If you’re thinking of hiring contractors to carry out some construction work for your business, it is important to consider the legislative provisions that regulate how and when you pay these workers. The Building and Construction Industry Payments Act 2004 (Qld) is state based legislation that regulates the payments for work delivered in the building and construction industry.
If you are undertaking a small or large scale building project, LawPath’s expert debt recovery lawyers can help you better understand your rights and obligations when hiring contractors.
What is the Security of Payments Act (QLD)?
In Queensland, the Building and Construction Industry Payments Act 2004 protects the rights of construction workers to receive progress payments for goods or services delivered. The Act applies to all contracts entered into on or after 1 October 2004 and covers a wide range of progress payments including single or one-off payments, final payments and milestone payments in relation to the carrying out of work and the supplying of goods and services under a contract.
Entitlement to payment
Under the Act, contractors are entitled to receive progress payments under any contract, including written or oral, or a combination of both. The Act does not apply to construction contracts for residential building work; underground construction work for the drilling or extraction of oil or natural gas; and work undertaken or supplies carried out outside of Queensland.
Progress payments are calculated on the value of work or supplies that have been carried out or delivered and the terms of the contract. Interest is payable on the unpaid amount of a progress payment and is calculated at the greater of the following:
- The rate stipulated under Section 59(3) of the Civil Proceedings Act 2011 (Qld); or
- The rate given in the contract.
Payment claims
The Act makes a distinction between ‘standard payment claims’ and ‘complex payment claims’. Complex payment claims are claims which amount to more than $750,000 (GST exclusive).
Where there is a progress payment owing for construction work and a claim has been made by the owed party, the Act specifies that payment must be made:
- On the day the payment becomes payable under the Contract if the provision is not void under the Section 16 of the Act; or
- 10 business days after a payment claim is made.
Payment schedule
A payment schedule is a notice in writing that must be served to the claimant to inform them the debtor does not intend to pay the amount claimed. The payment schedule must identify the payment amount being claimed and state reasons as to why the person proposes to pay less than the amount claimed.
If full payment for the goods or services is not made within the due date, a payment schedule must be provided to the claimant within 10 business days of the standard payment claim. For a complex payment claim, a payment schedule must be provided to the claimant:
- 15 business days after a payment claim is made if the claim was served within 90 days of the the reference date; or
- 30 business days after a payment claim is made if the claim was served more than 90 days after the reference date.
Adjudication
The Act has specific provisions for the adjudication of disputes between a claimant and a debtor. For a standard payment claim, respondent must provide an adjudication response within 10 business days of receiving notice of the application. For a complex payment claim, a respondent must provide an adjudication response within 15 business days of receiving notice of the application. Additionally in a complex payment claim, the respondent can request an extension of up to 15 business days from the adjudicator.
Breach of the Act
Under the Act, there are serious penalties for infringement and breaches of the provisions. Where a respondent is not satisfied with an adjudication decision, they can seek a final resolution through a court or tribunal.
If you have a payment dispute or are looking to hire a contractor, LawPath’s experienced debt recovery lawyers can advise you on your rights and obligations.
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