Sansan Investigates the Reality Three Months After the Enforcement of the Subcontract Act

Sansan Inc., a provider of AI services that transform working styles, conducted a "Survey on the Reality After the Enforcement of the Act on the Prevention of Frauds and Other Practices Relating to Subcontracting of Specified Businesses" (hereinafter referred to as the "Act") targeting 743 employees in subcontractor roles (employees of companies falling under the definition of small and medium-sized subcontractor businesses, responsible for subcontracted work) and 143 legal personnel in client companies (companies falling under the definition of委託事業者), totaling 886 respondents, to clarify the corporate response status three months after the Act's enforcement in January 2026.

The survey results indicate that over 60% of subcontractors have not experienced an increase in price negotiations even after the Act's enforcement. For companies where price negotiations did increase, "ensuring access to contracts and purchase orders" was cited as the most important initiative. Furthermore, while 90% of clients are proceeding with compliance measures, approximately 60% face challenges in identifying small and medium-sized subcontractor businesses, highlighting that some issues remain.

On January 1, 2026, the "Subcontract Act," which regulated unfair transactions utilizing the superior position of client companies (formerly "parent companies"), was revised and enforced as the "Act on the Prevention of Frauds and Other Practices Relating to Subcontracting of Specified Businesses." The Act (formerly the Subcontract Act) has, since before the revision, obligated client companies to clearly state transaction terms in writing when dealing with small and medium-sized subcontractors. Previously, eligible small and medium-sized subcontractors were determined by capital criteria, but the revision expanded the scope by adding employee number criteria. Furthermore, the revision prohibits client companies from unilaterally determining prices, thereby supporting small and medium-sized subcontractors in achieving price pass-through as needed.

In response to these changes, companies are also required to strengthen their contract management. Specifically, operations are needed that allow for changes in contract content in accordance with legal revisions, and for on-site personnel to clearly state transaction terms in contracts and purchase orders, manage them including any "transitions" such as changes in terms, and achieve compliance with the Act.

This survey was conducted to clarify how companies are responding and what factors are hindering their response, three months after the enforcement.

・ More than 40% of subcontractors experienced an increase in price negotiations after the Act's enforcement, while 60% did not see an increase in negotiation opportunities.

・ Over 60% responded that "being able to confirm contracts and purchase orders" is important for promoting price negotiations, making it the most cited factor.

・ Over 70% of subcontractors have experienced "hesitation in price negotiations due to not having contracts or purchase orders on hand," and about 20% have experienced "making incorrect transactions due to not being aware of contract changes."

・ Approximately 60% of clients face challenges in "identifying target companies (under the Act)," with "individual collection of company information" being the most common reason.

・ More than 40% of subcontractors experienced an increase in price negotiations after the Act's enforcement, while 60% did not see an increase in negotiation opportunities.

When subcontractors were asked if price negotiations had increased after the Act's enforcement, 43.2% responded "increased," while 56.8% responded "no change," accounting for about 60%. This indicates that while price negotiations are beginning to be promoted, many personnel have not yet felt a change.

FAQ

What is the "Act on the Prevention of Frauds and Other Practices Relating to Subcontracting of Specified Businesses" (取適法)?

The Act, revised from the former Subcontract Act, aims to regulate unfair transactions by client companies that exploit their superior position when dealing with subcontractors. It mandates clear written terms for transactions and prohibits unilateral price determination by clients, supporting subcontractors in achieving price pass-through.

When was the Act enforced?

The Act was enforced on January 1, 2026.

What were the main findings of the survey conducted three months after the Act's enforcement?

The survey found that while over 40% of subcontractors experienced increased price negotiations, 60% did not. Key challenges for subcontractors included not having contracts readily available, leading to hesitation in negotiations. For clients, identifying eligible subcontractors was a major hurdle.

What is considered important for promoting price negotiations according to the survey?

Over 60% of respondents identified "ensuring access to contracts and purchase orders" as the most important factor for promoting price negotiations.

What challenges do client companies face in complying with the Act?

Approximately 60% of client companies reported difficulties in identifying which businesses fall under the Act's scope, with the primary reason being the need to individually collect company information.

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