For subcontractors, late payment is not an occasional frustration — it is a structural feature of the industry. Main contractors routinely hold retentions, pay at the end of month cycles that bear no relation to agreed terms, and use delays in progress claim assessment as a cash flow tool. The result is that the businesses doing the physical work are often the last to be paid and the most vulnerable to non-payment.
Security of Payment legislation
Each Australian state and territory has legislation designed to protect subcontractors' right to be paid. In Queensland, it is the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). In NSW, it is the Building and Construction Industry Security of Payment Act 1999 (SOPA). Victoria, South Australia, Western Australia and the ACT have equivalent legislation. The specifics vary by jurisdiction, but the core mechanism is similar: a right to make a payment claim and have it assessed on a fixed statutory timetable, with the ability to adjudicate any dispute quickly and at low cost.
Making a valid payment claim
The process begins with a payment claim — a formal invoice that complies with the requirements of the relevant Act. In most jurisdictions this means the claim must be in writing, identify the construction work or related goods and services, state the amount claimed, and include a statement that it is made under the relevant Act. Getting the claim right matters: a deficient claim can delay or prevent adjudication.
The respondent (the party who owes payment) has a fixed period to provide a payment schedule — typically 10 to 15 business days depending on the jurisdiction. If they do not, the full claimed amount becomes due and payable, and you can apply to adjudicate or sue for the debt.
Adjudication: fast, cheap, enforceable
If the respondent disputes the claim via a payment schedule, you can refer the dispute to an adjudicator. Adjudication is far faster than court proceedings — decisions are typically made within ten business days of the adjudicator's appointment. An adjudication determination in your favour can be registered as a judgment in the relevant court and enforced immediately.
Adjudicator fees are borne by the losing party in most jurisdictions, keeping the process commercially accessible for subcontractors. The intent of the legislation is that payment disputes in construction should be resolved in weeks, not years.
Retention trusts
Queensland's BIF Act introduced a retention trust regime that requires head contractors to hold subcontractor retentions in a separate trust account — the funds cannot be used for the head contractor's general cash flow. Similar regimes are being considered in other states. If your retentions are not being held in trust as required, that is a compliance breach by the head contractor and a matter you can raise with the Queensland Building and Construction Commission (QBCC).
Practical steps for subcontractors
Invoice promptly on every milestone. Keep records of everything — progress photographs, delivery records, daily site diaries. Respond to any request for variation instructions in writing. If a progress claim is disputed, get the payment schedule and respond within the statutory time. Do not let a disputed amount sit without action — the Security of Payment regime has strict time limits and missing them can affect your rights.
If a head contractor is holding a significant overdue amount and you have exhausted the Security of Payment pathway, speak to Merion — commercial recovery is available alongside statutory options.