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Security of payment  

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. This section outlines the particular standards for these payments, which help to enable fair and timely remuneration for construction work.

The section also has information on how to make and respond to a payment claim, what to do if there is a dispute over a payment, how to apply for adjudication and key deadlines you must know to maintain the protections afforded to you and help you avoid costly legal proceedings.

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

You can learn about how to do this on the Making a payment claim page.

Step 2: Apply for adjudication

Information about this step can be found on  the Applying for adjudication page.

You may also wish to obtain your own independent legal advice about commencing action in an appropriate court

Note - NSW Fair Trading does not recover money owed to a person by a head contractor.

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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).

IMPORTANT: Be aware of time limits for making a progress payment claim (see our Summary of key deadlines below).

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Disputes  

If there is a dispute over the amount of a progress payment owed, contractors can have an arbitrator determine the dispute, under certain conditions. Find out when and how to apply for adjudication, and essential steps to take to help you recover the adjudicated amount at the Applying for adjudication page on the Fair Trading website.

The Payment claim and adjudication flow chart on our website shows the payment claim and applying for adjudication processes.

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Summary of key deadlines 

The tables below show the key deadlines as 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 (refer to the relevant pages for full details).

Note that these deadlines are only the maximum timeframes as provided for by the Act if your contract does not specifically set out deadlines. Your contract can specify shorter deadlines, so you should always check your contract first. 

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Payment following a payment claim 

After a payment claim is made for construction work and services performed, the following due dates for payment apply. Learn more at our Making a payment claim page.

 

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

*Key deadlines/due dates listed in the table above refer to the number of business days. 

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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. Learn more at our Responding to a payment claim page. 

 

Payment schedule

Key deadlines/due dates*

After claim is made:

  • before due date has expired
10 days after claim is made
  • after due date has expired
5 days after receiving notice of intention to apply for adjudication

*Key deadlines/due dates listed in the table above refer to the number of business days.

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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. Learn more at our Applying for adjudication page.

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

*Key deadlines/due dates listed in the table above refer to the number of business days.

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Payment withholding 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. Learn more at our Make a payment withholding request page.

 

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

*Key deadlines/due dates listed in the table above refer to the number of business days.

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Report a breach of Security of Payment laws 

Security of payment laws provide a right under a construction contract to receive and recover progress payments for carrying out work and supplying related goods and services.

As well as following the process for recovery of payment and adjudication of disputes, you can report a possible breach of Security of Payment laws to NSW Fair Trading:

  • as a subcontractor who believes you have not been paid according to the laws.
  • as a contractor or industry participant with information about subcontractors not paying or complying with their requirements.

Please give accurate and detailed information when reporting the possible breach.

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