Japan: Results of the FY2025 Activities of the “Construction Business Act Compliance Promotion Headquarters” and Points of Attention for Construction Businesses in Light of the FY2026 Activity Policy

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→Results of the FY2025 Activities of the “Construction Business Act Compliance Promotion Headquarters” and Points of Attention for Construction Businesses in Light of the FY2026 Activity Policy

Results of the FY2025 Activities of
the “Construction Business Act Compliance Promotion Headquarters”
and Points of Attention for Construction Businesses in Light of the FY2026 Activity Policy

August 2026
One Asia Lawyers, Osaka Office

Section 1  Overview of the “Construction Business Act Compliance Promotion Headquarters” and Report on Its Activities

Since April 1, 2007, the Ministry of Land, Infrastructure, Transport and Tourism (“MLIT”) has established a “Construction Business Act Compliance Promotion Headquarters” (hereinafter, the “Promotion Headquarters”) at each of its Regional Development Bureaus and other regional offices, with a view to strengthening the legal compliance system for the construction industry. The Promotion Headquarters’ principal functions are: (i) collecting information suggesting suspected violations of laws and regulations by construction businesses; (ii) requesting reports and conducting on-site inspections; and (iii) coordinating with related authorities (prefectural construction business licensing authorities, the Ministry of Health, Labour and Welfare, the Japan Fair Trade Commission, etc.). The “Construction G-Men,” who serve as the field unit carrying out part of the Promotion Headquarters’ activities, investigate construction contractors’ compliance with the Construction Business Act primarily in relation to estimates, contracts, and payments under construction work contracts, and provide guidance for improvement where inappropriate transactions are identified. This work is conducted in line with the purpose of the so-called “Three Acts for Securing the Next Generation of Construction Personnel,” with the improvement of workers’ treatment and the promotion of work-style reform, aimed at securing the future construction workforce, as its principal objectives.

Each year, MLIT publishes both (a) the results of the Promotion Headquarters’ activities for the preceding fiscal year (statistics on the number of reports of suspected violations received, the number of on-site inspections conducted, the status of administrative dispositions, etc.) and (b) its activity policy for the current fiscal year (the Construction G-Men’s priority areas of investigation, etc.). For legal and compliance officers at construction businesses, it is important to view these publications, in effect, as an “annual business report and business plan” issued by the administration — using the activity results to understand the administration’s guidance trends, and using the activity policy to anticipate the focus areas of investigation for the coming year in order to prepare their internal compliance systems accordingly.

This article focuses on the “Results of the FY2025 Construction Business Act Compliance Promotion Headquarters Activities and the FY2026 Activity Policy” (hereinafter, the “FY2026 Materials”), published in May of Reiwa 8 (2026), and summarizes the content of the activity policy and points of practical attention.

Section 2  Results of FY2025 Activities and Notable Features

1  Results of FY2025 Activities

First, the results of FY2025 activities, as set out in the FY2026 Materials, are as follows.

2  Notable Features Compared with Past Fiscal Years

Comparing the above FY2025 results with past results, the following points stand out.
(1)  The number of training sessions held increased approximately 3.1-fold, from 82 (FY2024) to 252. Looking at the past five years — 37 → 45 → 72 → 82 → 252 sessions — the increase in FY2025 stands out markedly, suggesting a rapid strengthening of the administration’s awareness-raising efforts.

(2)  The number of businesses subject to recommendations / written guidance, etc. has steadily increased, from 456 (FY2023) → 649 (FY2024) → 768 (FY2025). In particular, the number of findings relating to “price pass-through” more than doubled, from 87 (FY2024) to 193 (FY2025), suggesting a high level of administrative interest in negotiations over the pass-through of increases in material and labor costs.

(3)  Of the 14 businesses subject to business suspension, 5 were disposed of for violations of the Antimonopoly Act. At least in recent years, business suspension on the grounds of violations of that Act had not been seen, and attention should be paid to the risk that an investigation triggered by the Construction G-Men may extend into the areas of labor law and competition law.

It should be noted that the above changes in figures may be attributable to circumstances specific to FY2025, and it will be necessary to monitor future trends — in light of the content of the activity policy discussed below and the status of future dispositions — to assess whether these represent a genuine change in the trend of dispositions.

Reference: Trends over the Past Five Years

Section 3  Overview of and Points of Attention Regarding the FY2026 Activity Policy

1  Overview of the FY2026 Activity Policy

The FY2026 activity policy is organized around the following five points.
(1)  Collection of information suggesting suspected violations
MLIT will publicize consultation and reporting channels such as the emergency hotline and the Construction Industry Follow-up Consultation Dial, and, where a whistleblower wishes to remain anonymous, will devise investigation methods that thoroughly protect confidentiality so that the whistleblower is not identified and subjected to disadvantageous treatment by the party reported.
(2)  Requests for reports and on-site inspections
Requests for reports and on-site inspections will be conducted flexibly, focusing primarily on construction businesses suspected of violations based on reports to the consultation channels or information provided by related authorities, businesses identified through Construction G-Men investigations as potentially in violation, businesses with questionable business office conditions or engineer assignments, and businesses that have previously received guidance or supervision.
(3)  Cooperation with related authorities
To promote work-style reform through appropriate construction period setting, MLIT will conduct awareness-raising activities in cooperation with prefectural labor bureaus and labor standards inspection offices; it will also make use of information on labor cost dumping investigations from public procuring entities, share information with labor standards inspection offices and the Japan Fair Trade Commission where suspected violations of labor-related laws or the Antimonopoly Act are identified, and cooperate with prefectural construction business licensing authorities through information sharing and joint on-site inspections, among other measures.
(4)  Construction Industry Fair Trade Promotion Month
November is designated as “Construction Industry Fair Trade Promotion Month,” during which awareness-raising activities for fair trade, including the holding of training sessions, will be intensively conducted. The Construction G-Men will likewise designate this month as a “concentrated action month” and undertake more focused efforts.
(5)  Other

• Publicizing the “Construction Industry Fair Trade Promotion Center,” a consultation window for disputes between prime contractors and subcontractors
• Exchanging information with construction industry associations and raising awareness of the Construction Business Act through training sessions, etc.
• Promoting and publicizing the Construction Career-Up System and the Construction Industry Retirement Allowance Mutual Aid System
• Publicizing amendments to laws and regulations other than the Construction Business Act relating to the execution of construction work
• As a countermeasure against sole proprietors seeking to evade regulation, publicizing thorough compliance measures such as the proper preparation of construction execution organization charts
• Raising awareness regarding the treatment of amounts equivalent to consumption tax in transactions with tax-exempt contractors and subcontractors

2  Principal Areas of Investigation by the Construction G-Men

The Construction G-Men conduct the necessary investigations and on-site inspections based on the above activity policy, and provide guidance based on the results. The principal areas of investigation are set out below.

In addition, the FY2026 activity policy expressly states that the Construction G-Men’s activities will include conducting investigations related to Article 40-4 of the Construction Business Act based on leads obtained from subcontracting transaction surveys, etc., and sharing information and cooperating with licensing authorities (e.g., providing information to licensing authorities where a suspected violation is identified, and conducting joint on-site inspections in relation to businesses licensed by prefectural governors).

3  Principal Points of Attention Compared with the Previous Activity Policy

(1) Change in the Framework for Organizing Investigation Items
Whereas the activity policy for FY2025 and earlier organized the Construction G-Men’s investigation items into four categories — (i) securing appropriate contract amounts and labor costs, (ii) appropriate pass-through of price increases, (iii) appropriate setting of construction periods, and (iv) appropriate payment of subcontracting fees — the FY2026 activity policy newly establishes “appropriate contract execution” as an independent category, reorganizing the framework into five items. Given that the number of findings relating to contract documentation increased from 283 (FY2024) to 516 (FY2025), it is possible that inspection of the statutorily required contract particulars under Article 19 of the Construction Business Act will receive greater emphasis in future investigations.
This reorganization involves not merely a change in the number of categories (from four to five) but also substantive changes in the content of each item. For example, while the “securing appropriate contract amounts and labor costs” item retains its basic content of checking for discrepancies in estimate amounts and the presence of dumping, it has been made more specific and expanded to include checks based on the “Standards Concerning Labor Costs” and the “Case Studies of Transactions Suspected of Falling Significantly Below the Labor Costs Normally Required” (MLIT Notice Kokufu-Kensui No. 76, dated January 5, Reiwa 8), as well as checks on the performance of contracts containing commitment clauses in multi-year and similar contracts. Similarly, “appropriate payment of subcontracting fees” now newly includes a check on whether bank transfer fees are being borne by the subcontractor, in addition to the existing checks on payment by promissory note and cash.

As described above, the reorganization from four to five categories involves not only the reallocation of investigation items accompanying the establishment of the new “appropriate contract execution” category, but also several substantive changes, including the specification of checks based on the labor cost standards and case studies within “securing appropriate contract amounts and labor costs,” and the addition of a check on bank transfer fees within “appropriate payment of subcontracting fees.” Attention should be paid to the fact that this represents a deepening of the investigation that goes beyond a mere change in terminology.
(2) Change in the Operation of the Construction Industry Fair Trade Promotion Period
Since FY2020, MLIT has designated the three-month period from October to December each year as the “Construction Industry Fair Trade Promotion Period.” Under the FY2026 activity policy, this has been changed to a single-month operation, designating November as the “Construction Industry Fair Trade Promotion Month” (a reversion to the approach used in FY2019 and earlier). Accordingly, businesses should review their internal training and self-inspection schedules with a view to November.
(3) Newly Specified Matters Concerning the Treatment of Amounts Equivalent to Consumption Tax
Under the FY2026 activity policy, awareness-raising activities regarding the following two points have been newly specified, and these matters may accordingly receive attention in this year’s investigations:

• that unilaterally reducing amounts equivalent to consumption tax in transactions with tax-exempt contractors may raise issues under the Construction Business Act and the Antimonopoly Act.
• that, in transactions with subcontractors, sufficient consultation should be held regarding the need to reflect amounts equivalent to consumption tax in the transaction price.

(4) Specification of the Operation of the Labor Cost Standards
The new rules introduced by the amended Construction Business Act promulgated in June of Reiwa 6 (2024) — prohibiting estimates, requests for amendment, and conclusion of contracts significantly below the “Standards Concerning Labor Costs” — came into full effect by December of Reiwa 7 (2025). The FY2026 activity policy specifies a concrete verification process based on the “Case Studies of Transactions Suspected of Falling Significantly Below the Labor Costs Normally Required” (MLIT Notice Kokufu-Kensui No. 76, dated January 5, Reiwa 8), reflecting an evolution from merely calling for compliance with the standards to a concrete investigative methodology.
(5) Establishment of a Dedicated Item for Information Sharing and Cooperation with Licensing Authorities
The policy newly specifies the provision of information to licensing authorities where a suspected violation is identified through the Construction G-Men’s investigations, and the conduct of joint on-site inspections in relation to businesses licensed by prefectural governors. Businesses operating across multiple licensing jurisdictions should bear in mind that guidance given by one Regional Development Bureau may be shared with other licensing authorities.

Section 4  Conclusion

As discussed above, the activities of the Promotion Headquarters and the Construction G-Men are deepening year by year — not only in quantitative terms, such as the number of reports received and dispositions imposed, but also by delving into the substance of individual contracting practices, including the particulars stated in contract documents, the basis for calculating labor costs, and the process of negotiating price pass-through. It would be overly optimistic to assume that “our company will not become the subject of administrative guidance”; businesses should bear in mind that the estimates, contracts, and payment terms they exchange in the ordinary course of business may themselves become the subject of the next investigation. In particular, the newly established “appropriate contract execution” category under the FY2026 activity policy focuses on the statutorily required particulars of contract documents — a point that is relatively easy to remedy. Conducting a self-inspection of your company’s contracts and estimates, with reference to the five investigation items introduced in this article, would be an effective first step in preparing for future investigations.

[List of Reference Materials]

1. MLIT, “Results of the FY2024 Construction Business Act Compliance Promotion Headquarters Activities and the FY2025 Activity Policy” (June, Reiwa 7)
2. MLIT, “Results of the FY2025 Construction Business Act Compliance Promotion Headquarters Activities and the FY2026 Activity Policy” (May, Reiwa 8)
3. MLIT, “Summary of the Results of the FY2025 Construction Business Act Compliance Promotion Headquarters Activities”