What Is Security of Payment?
Security of payment (SOP) legislation ensures that anyone who carries out construction work or supplies related goods and services has a right to receive payment and a rapid mechanism to recover it if payment is disputed or withheld. Every Australian state and territory has enacted its own SOP legislation, modelled on the principles of the NSW Building and Construction Industry Security of Payment Act 1999.
How It Works
The SOP framework creates a statutory right for builders and subcontractors to make a payment claim for work completed. The key steps are:
- Payment claim — the builder or subcontractor serves a payment claim (essentially an invoice) on the party who engaged them
- Payment schedule — the respondent must issue a payment schedule within a set timeframe, stating the amount they agree to pay and reasons for any withholding
- Adjudication — if the parties cannot agree, either party can apply for adjudication — a rapid, independent determination by an authorised nominating authority
- Enforcement — an adjudication determination can be enforced as a court judgment
The process is designed to keep cash flowing through the construction supply chain and prevent disputes from stalling projects.
State Variations
| State/Territory | Legislation | Response Time for Payment Schedule |
|---|---|---|
| QLD | Building Industry Fairness (Security of Payment) Act 2017 | 15 business days |
| NSW | Building and Construction Industry Security of Payment Act 1999 | 10 business days |
| VIC | Building and Construction Industry Security of Payment Act 2002 | 10 business days |
| WA | Building and Construction Industry (Security of Payment) Act 2021 | 15 business days |
| SA | Building and Construction Industry Security of Payment Act 2009 | 15 business days |
How It Relates to Licence Verification
SOP legislation generally applies to licensed contractors performing construction work. If you engage an unlicensed tradesperson, they may not be able to access the SOP framework to recover payment, and you lose the consumer protections that come with regulated payment processes. Using TradieVerify to verify licences ensures your project operates within the regulated framework where both parties’ payment rights are protected.