Subcontractor Payment Schedules Under Security of Payment Acts

What it is

A payment schedule is the written response a head contractor must serve when a subcontractor lodges a payment claim under a Security of Payment Act. Every Australian state and territory now has its own version of the Act but the architecture is the same. The subbie claims. The head contractor schedules. If the scheduled amount is less than claimed the dispute can go to adjudication.

The schedule has to identify the payment claim it responds to, state the amount the head contractor proposes to pay, and if that scheduled amount is less than the claimed amount, give reasons why and explain any withholding. Without those elements the schedule is invalid and the law treats the head contractor as if no schedule was served at all.

Statutory deadlines by state

The clock starts the day the payment claim is received.

NSW and VIC

Under the NSW Building and Construction Industry Security of Payment Act 1999 and the VIC Building and Construction Industry Security of Payment Act 2002 a payment schedule must be served within 10 business days after the payment claim is received, or earlier if the contract sets a shorter period. A contract cannot lawfully extend the 10 business day window. Any clause that tries to is void.

QLD

The QLD Building Industry Fairness (Security of Payment) Act 2017 also uses a 15 business day default for payment schedules from head contractors to subcontractors, although shorter contractual periods apply once head contracts move to project trust accounts.

Other jurisdictions

WA, SA, TAS, ACT and NT each set their own deadlines. The pattern across all of them is the same. A defined statutory window. No ability to contract out. A consequence regime if the head contractor stays silent.

What happens if the head contractor misses the deadline

This is the lever that gives the scheme its bite. If a payment schedule is not served within the statutory window the head contractor becomes liable for the full claimed amount as a statutory debt. The subbie can then either sue for the debt in court or apply for adjudication.

Once the debt has crystallised the head contractor cannot raise defences about quality, value or set off in court. The only path left is to challenge the validity of the payment claim itself, which is a narrow argument. For subbies this is the fastest route from unpaid invoice to enforceable judgment in Australian construction law.

What goes in a valid payment schedule

A schedule needs four elements to do its job.

Identification

The schedule must identify which payment claim it responds to. Where the subbie has issued more than one claim this matters because vague references trigger validity disputes at adjudication.

Scheduled amount

The head contractor states the amount it proposes to pay. This can be the claimed amount, a lesser amount or zero. The number must be a clear figure rather than a placeholder.

Reasons for difference

If the scheduled amount is less than the claimed amount the head contractor must give reasons. Reasons can include defects, incomplete work, prior payments, retention deductions, back charges or set off rights. The reasons need to be specific enough that an adjudicator can test them.

Withholding statement

If money is being withheld under the contract for retention or to cover defects the schedule must explain the basis. Adjudicators routinely strike out withholding arguments that were not raised in the original schedule.

Practical workflow for residential head contractors

The shift in 2021 brought owner occupier residential work inside the NSW Security of Payment Act for the first time. Residential head contractors can no longer assume the regime does not apply to them. The same applies in other states once the project sits inside the relevant Act.

Set up an intake process for incoming payment claims with date stamping at the moment of receipt. Diary the 10 business day deadline immediately and treat it as immovable. Get the schedule drafted within 5 business days so there is time for review. Pre populate a schedule template with the contract reference, project details and standard withholding reasons. Track every claim and schedule in one register so nothing slips when projects run hot.

The most common cause of statutory debt liability is not bad faith. It is a payment claim that landed during leave, in someone else''s inbox or in a folder no one was watching. Operationally that is fixable. Legally a missed deadline is not.

Adjudication as the next step

If the subbie disputes the scheduled amount the next step is adjudication. The subbie lodges an application with an authorised nominating authority. An adjudicator is appointed and decides the dispute on a paper basis within tight timeframes. The decision is enforceable as a judgment and binds both parties to pay first and argue later. Court action to recover overpayments can come later but the cash flows now.