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On 11 September 2025 reforms to the Building and Construction Industry Security of Payment Act 2002 (Vic) (the SOPA Act) were detailed in the release of the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 (the Bill) Amendments to the Act have been in discussion since the 2023 inquiry undertaken by the Legislative Assembly Environment and Planning Committee which resulted in 28 recommendations. The purpose of the inquiry was to highlight the gaps in the current legislation and determine amendments to be made that promotes better compliance with the rest of Australia.
The Bill includes 16 of the 28 recommendations which are to be implemented by no later than 1 September 2026. The reforms to the Act will apply to contracts immediately following the Bill passing and will also apply to construction contracts entered into prior to the new Act; however, the date from which it will apply is yet to be set.
Effect of the Reforms to the SOPA Act
The proposed changes were first discussed in our article earlier this year, Building and Construction Industry Update: Proposed Reforms to The Security of Payment Act (Victoria), which foreshadowed the introduction of the Bill. The most significant changes which formed part of the proposed reform, which are now adopted by the Bill brings are outlined below:
Removal of "Excluded Amounts" -the types of claims that may be pursued under the Act will be broadened in scope to include those which have previously been deemed an "excluded amount". This allows contractors to pursue claims for aspects such as disputed variations which were previously disallowed.
Removal of "Reference Dates" - a payment claim can be pursued at the end of each month or earlier should it be contracted which aligns Victoria with other states across Australia. Payment claims served before the minimum timeframe may still be valid but only from the date of the earliest day for service.
Payment Timeframes - reforms to the Act will cap the timeframe in which payment must be made to 20 business days. Any contractual term contrary to this will have no effect. The mandatory time limit may impact contracts entered into prior to the Bills enactment.
Christmas shutdown period - the Bill amends the Christmas shutdown period, from 22 December to 10 January to be non-business days, meaning payment claims cannot be enforced, including by service of any adjudication application or otherwise over this period. This is to uphold principles of fairness and align with industry wide breaks.
Performance security - amendments to the bill include the statutory right to the release of performance security ten (10) business days after a performance security claim is served or as per the contract. The Bill also requires five(5) business days' notice be provided should a party wish to exercise recourse to the performance security.
Unfair Time Bars - adjudicators will now have the ability to determine is a notice-based time bar is unfair and therefore has no effect. Multiple factors can be considered in this decision with weight being given to the bargaining power of the parties.
The Steamlining Across Jurisdictions
The new reforms to the SOPA Act address long standing issues that occur within the construction industry within Victoria. The overall impact of this Bill will ensure closer alignment to uniform law across Australia regarding claims which improves consistency and efficiency across jurisdictions. The amendments brought by the Bill is substantially beneficial for contractors working across multiple states in operating under similar requirements.
By strengthening the payment system and simplifying the regulations around claims, the adjudication process becomes streamlined. This works towards creating a fairer, more accessible process for all. The uniform process for payment claims and introduction of the guidelines around performance security provide a new level of protection for contractors and subcontractors in obtaining payment. The overall impact should improve cash flow through the contractual chain.
Key Issues for The Construction Industry
All parties need to be aware of the changes and understand the legal implications these will bring to their projects.
If you have received a payment claim subject to a contract, you need to be aware of the timeframes in under which payment must be made as well as the consequences of non-compliance with the new requirements. It is important that payment claims are adequately and efficiently responded to and that contractors, superintendents, principals and otherwise are all aware of the changes.
If you are a contractor or subcontractor, these new protections aim to increase your rights to payment and fairness under the contract and reduce the ambiguity around reference dates and payment terms. You need to be aware of the new imposed requirements to determine when you may have a claim and enforce your rights.
If you need assistance navigating the changes, or updating your systems and processes please reach out to one of our experienced Building and Construction lawyers who can provide advice and guidance to you.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
