An unpaid invoice on a construction project can quickly become more than an accounting problem.
You may have already paid employees, subcontractors and suppliers. The work may be finished. Your client may even accept that the work was done – but payment is still being delayed, reduced or disputed.
If that sounds familiar, Australia’s security of payment laws may give you a faster way to pursue payment.
These laws are designed to keep money moving through the construction industry. But they are highly procedural. Deadlines matter, documents matter and the State or Territory where the work was carried out matters.
Here are five things contractors, subcontractors, consultants and construction businesses should know.
1. You may have rights beyond your construction contract
One of the biggest misconceptions about a construction payment dispute is that your rights begin and end with the contract, when actually, they may not!
Security of payment legislation can give people who carry out construction work or supply related goods and services statutory rights to claim progress payments and, where necessary, have payment disputes adjudicated.
That can be particularly important when a client is delaying payment, disputing a substantial part of an invoice or simply refusing to engage.
But there is a catch: Australia does not have one national security of payment law.
Each State and Territory has its own legislation and procedures. That means you should not assume that a payment claim that works in one jurisdiction will work in another.
This becomes particularly important for businesses operating across State borders. The location of the construction work can affect which legislation applies, regardless of where your business is based.
Practical point: before sending a document intended to operate as a statutory payment claim, work out which legislation applies and what that legislation requires.
Dealing with payment claims across different States and Territories
Many companies have a presence in several Australian states and territories. That is, depending on where the work that is the subject of the claim is performed, they may be subject to different security of payment Acts.
In such cases, complex issues may arise where the work that is the subject of the claim is performed in multiple Australian jurisdictions. Alternatively, there may be issues if some of the work is performed outside Australia.
Each Act contains a provision limiting the usual rules for determining whether the Act applies extraterritorially. This avoids the problem of claims being brought in any number of jurisdictions. And it applies where there is a connection between the subject matter of the claim and the State or Territory.
This avoids the problem of, for example, a Queensland company entering into a construction contract governed by Queensland law involving certain construction work to be performed in New South Wales. In that case, the NSW Act would apply, not Queensland law.
2. “Construction work” covers more than building
You do not necessarily need to be a builder to fall within security of payment legislation.
Depending on the relevant State or Territory, the legislation can extend to a broad range of construction-related work and services. This can include activities associated with:
- construction and demolition;
- alterations, renovations and fit-outs;
- excavation and site preparation;
- installation work;
- electrical, mechanical and other building services;
- prefabrication and assembly;
- engineering and design work; and
- supplying certain goods and materials for construction projects.
There are also exclusions and jurisdiction-specific rules.
So if your business sits somewhere around the edges of what people ordinarily think of as “construction”, do not automatically assume the legislation does (or does not) apply to you.
The better question is whether your particular work, goods or services fall within the legislation that applies to the project.
3. A payment claim is not just another unpaid invoice
This is where security of payment legislation becomes practically useful. A payment claim can trigger a statutory process with strict consequences and deadlines.
The precise requirements differ between jurisdictions, but a valid claim will generally need to clearly identify the relevant work or services and the amount claimed. There may also be specific requirements about timing, service and what information must appear in the claim.
A common mistake is treating this as an ordinary invoicing exercise, which it isn’t.
Before serving a payment claim, check:
- whether the relevant security of payment legislation applies;
- whether you are entitled to make the claim at that time;
- who the claim must be served on;
- what information the claim must contain; and
- how you will prove when and how it was served.
We often see that last point easily underestimated. When statutory deadlines start running from service of a document, evidence of service can become very important if the dispute escalates.
4. If you receive a payment claim, ignoring it can be an expensive mistake
Security of payment legislation does not only matter to businesses trying to recover money. It matters just as much to principals, developers, builders and contractors receiving payment claims.
If you dispute a claim, you may need to respond with a payment schedule within a strict statutory timeframe.
A payment schedule generally identifies how much you propose to pay and, where that amount is less than the amount claimed, the reasons for withholding payment.
Failing to respond correctly or on time can have serious consequences. For example, under the NSW legislation, a respondent that fails to provide a payment schedule within the required period can become liable for the claimed amount. The NSW Act generally requires the schedule within the time required by the contract or 10 business days after service, whichever expires earlier.
That is why putting a disputed payment claim aside until somebody “has time to look at it” can be dangerous.
If a statutory payment claim lands in your inbox, identify the applicable deadline immediately. Do not assume the timeframe is the same in every State or Territory.
5. Adjudication can turn a payment dispute into a fast-moving legal process
If the parties cannot resolve the payment dispute, security of payment legislation may allow the claimant to apply for adjudication.
Adjudication is intended to provide a much faster determination of payment disputes than ordinary court proceedings.
An adjudicator considers the material permitted under the relevant legislation and determines whether an amount is payable.
That speed is one of the major advantages of the process, but it is also where businesses can get caught. Once a dispute reaches this stage, there may be very little time to:
- analyse the claim and contract;
- gather project records;
- identify jurisdictional issues;
- prepare submissions;
- respond to the other party’s arguments; and
- comply with statutory deadlines.
Waiting until an adjudication application arrives before getting organised can therefore put a business on the back foot.
Good record-keeping throughout the project matters. Contracts, variations, emails, site records, payment claims, schedules and evidence of service can all become important.
The point most businesses miss: timing can determine the outcome
Security of payment legislation is designed to provide a fast pathway for dealing with construction payment disputes. That speed comes with strict procedural requirements.
A strong underlying contractual position does not necessarily protect a business from the consequences of missing a statutory deadline. Equally, rushing out a payment claim without first checking the applicable legislation can create avoidable problems.
So whether you are chasing payment or disputing a claim, the sensible first questions are:
- Which State or Territory’s legislation applies?
- Is this actually a payment claim under that legislation?
- What is the next deadline?
- What must happen before that deadline expires?
Those questions are often more useful at the outset than debating who is ultimately “right” about the underlying dispute.
Steps to making a payment claim
Payment disputes in the construction industry were the main reason for the enactment of the Security of Payment Acts. Many small subcontractors and suppliers were not being paid for their work. As a result, they may have experienced cash flow issues.
The process of recovering progress payments begins with the submission of a “payment claim” by the contractor.
A claimant makes a payment claim by sending a statement of claim to the entity that is obligated to pay under the contract.
In other words, a Payment Claim is a contractor’s (or subcontractor or consultant) claim for payment from its client under the relevant building contract and the SOP legislation.
Here’s a general guide on how to make a payment claim under the Security of Payment Acts:
Step 1: Make sure you are covered by the Act.
Step 2: Check if there is an available date for making the claim.
Step 3: Plan to serve the claim at the right time.
Step 4: Address the claim to the right person.
Step 5: Ensure the claim contains the correct information.
Step 6: If you are a head contractor, include a correctly completed Supporting Statement.
Step 7: Serve the claim properly.
Step 8: Keep evidence of service.
Received a payment claim, or still waiting to be paid?
Prosper Law advises contractors, subcontractors, builders, developers, consultants and other construction industry participants on payment disputes and construction contracts across Australia.
If you have received a payment claim, are considering making one, or are facing an adjudication, getting advice early can help you understand the applicable process before a deadline limits your options.
Contact us for an initial consultation with an Australian building and construction lawyer.
Frequently asked questions
What happens if I ignore a SOPA payment claim?
Potentially, quite a lot. Depending on the legislation that applies, failing to provide a compliant payment schedule within the required timeframe can significantly restrict your position and may expose you to liability for the claimed amount.
Can an ordinary invoice be a payment claim?
Potentially. Whether a document qualifies as a statutory payment claim depends on the applicable legislation, the circumstances and the contents of the document. Do not assume something is merely an invoice because it is labelled “invoice”.
How long do I have to respond to a payment claim?
There is no single Australia-wide answer. The applicable deadline depends on the relevant State or Territory legislation and, in some circumstances, the construction contract or even if a payment schedule is offered. Check the deadline as soon as the claim is received. If in doubt, reach out to our Security of Payment Act Lawyers to find out more.
Is adjudication the same as going to court?
No. Statutory adjudication is designed as an expedited mechanism for determining construction payment disputes. Its effect and the parties’ subsequent rights depend on the applicable legislation and circumstances.
When should I speak to a construction lawyer?
Ideally, before serving a payment claim if a substantial amount is at stake, and as soon as possible after receiving a claim you intend to dispute. With security of payment matters, obtaining advice after a statutory deadline has expired may be too late to preserve some options.
(Updated August 2026)
About the Author
Farrah Motley
Contact an Australian Business Lawyer Today.
Contact us for a free consultation
