Security of Payment Act Explained: How Australian Subcontractors Actually Get Paid

If you’re a tradie or subcontractor owed money by a builder, head contractor, or developer, you have legal rights. Every Australian state and territory has a Security of Payment Act that gives you a formal pathway to chase the debt—even before you sue.

These Acts aren’t new. NSW introduced the first one in 1999, and all other states and territories have since passed their own versions. The purpose is simple: keep cash flowing down the construction supply chain so small contractors don’t go under waiting for payment.

This guide explains how the Security of Payment system works, what deadlines matter, and what your next steps are.

What is the Security of Payment Act?

The Security of Payment Act is a state-based law that creates a fast-track dispute resolution process for construction payment disputes. It doesn’t make money magically appear—but it does give you a legal mechanism to force the other party to respond to your claim quickly.

The system has three main stages:

• Payment claim – You lodge a formal written claim for unpaid work or materials.
• Payment schedule – The other party must respond within a strict timeframe (usually 10 business days) saying what they’ll pay, what they dispute, and why.
• Adjudication – If they don’t pay or won’t agree, you can escalate to an independent adjudicator who makes a binding decision in days, not months.

If the adjudicator rules in your favour and they still don’t pay, you can enforce that decision through court.

How long do I have to lodge a payment claim?

Timing is critical. You must lodge your payment claim within a set period after the work is done or the invoice is due. In most states, this is 12 months. After that, you lose your right to use the Security of Payment Act.

Some states are stricter:

Don’t wait. Lodge your claim early. Once 12 months passes, you lose your statutory right and must resort to common law (which is slower and more expensive).

What must I include in a payment claim?

A payment claim under the Security of Payment Acts isn’t just an invoice. It’s a formal document that must contain specific information. If you miss the requirements, the respondent can reject it and you’ll have to start again.

All states require broadly the same details:

1. Identification of the work performed (or materials supplied).
2. The period the claim covers (dates).
3. The contract details (or reference to the work).
4. The amount claimed (gross, plus GST if applicable).
5. A breakdown or description of what the money is for.
6. Statement that it’s a payment claim under the Security of Payment Act.
7. Your bank details or how you want to be paid.

If you’re unsure about the format, check your state’s legislation or the relevant prescribed form. Many states provide a template. If you want to skip the paperwork and file a payment claim online, PayClaim prepares a compliant claim for a flat $69 across all Australian states.

How does the payment schedule process work?

Once you’ve lodged a valid payment claim, the head contractor or developer (the “respondent”) must respond with a payment schedule. This is their chance to say yes, no, or “part yes, part no”—and they must explain why.

The deadline varies slightly by state but is typically 10 business days. In NSW, it’s section 14 of the Building and Construction Industry Security of Payment Act 1999. In Queensland, it’s section 21 of the Building Industry Fairness (Security of Payment) Act 2017.

The payment schedule must state:

• The amount they’ll pay (can be zero).
• The amount they dispute (if any).
• Reasons for disputing any part.
• How and when they’ll pay.

If they don’t issue a payment schedule within the deadline, they’ve defaulted. You can then apply for adjudication or move to enforce the full claim.

What happens if they don’t respond?

Silence is not an option for them. If the respondent doesn’t issue a payment schedule within the statutory timeframe, they’re in breach of the Act. You have several options:

• Wait for payment anyway (they technically owe you the full amount).
• Apply for adjudication immediately—you don’t need a dispute to do this.
• Lodge a court claim.

Most tradies don’t wait. Moving to adjudication is faster and forces a binding decision within weeks.

What is adjudication and how does it work?

Adjudication is the core of the Security of Payment Acts. It’s a fast-track dispute resolution process where an independent third party (the adjudicator) reviews your claim and the respondent’s payment schedule, then issues a binding determination.

You can apply for adjudication if:

1. You’ve lodged a valid payment claim.
2. The respondent issued a payment schedule and you dispute it, OR
3. The respondent failed to issue a payment schedule by the deadline.

The process is strictly timetabled. Most states require the adjudicator to make a determination within 10–15 business days of your application. There’s no discovery phase, no cross-examination, no lengthy procedural delays. It’s documents and argument only.

The adjudicator decides the merits on the material you and the respondent provide. Their decision is binding and enforceable—even if either party disagrees.

What does adjudication actually cost?

Adjudication fees are set by the prescribed bodies in each state. You usually pay an application fee upfront (typically AUD 200–500 depending on the claim value and your state). The respondent pays their share of the adjudicator’s fees separately.

Some states allow you to recover adjudication costs if you win. Check your state’s legislation to see if costs are recoverable—it varies.

Can I enforce an adjudicator’s decision?

Yes. An adjudication determination is immediately enforceable. If the respondent doesn’t pay, you can take the determination to court and seek an order for payment plus costs and interest.

In practice, many contractors do pay once an adjudicator rules against them, because the determination is binding and the legal costs of resisting it in court are usually greater than the debt itself.

If they still refuse, you can pursue debt recovery or bankruptcy proceedings—but by that point, you have a court judgment in your hand.

What are my options if adjudication doesn’t apply?

The Security of Payment Acts only cover construction work and goods. Some disputes fall outside the Act:

• Retention money (sometimes excluded or treated differently by state).
• Claims between a developer and end customer (not “construction work”).
• Disputes over defective work (sometimes separate from payment claims).
• Claims for damages beyond contract price.

If your dispute isn’t covered by the Act, you’ll need to resolve it through direct negotiation, mediation, or court action. Legal advice is worth considering at that point.

State-by-state differences: what do I need to know?

While the Security of Payment Acts across all eight states and territories operate on the same basic model, there are some differences worth noting:

• NSW and QLD: Most developed case law; adjudication is well-established and widely used by tradies.
• VIC: Requires a contract term giving the right to claim. Some exclusions for small contracts.
• WA: Broader scope; includes supply of goods for construction.
• SA and TAS: Similar framework to NSW but smaller construction industry means fewer adjudications.
• NT and ACT: Similar framework; less case law but same statutory rights.

The fundamental deadlines and process are consistent across all states, so the principle is the same wherever you operate.

What should I do right now?

If you’re owed money:

1. Check the 12-month deadline. Calculate when the work was completed or invoice issued. If you’re within 12 months, you still have time.
2. Gather your documents. Collect invoices, contracts, emails, proof of work, and payment records.
3. Prepare a payment claim. Use your state’s template or work with a service like PayClaim to ensure compliance.
4. Serve it formally. Make sure you serve the claim on the right party by the right method (usually email or personal delivery to the head contractor or developer).
5. Wait for the payment schedule. Give them 10 business days. If they don’t respond, you can move straight to adjudication.
6. If they dispute, apply for adjudication. Don’t negotiate endlessly—use the statutory process.

The Security of Payment Act exists because construction cash flow matters. Use it.

Frequently Asked Questions

Q: Does the Security of Payment Act guarantee I’ll get paid?

No. The Act gives you a legal mechanism to claim money and forces a quick decision, but the adjudicator’s determination is based on the merits of your claim. If your claim is weak or you can’t prove the work was done, you may not succeed. What the Act does guarantee is a fast, binding process—not an outcome.

Q: Can I claim for retention money under the Security of Payment Acts?

It depends on your state and the contract terms. Retention (money held back until job completion) is sometimes excluded or treated as a separate dispute. In NSW, retention disputes can go to adjudication, but you may need to satisfy additional conditions. Check your state’s Act or seek advice on your specific contract.

Q: What if the head contractor says “the developer hasn’t paid me yet”?

That’s their problem, not yours. The head contractor is your debtor. They must pay you under the contract and the Act, regardless of whether they’ve been paid by the developer. If they don’t pay, you pursue them—not the developer (unless you have a separate contract with the developer).

Q: How much does adjudication cost me?

Application fees range from around AUD 200 to AUD 500, depending on your state and the claim value. The respondent pays their share of the adjudicator’s fees. Some states allow the winning party to recover costs from the losing party; others don’t. Check your state’s legislation or ask the adjudication body for a quote before you apply.

Q: Can a head contractor refuse to respond to a payment claim?

They can try, but it’s a breach of the Act. If they don’t issue a payment schedule within 10 business days, you can apply for adjudication immediately. The adjudicator will then assess your claim without the benefit of their defence, which usually works in your favour.

FAQS END.

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