Show me the money: Understanding the NSW Security of Payment Laws

If you work in construction in New South Wales – whether you are a subcontractor, a small builder, or a head contractor – you have probably had to chase payment at some point.

The good news is the law is on your side. The Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) is designed to make sure you get paid (and paid quickly) for the work you have done.

What does the SOP Act do?

In short, it gives you:

• the right to make a payment claim for work or materials you have supplied;
• a strict timeframe for when the other party must respond;
• a fast-track adjudication process if the other party do not pay up; and
• expeditious enforcement procedures.

How it works, in simple terms…

1. Send a payment claim:
   • This is an invoice (or the like) that meets the rules of the SOP Act. It must clearly say it is made under the SOP Act.
   • Include the amount you are claiming, and details of the work done or goods supplied.
2. Wait for a payment schedule:
   • The other party has 10 business days (or less if your contract says so) to respond with a payment schedule – this says how much they will pay and why they are holding back any part.
3. If they do not respond or pay:
   • You can apply for adjudication – a quick, low-cost dispute process where an independent adjudicator decides what you are owed.
   • This can be done in weeks, not months or years like court.
4. Enforce the decision:
   • If the adjudicator says you are owed money and the other party still do not pay, you can obtain a court judgment and take enforcement steps.

    

   Common mistakes that will cost you

   • Not including the ‘magic words’ in your payment claim – “This is a payment claim made under the NSW Building and Construction Industry Security of Payment Act 1999”.
   • Not acting fast when you get an underpayment or no payment schedule.
   • Thinking it’s “too small to bother” – the SOP Act can apply to small amounts too.

    

   How Project Lawyers can help

   We regularly help head contractors, subcontractors, and suppliers:

   • prepare compliant payment claims;
   • respond to payment schedules; and
   • run (and defend) adjudication applications.

    

   We been successful in many adjudications and have a track record in obtaining excellent outcomes for our clients.

   The construction industry runs on tight margins – do not let unpaid claims or invoices crush your business. The SOP Act is there to be used, and when used properly, it works.

   If you have any questions, please feel free to contact Maysaa Parrino or Matt Armota via email (maysaa@projectlawyers.com.au / matt@projectlawyers.com.au) or via telephone on (02) 9025 0808.

    

   The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

   Liability limited by a scheme approved under Professional Standards Legislation.

    

   Author: Maysaa Parrino & Matt Armota