The most significant overhaul of Victoria’s security of payment regime in two decades commenced in April. It reaches backwards into contracts signed years ago, and most of what it changed works in favour of the party trying to get paid.
Most legislative change gives you a runway. You sign contracts under the old rules, the new rules start on a date, and the jobs you already have run out their life under the terms you agreed.
Victoria did not do that.
The amendments to the Building and Construction Industry Security of Payment Act commenced on 15 April 2026, and they apply to construction contracts entered into before that date. The contract sitting in your filing cabinet from 2024 is now governed by rules that did not exist when you signed it.
A second round of amendments then commenced on 24 June 2026. Those ones are housekeeping rather than substance, but they mean the version of the Act you want to be reading is the one authorised as at 24 June 2026, not the April one.
If you build in Victoria, this changed your position on every live job. If you build elsewhere, it is worth understanding anyway, and the last section explains why.
What is security of payment legislation?
Security of payment legislation gives anyone who carries out construction work a statutory right to make progress claims and to have a payment dispute decided quickly by an adjudicator rather than a court. Every Australian state and territory has a version. The point is speed: the money moves down the contracting chain while the underlying argument continues, rather than everyone waiting years for a judgment. It operates regardless of what your contract says, and you cannot contract out of it.
Excluded amounts are gone
This is the big one, and it is the reason the Victorian regime was so much weaker than everywhere else.
Victoria was the only Australian jurisdiction that carved a broad set of claims out of its security of payment scheme. Under the old rules, you could not put through a claim for most variations, for delay damages, for time-related costs, for latent conditions, or for changes in regulatory requirements. They were “excluded amounts”.
Think about what that removed. Those categories are where most construction payment disputes actually live. A regime that excluded them was of limited use for the disputes people were having, which is exactly why the Victorian Act saw so little use compared with New South Wales or Queensland.
The excluded amounts regime has been repealed, along with the related concept of claimable variations. A progress claim can now generally cover any construction work under the contract and associated costs. Anyone who has been treating a variation dispute as something to argue about later, on the basis that the Act could not help, is working from an assumption that no longer holds. What changes in practice still turns on what your contract says about variations.
One consequence cuts the other way, and it is worth knowing. Because the excluded amounts regime is gone, owners can now set off liquidated damages against payment claims where the contract allows it. The door opened in both directions.
Reference dates are gone too
Under the old rules, a payment claim needed a reference date to arise under the contract before you could serve it. That created a technical trap: serve early, and the claim could be invalid regardless of whether the work was done.
Reference dates have been replaced with a monthly entitlement. You can serve a payment claim on and from the last day of each month in which you carried out work, or earlier if your contract allows it.
December works differently. Work carried out between 1 and 21 December can be claimed from 22 December. Work carried out between 22 and 31 December cannot be claimed until 31 January the following year.
There is also a safety net that did not exist before. If you serve a claim too early, it is no longer invalid. It is treated as served on the earliest day it could have been, and the clock for the payment schedule starts then. Under the old reference date regime, serving early could sink the claim entirely.
The window to claim also stretched. A payment claim can now be served up to the latest of the date your contract specifies, six months after practical completion of all construction work, or six months after the supply of all related goods and services. That is up from three months. Claims that would have expired under the old timeframe may have become available again.
The Act now also defines practical completion, which it did not before. Where the contract sets a day, that is the day. Where it does not, it is the day the work is complete and there are no omissions or defects that materially prevent the intended use.
Why 20 business days matters
Victoria now has a statutory cap on payment terms for the first time. It is a common feature in other states and it is new here.
| Before 15 April 2026 | From 15 April 2026 | |
|---|---|---|
| Claimable amounts | Variations, delay damages, time-related costs largely excluded | Generally any construction work and associated costs |
| Payment claim trigger | Required a contractual reference date | Monthly entitlement, no reference date needed |
| Time to claim after PC | 3 months | 6 months |
| Maximum payment term | Whatever the contract said | Capped at 20 business days |
| New reasons at adjudication | Could be raised in the response | Limited to reasons in the payment schedule |
| Unfair time bars | No mechanism | Can be declared of no effect |
| Business days | Included the Christmas shutdown | Excludes 22 December to 10 January |
Summary of key changes under the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025, commenced 15 April 2026. Source: Victorian Building Authority.
Any clause purporting to extend payment beyond 20 business days after service of a claim has no effect. And where a contract says nothing about when a progress payment is due, the default is now 10 business days. For anyone who has watched cash flow between progress claims get stretched by payment terms written to suit the party at the top of the chain, that is a structural change rather than a technical one.
The contract sitting in your filing cabinet from 2024 is now governed by rules that did not exist when you signed it.
The claim you can now make
The genuinely new machinery in this reform is around performance security, which is the part most coverage has skipped.
What is a performance security?
The Act defines it as a performance bond or retention money. A performance bond is a security issued in favour of a party to secure another party’s performance, and the definition expressly includes a guarantee and a bond. So a bank guarantee is captured, and so is the retention held out of your progress payments. In plain terms it is your money or your credit, sitting in someone else’s control.
Victoria has created a statutory entitlement to claim the release of a performance security, with its own claim and adjudication process that runs in parallel to the payment claim process. Previously, getting your bank guarantee back was a contractual argument. Now there is a statutory route.
Alongside it, anyone wanting to call on your security must serve a notice of intention and then wait at least five business days, or longer if the contract provides for a longer period. That notice has to identify the contract, the provisions relied on, the amount if it is a partial call, and the circumstances said to justify it. The Act deems those requirements into every construction contract, so a clause purporting to override them does not work.
That notice period is the difference between finding out your guarantee has been drawn and having a window to do something about it.
There is also a statutory definition of the defects liability period, running from practical completion to the completion of any required rectification, and interest may be payable on a performance security that is not released by the due date.
These provisions reach existing contracts and the security already held under them. If someone is holding a bank guarantee on a job you signed in 2023, this applies. Like a payment claim that goes unanswered, a security release claim now has a defined process with defined consequences for ignoring it.
If you are the one paying
Everything above is written from the position of the party claiming. Most builders are on both sides of this, and the obligations flowing the other way are sharper than they look.
The change with the most teeth is that you can no longer raise new reasons for withholding payment at adjudication. Whatever reason you have for not paying must be set out in the payment schedule you serve in response to the claim. If it is not in the schedule, you cannot rely on it later.
Victoria previously allowed new reasons to be introduced in an adjudication response, which was a uniquely Victorian latitude. It is gone. A payment schedule written in a hurry is now the whole of your case.
The same logic applies to the subbies working under you. They have the same expanded claim rights against you that you have against the party above you, and the same 20 business day cap applies to what you owe them.
One more. Notice-based time bar clauses can now be declared unfair by an adjudicator, court, arbitrator or expert determiner, if compliance was not reasonably possible or would have been unreasonably onerous.
Two limits are worth understanding before anyone treats this as a general escape hatch. The party alleging a time bar is unfair carries the onus of proving it. And a declaration only kills the clause for the particular entitlement in that proceeding. It keeps working everywhere else in the contract.
The Act also lists what the decision maker must weigh, and the list is not soft on contractors. It includes when you would reasonably have become aware of the deadline, the relative bargaining power of the parties, that both parties are taken to have read and understood the contract, and that the party giving notice has the commercial and technical competence of a reasonably competent contractor.
The national direction
The reason this matters outside Victoria is that it is not an outlier. It is a state joining a pattern.
Victoria’s reforms were explicitly designed to bring it closer to the regimes operating everywhere else, and the amendments repeal changes made in 2006 that had pulled it away from the pack.
Look at what else has moved recently. Western Australia moved to a deemed trust model for subcontractor money on government projects, and Queensland has run project trust accounts for years.
Federally, the regulatory environment around late payment has tightened through the Payment Times Reporting Scheme and expanded ACCC powers.
None of these are the same mechanism. All of them point the same way: money owed down the contracting chain is getting more legal protection, and the parties holding it are getting less discretion about when to release it.
Victoria has also now legislated to keep looking. A further amendment that commenced on 24 June 2026 requires the Minister to run recurring reviews of the Act, expressly aimed at identifying emerging poor payment and contracting practices and at picking up reforms implemented in other jurisdictions. This regime is built to keep moving.
It is the same direction we noted when Victoria flipped to first-resort warranty. Regulators are arriving earlier and reaching further back.
Where the changes bite
Every builder’s position depends on their own contracts and their own circumstances, and none of the below is a substitute for advice on either. But the reform touches five things that were previously settled, and knowing which ones are in play is the starting point for a conversation with a lawyer rather than a replacement for one.
- Claims previously written off. Variations, delay damages and time-related costs sat outside the regime before April. They no longer do.
- Payment terms in existing contracts. A term allowing payment later than 20 business days after a claim is served has no effect, whatever the contract says.
- Payment schedules. A reason not set out in the schedule cannot be raised later at adjudication. The schedule now carries more weight than it used to.
- Performance security. Recourse now requires a notice of intention and a minimum five business day wait, in both directions, and those requirements are deemed into every construction contract.
- The Christmas shutdown. 22 December to 10 January are no longer business days, which changes how the timing around a December claim works.
The transitional position sits in section 54. The amendments apply to construction contracts entered into before, on or after commencement. The carve-out is narrower than people assume: the Part 3 changes do not apply to a payment claim already served under section 14, or an adjudication application already made but not determined, before 15 April 2026.
Which of those matter on any given job is a question for someone looking at the contract in front of them. The point of knowing they exist is being able to ask.
The Good Builder Take
Retrospective legislation makes people nervous, and reasonably so. But it is worth being clear about what was actually done here. Victoria had the weakest security of payment regime in the country, with a carve-out that excluded the exact disputes builders and subbies were having. Removing it brings Victoria into line with everywhere else rather than out in front.
For most builders this is a net gain, because most builders spend more time chasing money than withholding it. The variations you could not claim, you can claim. The bank guarantee you could not get back, there is now a process for. The payment term someone wrote at 45 days is void.
The obligation that came with it is real though. A payment schedule now carries reasons that cannot be added to later, which raises the cost of writing one in a hurry. That is a lighter burden on a builder who documents properly than on one who does not, and it is the same pattern running through licensing and compliance across Australia right now. The rules keep rewarding the operators with their paperwork in order.
None of which tells you where you stand on your own jobs. That depends on your contracts, and it is worth the hour with someone who can read them.
Frequently asked questions
15 April 2026. The Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 was proclaimed to commence on that date. The legislation had a backstop date of 1 September 2026, but the Victorian Government commenced it early. Some published commentary still refers to the September date.
Yes. The amendments apply to construction contracts entered into before they commenced, including performance security already held under those contracts. The exceptions are payment claims served before 15 April 2026 and adjudication applications made but not determined as at that date, which are generally dealt with under the previous rules.
20 business days after service of a payment claim or performance security claim. Any contract clause that purports to allow payment beyond that period has no effect. Where a contract does not expressly say when a progress payment is due, the default is 10 business days after the earliest day the claim could be served. This is a first for Victoria and brings it into line with states such as New South Wales and Queensland.
Generally yes. The excluded amounts and claimable variations regimes have been repealed. A progress payment can now generally be claimed for any construction work under the contract and associated costs, including categories such as variations, delay damages, time-related costs and latent conditions that were previously excluded. Your specific entitlement still depends on your contract and circumstances.
A notice-based time bar is a contract clause requiring you to give notice within a set period or lose an entitlement. Under the Victorian changes, an adjudicator, court, arbitrator or expert determiner can declare such a provision unfair if compliance was not reasonably possible or would have been unreasonably onerous. The party alleging unfairness carries the onus of proving it, and a declaration only affects the particular entitlement in that proceeding. The clause continues to operate in other circumstances under the contract.
Version 015, the authorised version incorporating amendments as at 24 June 2026. The 15 April 2026 version, 014, is superseded. A further amending Act commenced on 24 June 2026 making procedural corrections, adding statutory immunity for authorised nominating authorities acting in good faith, and requiring recurring ministerial reviews of the Act. Some third party legislation mirrors still display the repealed excluded amounts provisions, so it is worth working from the authorised version on legislation.vic.gov.au.
For more on getting paid and staying paid in Australian construction, listen to The Good Builder Podcast on Spotify and Apple Podcasts.
Related reading: licensing and compliance across Australia.
Last updated: 23 July 2026. Primary source: Building and Construction Industry Security of Payment Act 2002 (Vic), Authorised Version No. 015, incorporating amendments as at 24 June 2026, legislation.vic.gov.au. Amending Acts: Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (No. 43/2025), commenced 15 April 2026 per Special Gazette No. 189, 14 April 2026; Building Legislation and Treasury Legislation (Tax Relief) Amendment Act 2026 (No. 22/2026), ss 77 to 81 commenced 24 June 2026. Also referenced: Victorian Building Authority, Changes to the SOP Act, published 14 April 2026.
This article is intended for general information purposes only and does not constitute legal, financial, or professional advice. Laws, regulations, and industry requirements vary by state and territory and change over time. Builders and trades professionals should seek independent advice relevant to their specific circumstances before making business, legal, or financial decisions.
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