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Changes to NSW Building and Construction Industry Security of Payment Act 1999

May 12, 2014 0 Comments

NSW Security of Payment Act Changes will affect Civil Construction Head Contractors.

In NSW, the Building and Construction Industry Security of Payment Act 1999 is the key legislation that regulates all payment practices across the industry. This includes residential, commercial and civil construction activity.

The NSW Government made changes to the Act in November 2013 and those changes are now in effect as of 21 April 2014.

For detailed information set out on the NSW Government website about the changes and how they affect you click on the following link:
https://www.procurepoint.nsw.gov.au/supplying/security-payment

The changes will now apply to all contracts that are entered into from April 21 2014.

The key changes introduced are:

  • to introduce prompt or maximum payment terms for progress payments
  • a requirement that payment claims made by a head contractor include a supporting statement declaring subcontractors it has engaged, have been paid what is due and payable
  • remove the requirement that a payment claim must state that it is being made under the Act

Contractors can now be prosecuted for lying about paying subcontractors, with fines up to $22,000 or possible jail time. In addition it is also now a responsibility for a head contractor to pay retention money into a trust account that operates according to the regulations.

The standard requirement to pay subcontractors is now 30 days. This has been criticised by The Master Builders Association as being too tough on builders/head contractors because the legislation does not ensure prompt payment between clients and builders. If clients are deliberately late in paying Head Contractors then they can be caught short on funds but still be held liable for paying contractors. This could have a dramatic impact, particularly in the civil construction industry where the funds required on large projects can be extensive.

If you are a Head Contractor or Builder then take immediate action to review the legislation changes and understand how these impact on your construction business.

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