What is the Subcontracting Act (Act for the Proper Transaction between Small and Medium-sized Subcontractors)?

It is a law that fundamentally revises the Subcontracting Act, established in 1956, and came into effect in January 2026. It prohibits the principle of payment by promissory note and mandates price negotiation.

How has the scope of application of the Subcontracting Act expanded?

In addition to the existing capital base criteria, new employee base criteria have been added (over 300 employees for manufacturing subcontracting, over 100 employees for service provision). The act now applies if either criterion is met.

What are the main current risks associated with business subcontracting contracts?

There is a risk of 'fake subcontracting' where the line between dispatch and subcontracting is ambiguous. This risk can lead to compliance issues that may escalate and spread through social media.

AI News NQ Analysis

[3 Months Since Chutekihou Enforcement] Challenges in Rationalizing Business Entrustment - Contract Reviews Demanded of Large Enterprises

NQ Score 88/100

N1 Content Completeness 90

AI Summary (NQ-processed)

Three months after the enforcement of the 'Small and Medium-sized Subcontracting Transactions Rationalization Act' (Chutekihou), the expanded applicability and the structural compliance risks of 'disguised outsourcing' in large enterprises are becoming apparent.

AI Analysis

Frequently Asked Questions

Q: What is the Subcontracting Act (Act for the Proper Transaction between Small and Medium-sized Subcontractors)?: A: It is a law that fundamentally revises the Subcontracting Act, established in 1956, and came into effect in January 2026. It prohibits the principle of payment by promissory note and mandates price negotiation.
Q: How has the scope of application of the Subcontracting Act expanded?: A: In addition to the existing capital base criteria, new employee base criteria have been added (over 300 employees for manufacturing subcontracting, over 100 employees for service provision). The act now applies if either criterion is met.
Q: What are the main current risks associated with business subcontracting contracts?: A: There is a risk of 'fake subcontracting' where the line between dispatch and subcontracting is ambiguous. This risk can lead to compliance issues that may escalate and spread through social media.