Conversely, the extent of claimable damages resulting from trade union activities is excessively broad with no cap on the maximum amount that can be claimed. This amendment expands the coverage of the act to include subcontractors, workers in special employment types, freelancers, platform workers, etc., and prohibits compensation claims against trade unions or workers for damages caused by collective bargaining or industrial actions, unless the damages have been caused by violent and destructive acts.

Promulgated bill: General Act on Public Administration

Competent Authority: Ministry of Government Legislation

● Currently, there are three different age-counting systems being used in Korea. This has continuously caused conflict and disputes over how to define the age when enforcing administrative services such as social welfare and medical services. To reduce the unnecessary costs stemming from such confusion, this act standardizes the age-counting system for most public services to the international standard, where people are considered zero at birth and turn a year older on the date of their birth.

Administrative announcement: Partial Amendment to the Enforcement Decree of the Depositor Protection Act

Competent Authority: Financial Services Commission

● This amendment reinforces depositor protection by separately establishing an insurance payout limit from the payout limit for general deposits for deposits closely tied to retirement income security and social security, deposits of existing defined contribution plans, and individual retirement pension plans.

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The Korea Herald republishes a weekly legislative report by local law firm DR & AJU LLC to provide the latest information on bills approved, proposed, pending and set to be promulgated. -- Ed.

For any queries about the bills, contact cr@draju.com.