There are payment requirements in the building and construction industry that principals, head contractors, subcontractors and suppliers must follow. These are regulated by the Building and Construction Industry Security of Payment Act 1999 (the Act).
All contractors providing goods or services as part of construction work have the right to receive ‘progress payments’ for work delivered.
What To Do If You Have Not Been Paid
There are two steps to take if you have not received a payment schedule within the required number of business days after making a claim, or you have not been paid by the due date.
Step 1: Ensure you have made a claim for payment.
Step 2: Apply for adjudication.
Entitlement to Progress Payments
Contractors have a right to progress payments whether a contract is verbal, written or absent, and even if a contract states the contractor cannot claim progress payments. Unless otherwise stated in the contract, progress payment claims can only be made once per month.
The progress payment amount is calculated based on:
- The terms of the contract, or
- The value of the work carried out (if not specified in the contract terms).
Disputes
If there is a dispute over the amount of a progress payment owed, contractors can have an arbitrator determine the dispute under certain circumstances.
Summary of Key Deadlines
The tables below show the key deadlines that are set out in the Act for:
- Making a payment claim
- Responding to a payment claim with a payment schedule
- Applying for adjudication, and
- Making a payment withholding request.
Note your contract could specify shorter deadlines.
Payment Following a Payment Claim
After a payment claim is made for the construction work and services performed, the following due dates for payment apply.
| Payment Claim | Key Deadlines/Due Dates* |
|---|---|
| Payment by Principal to Head Contractor | 15 days after claim is made |
| Payment by Head Contractor to Subcontractor (Non-Residential) | 30 days after claim is made |
| Payment by Head Contractor to Subcontractor (Residential) | 10 days after claim is made |
*business days.
Giving a Payment Schedule
A payment schedule may be given if the person responding to a claimant does not intend to pay the total amount claimed and states why. The payment schedule is only valid within the set periods outlined below.
| Payment Schedule | Key Deadlines/Due Dates* |
|---|---|
| After claim is made before due date has expired | 10 days after claim is made |
| After claim is made after due date has expired | 5 days after receiving notice of intention to apply for adjudication |
*business days.
Adjudication Process
Only a claimant can start adjudication and they must apply within set periods. The key dates for the claimant, respondent and adjudicator in this process are listed below.
| Adjudication Application | Key Deadlines/Due Dates* |
|---|---|
| Notice of intention to apply for adjudication | 20 days after due date has passed |
| Claimant receives payment schedule, does not dispute schedule but respondent fails to pay by due date | 20 days to lodge application |
| Claimant receives payment schedule, schedule amount is less than claim amount | 10 days to lodge application |
| No payment schedule received, due date has passed, respondent given notice of intention to apply for adjudication, respondent given further 5 days to give payment schedule | 10 days to lodge from last day of the 5 day notice period |
| Adjudicator acceptance | Should be within 4 days of adjudication application, otherwise claimant can make new application |
| New adjudication application | Within 5 days of becoming entitled to lodge new application |
| Adjudication response | Due 5 days after receiving adjudication application from claimant, or 2 days after receiving adjudicator acceptance |
| Adjudicator’s decision | Due within 10 days of adjudicator acceptance |
| Payment of adjudication amount | 5 days after release of adjudicator decision |
*business days.
Payment Withhold Request
A claimant who has made an adjudication application can serve a payment withholding request. This directs a principal contractor (above the respondent in a chain of contracts) to hold back a respondent’s payment, so there is enough money to cover a claim.
| Payment Withholding Request | Key Deadlines/Due Dates* |
|---|---|
| Principal contract served with payment withholding request. If person no longer a principal contractor | 10 days to give notice to claimant |
| Claimant must serve adjudication determination on principal contractor | Within 5 days of receiving determination |
| If adjudication application is withdrawn, claimant must notify principal contractor | Within 5 days of the application being withdrawn |
| Claimant must serve notice of claim to principal contractor under Contractors Debt Act 1997 | Within 20 days of serving adjudication determination on them |
*business days.
Please contact Etheringtons Solicitors if you want to utilise this regime by using the contact form or calling us on (02) 9963 9800.