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 doing construction work or providing goods or services as part of construction work under a construction contract, have the right to receive ‘progress payments’ for work delivered.

This section outlines the particular standards for these payments, which gives 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.

  1. Ensure you have made a claim for payment. Go to the making a payment claim page for more information.
  2. Apply for adjudication. Go to the applying for adjudication page for more information.

You can also get your own independent legal advice about commencing action in an appropriate court

Note: NSW Fair Trading does not recover money owed to a person.

Entitlement to progress payments (Section 8 of the Act)

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.

Disputes

If there is a dispute over the amount of a progress payment owed, contractors can have an adjudicator determine the dispute, under certain conditions. Go to the applying for adjudication page to find out when and how to apply for adjudication and more information. The payment claim and adjudication flow chart (PDF, 239.07 KB) on our website shows the payment claim and applying for adjudication processes.

Summary of key deadlines

The tables below shows the key deadlines 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).

These deadlines are only the maximum time frames provided 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.

Payment following a payment claim

After a payment claim is made for construction work and services complete, the following due dates for payment apply. Go to our making a payment claim page for more information.

Payment claim

Key deadlines/due dates*

Act Reference

Payment by principal to head contractor

15 days after claim is made

11(1A)(a)

Payment by head contractor to subcontractor

(non-residential)

30 days after claim is made

11(1B)(a)

Payment by head contractor to subcontractor (residential)

10 days after claim is made

11(1C)(b)

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

Giving a payment schedule

A payment schedule can be made 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 if provided within the set periods outlined below. Go to our responding to a payment claim page for more information.

Payment schedule

Key deadlines/due dates*

Act Reference

After claim is made:

  • before payment due date has expired

10 days after claim is made

14(4)(ii)

  • after payment due date has expired

5 days after receiving notice of intention to apply for adjudication

17(2)(b)

*Key deadlines/due dates listed in the table above refer to the number of 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. Go to our applying for adjudication page for more information.

Adjudication application

Key deadlines/due dates*

Act Reference

Claimant receives payment schedule, does not dispute schedule but respondent fails to pay by due date

20 days to lodge application

17(3)(d)

Claimant receives payment schedule, schedule amount is less than claim amount

10 days to lodge application

17(3)(c)

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

17(3)(e)

Notice of intention to apply for adjudication

20 days after due date for payment has passed

17(2)(a)

Adjudicator acceptance

Should be within 4 days of adjudication application, otherwise claimant can make new application

26(1)(a)

New adjudication application

Within 5 days of becoming entitled to lodge new application

26(3)

Adjudication response

Due 5 days after receiving adjudication application from claimant, or 2 days after receiving adjudicator acceptance

20(1)

Adjudicator’s decision

Due within 10 days of adjudicator acceptance

21(3)(a)

Payment of adjudication amount

5 days after release of adjudicator decision

23(1)(a)

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

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. Go to our make a payment withholding request page for more information.

Payment withholding request

Key deadlines/due dates*

Act Reference

Principal contract served with payment withholding request. If person no longer a principal contractor

10 days to give notice to claimant

26A(5)

Claimant must serve adjudication determination on principal contractor

Within 5 days of receiving determination

26B(5)

If adjudication application is withdrawn, claimant must notify principal contractor

Within 5 days of the application being withdrawn

26D(3)

Claimant must serve notice of claim to principal contractor under Contractors Debt Act 1997

Within 20 days of serving adjudication determination on them

26B(3)

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

Report a breach of Security of Payment laws

You can report a possible breach to NSW Fair Trading including:

  • where a Head Contractor has supplied a false or misleading supporting statement with a payment claim, or
  • where a Head Contractor has not supplied a supporting statement with a payment claim, or
  • other non-compliance with the requirements of the Act or its associated Regulation.

Use the breach reporting form (DOCX, 21.26 KB) when reporting and give accurate and detailed information.

Prev Resolving a dispute
Next Consumer building guide