Payments in the building industry
The building and construction industry has legal obligations and processes to follow to protect the payments of contractors.
The Building Industry Fairness (Security of Payment) Act 2017 was passed to ensure everyone gets paid for the work they do.
The Queensland Government will soon further strengthen and expand its safeguard 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.
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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.
Project bank accounts
For certain building projects, payments may need to be made using a project bank account.
A project bank account (PBA) is a set of 3 trust accounts where funds are held in trust for head contractors and subcontractors until payments are due.
These accounts secure progress payments, disputed funds and retention funds until they're paid to the entitled contractor.
Head contractors must determine whether they need 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.
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.
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 one. Read more about the various dispute resolution options.
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.
The QBCC has powers to uphold compliance, and protect consumers and licensees who do the right thing.
Read about the QBCC's 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.
- creating one Act to support these reforms – the Building Industry Fairness (Security of Payment) Act 2017
- expanding QBCC's powers under the Queensland Building and Construction Commission Act 1991.
The majority of these changes have been implemented and only a small number remain subject to commencement. This includes the extended application of the PBA framework, which is being revised via the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Bill 2020.
Read more about the reforms and the time frames for their implementation.
- Last reviewed: 29 May 2020
- Last updated: 1 Jun 2020