Payments in the building industry

The building and construction industry must follow legal obligations and processes to protect contractor payments.

The Building Industry Fairness (Security of Payment) Act 2017 was passed to ensure everyone gets paid for the work they do.

The Queensland Government has strengthened and expanded its safeguards for subcontractor payments as a result of an evaluation conducted by the Building Industry Fairness Reforms Implementation and Evaluation Panel and the work of the Special Joint Taskforce.

Read more about industry obligations to protect payments and what actions people can take if payment is late or they don't receive it.

Email securityofpayment@hpw.qld.gov.au with queries about these requirements.

Paying contractors

Progress payments

To get paid, a contractor must submit a payment claim (which may be an invoice). This is a written request for payment for construction work or related goods and services delivered under a construction contract.

When a respondent receives the payment claim, they must either pay in full or give the contractor a payment schedule within a specific time frame.

Read more about payment claims and payment schedules.

Project bank accounts

Between 1 March 2018 to 28 February 2021, certain government building contracts required payments to be made using a project bank account (PBA).

A PBA was a set of 3 trust accounts where funds were held in trust for head contractors and subcontractors until payments were due.

Head contractors were required to determine if they needed a PBA for their building contract, based on set criteria, and then establish and operate the PBA according to strict rules.

Read more about project bank accounts.

Trust accounts

On 1 March 2021, PBAs were replaced with a new streamlined trust account framework.

The trust account framework reduces the number of trust accounts from 3 trust accounts to:

  • 1 project trust account for each eligible contract
  • 1 retention trust account per contractor to hold cash retentions for all of the contractor's project trust contracts.

The contracted party (generally the head contractor) must still determine whether a trust account for their contract is needed based on set criteria, and then establish and operate the trust account accordingly.

Read more about trust accounts and their phased commencement.

Payment disputes

Adjudication

Adjudication is a dispute resolution process to help resolve disagreements about progress payments and money owed. It's a quick, cost-effective alternative to court.

If there's a dispute about an amount owed, the contractor can make an adjudication application to the Adjudication Registrar.

The Registrar refers the application to an adjudicator to consider the disputed payment claim. The adjudicator's decision is enforceable in a court.

Read more about the adjudication process.

Subcontractors' charges

A subcontractors' charge provides a way for subcontractors to secure payment of amounts owed to them under a contract by someone higher in the contractual chain.

To claim a subcontractors' charge over money payable, the subcontractor issues a notice of claim form to the contractor and the person who engaged the contractor (the superior contractor). The contractor must then respond to the claim and the superior contractor must retain money that is, or will be, payable to the subcontractor to satisfy the claim.

Subcontractors should always seek legal advice before submitting a notice of charge.

Read more about subcontractors' charges.

Note: A subcontractor can't use both subcontractors' charges and adjudication; they must pick 1. Read more about the various dispute resolution options.

Financial reporting

Licensees must report their financial information, or continued compliance with the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 and minimum financial requirements (MFR) policy, at certain times.

Under the MFR Regulation, licensees must declare their revenue and net tangible assets every year.

These laws enable the Queensland Building and Construction Commission (QBCC) to better detect and mitigate the effect of potential insolvencies and corporate collapses. This protects everyone working in Queensland's building and construction industry.

Read more about minimum financial requirements for licensees.

The MFR Regulation introduced a range of changes to reporting requirements for licensees. Read about changes to the reporting requirements.

QBCC powers

The QBCC has powers to enforce compliance, and protect consumers and licensees who do the right thing.

Read about the QBCCs powers to regulate and protect the industry.

Changes to the legislation

The Building Industry Fairness Reforms were developed under the Queensland Building Plan 2017 to improve security of payment for subcontractors.

This included:

Contact

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General enquiries: 13 QGOV (13 74 68)