How to Get Paid in the Construction Industry

Summarise with: ChatGPT Perplexity Microsoft Copilot

---

Table of Contents

• Building Contracts and the Law
• What are Your Options for Getting Paid?
• Option 1: Payment Claims
• Option 2: Adjudication Applications
• Key Takeaways
• Frequently Asked Questions

One of the biggest challenges within the construction industry is how to get paid. It can be a significant challenge if the other party delays payment or refuses to pay at all. If you are a head contractor, sub-contractor, supplier or consultant for construction work, this article will help you navigate payment claims and the adjudication process in New South Wales.

Building Contracts and the Law

The Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act’) is the law that regulates payment claims and adjudication claims for construction work and related goods and services in NSW. The contract itself can be verbal, written or a mixture of both. It does not have to state that it uses NSW law. However, it does have to relate to construction work occurring within NSW or the supply of goods and services for construction work in NSW.

At the outset, it is essential to indicate what construction contracts the Act does not cover. It does not cover:

1. construction contracts forming part of loan agreements with recognised financial institutions (this includes lending, guarantees and indemnities); and
2. contracts where the payment is for something other than the value of construction work or the supply of construction goods.

What falls into the ‘related goods or services’ category is also very broad. It includes:

• the hire or sale of plants and materials;
• labour;
• surveying;
• engineering;
• architectural;
• interior;
• landscaping; and
• building design work.

What are Your Options for Getting Paid?

You have two legal options for getting paid in the construction industry. The first is to make a payment claim. Alternatively, the Act also provides for an adjudication process. Here, the Minister appoints bodies known as Authorised Nominating Authorities (‘ANA’). These bodies then appoint adjudicators to hear and determine applications under the Act, should a payment claim fail.

Option 1: Payment Claims

Making the Payment Claim

Your contract will specify the date you can claim payment, known as the reference date. Your payment claim can only be made on or after this date. The Act states that you can make a payment claim from the last day of the month in which you carried out the construction work (or the related goods and services were first supplied). Unless the contract expressly allows you to make multiple payment claims for work completed in a particular month, or provides for a specified period when payment claims can be made, then you are limited to one payment claim for work completed in that month.

You will need to make the payment claim in writing and serve this on the person who owes you (the respondent). The contract will specify who the respondent is. Each payment claim you serve on the respondent can only be for a separate reference date, and you must make it within 12 months of when you did the work.

Your payment claim should also detail the following:

• what work was carried out; 
• the amount the respondent owes you; 
• the reference date; and 
• that you are making a payment claim under the Act.

Awaiting the Response

The respondent must serve a payment schedule to you within 10 business days of receiving your payment claim. The contract may specify a shorter period. If the respondent does not provide you with a schedule, they must pay the full amount claimed.

Additionally, the payment schedule must include:

• the amount the respondent proposes to pay;
• a reference to the payment claim; and
• an explanation if the respondent is paying less than the amount claimed.

The Act also sets out timelines for when progress payments become due. These deadlines depend on circumstances such as:

• if the respondent is a principal, they have 15 business days after service of the payment claim;
• if the respondent is a head contractor, they have 20 business days after service of the payment claim;
• if the contract is silent on the date for payment, the respondent has 10 business days after service of the payment claim; or
• a shorter period as disclosed in the contract.

Option 2: Adjudication Applications

Making the Application

If the respondent provides you with a payment schedule which you do not necessarily agree with, you can apply for adjudication in two circumstances:

1. if the respondent pays less than the claimed amount, 10 business days after receiving the payment schedule; or
2. if the respondent has failed to pay all or part of payment schedule, 20 business days after the due date for payment.

Where the respondent does not provide you with a payment schedule, you can still apply for adjudication. In this case, you should:

1. serve a notice to the respondent indicating that you intend to apply for adjudication. You should do this 20 business days after the due date for payment;
2. allow 5 business days for the respondent to respond; and
3. make your application within 10 business days following this 5 day period.

Your application to the ANA must:

• be in writing;
• identify the claim;
• include any payment schedules;
• include any submissions (if any); and
• provide the fee that the ANA requires.

Lastly, you must also serve a copy of this application to the other side.

Post Adjudication

If the other side fails to pay the adjudication amount within five business days of the respondent receiving the determination, you can request an Adjudication Certificate from the ANA. Next, you can file the Adjudication Certificate in court to obtain a judgement debt. Finally, you can use this judgement debt to obtain civil remedies to attempt to recover the debt.

How to Recover Unpaid Invoices

Whether you’re a small business owner or the Chief Financial Officer of an ASX-listed company, one fact remains: your customers need to pay you.

This manual aims to help business owners, financial controllers and credit managers best manage and recover their debt.

Download Now

Key Takeaways

Ensuring you get paid for construction work can be stressful if the other party delays or refuses to pay you. In New South Wales, the Building and Construction Industry Security of Payment Act 1999 allows you to recover payment for construction work and provides catch-all sections for situations your contract does not cover. To take advantage of the Act, you must comply with time limits and keep accurate records of your work and payment claims. 

For assistance with your construction dispute, our experienced construction and building lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions