Security of payment in New South Wales

Who can serve a payment claim in NSW?

Anyone who has undertaken to carry out construction work, or supply related goods and services, under a construction contract (s 8(1)): subcontractors, head contractors, suppliers and consultants. Since 1 March 2021 that includes work for owner-occupiers, although those contracts are "exempt residential construction contracts" with different payment terms.

• No entitlement arises if the contract fails the Home Building Act 1989 requirements or the residential work was carried out unlicensed (s 8(2)).
• Owner-occupier contracts are covered but exempt: the statutory 15 and 20 business day payment caps do not apply, and payment is due per the contract or 10 business days by default (s 11(1C)).

When can I serve a payment claim in NSW?

Reference dates were abolished in 2019. You can serve one payment claim on and from the last day of each named month in which you carried out work (s 13(1A), (5)), earlier if the contract allows (s 13(1B)), and on termination (s 13(1C)). The outer limit is 12 months after the work was last carried out (s 13(4)).

The claim must identify the work, state the claimed amount, and state that it is made under the Act (s 13(2)(c)). The endorsement was removed in 2014 and re-imposed from 21 October 2019, so older templates without it produce invalid claims.

A head contractor claiming on the principal must attach a supporting statement declaring subcontractors have been paid (s 13(7)). Serving without one attracts penalties of up to 1,000 penalty units for a corporation, and a false statement can mean imprisonment (s 13(8)).

How long do I have to serve a payment schedule in NSW?

Ten business days after the payment claim is served, or the time your contract requires, whichever is earlier (s 14(4)). Serve nothing in time and you are liable for the full claimed amount on the due date; the claimant can then take summary judgment with no cross-claim or contract defence available (s 15(4)(b)), or adjudicate.

When is a progress payment due under the NSW Act?

It depends where you sit in the chain. A principal must pay a head contractor within 15 business days after the claim (s 11(1A)) and anyone paying a subcontractor has 20 business days (s 11(1B)), unless the contract provides earlier. Exempt residential contracts follow the contract, or 10 business days by default (s 11(1C)).

When can I apply for adjudication in NSW?

Within 10 business days after receiving a payment schedule that offers less than you claimed (s 17(3)(c)), or 20 business days after the due date if a scheduled amount is not paid (s 17(3)(d)). If no schedule arrived, notify your intention within 20 business days after the due date, allow 5 business days for a late schedule, then apply within 10 business days (ss 17(2), 17(3)(e)).

• Applications go to an authorised nominating authority chosen by the claimant (s 17(3)(b)); ANAs are authorised by the Minister (s 28).
• The adjudicator must determine the application within 10 business days of the response being lodged or falling due, extendable by agreement (s 21(3)).

What catches people out under the NSW Act?

• The endorsement is back: since 21 October 2019 every claim must state it is made under the Act (s 13(2)(c)). Templates from the 2014 to 2019 window silently fail.
• Head contractors must attach a supporting statement to claims on the principal (s 13(7)). The penalties are heavy and the obligation is easy to forget on final claims.
• Owner-occupier work has been covered since March 2021, but as an exempt residential construction contract: the 15 and 20 business day payment caps do not apply (s 11(1C)).
• A "business day" excludes 27 to 31 December (s 4), so December claims run longer than the calendar suggests.
• A 2026 bill proposes renaming business days to working days. The definition is unchanged, but watch the terminology when reading new contracts and advice.

Frequently asked questions

Primary sources

• Building and Construction Industry Security of Payment Act 1999 (NSW), legislation.nsw.gov.au
• Building and Construction Industry Security of Payment Regulation 2020 (NSW), legislation.nsw.gov.au

General information, not legal advice. Deadlines depend on your contract and the current Act, and amendments move them. Verify against the Act and your executed contract, or get advice, before relying on any date here.