Victoria has introduced major changes to its Security of Payment laws through reforms to the Building and Construction Industry Security of Payment Act 2002 (Vic) to better protect subcontractors. These amendments represent the first stage of reform, with further changes still to come.

Late and missed payments remain a persistent issue for subcontractors, including many MEA members. In response, MEA worked alongside other construction industry associations to survey payment practices across the sector and advocate for targeted reforms with a particular focus on retention money. You can read more about our joint industry policy here.

MEA has been actively involved in the Victorian Government’s consultation process to date and welcomes its practical approach to these initial reforms. Further stages of reform are still under development, and MEA will continue to represent members’ interests as the process progresses.

Key changes under the reforms include:

• More costs can be claimed
  Items that were previously excluded can now be claimed, including variations, latent conditions and time-related costs.
• More time to make final claims
  Final payment claims can now be made up to 6 months after practical completion. The removal of “reference dates” also means subcontractors can make one payment claim per calendar month and are able to submit a payment claim after a contract has ended.
• No new excuses after the fact
  A respondent can no longer raise new reasons for non-payment during adjudication if those reasons were not included in their original payment schedule.
• Christmas shutdown pause
  SOP enforcement and adjudication timeframes will pause each year from 22 December to 10 January to reflect common industry shutdowns.
• Unfair time-bar clauses can be ignored
  If a contract requires notice within an unreasonable timeframe, or compliance was not realistically possible, that clause can be set aside so it cannot be used to block payment.
• ‘Pay when paid’ practices are tightened
  Your payment (or release of retention or security) can no longer be delayed just because someone else hasn’t been paid under a different contract. This includes release of retention at practical and final completion being contingent on completion by others.
• Clear payment deadlines
  Progress payments must be made within 20 business days of a valid payment claim (or the payment schedule deadline, if later).
• Advance notice before security is used
  Before accessing retention, bonds or bank guarantees, the other party must give at least 5 business days’ notice, explaining why, how much they intend to use, and the contract clause relied on.

The changes are expected to start from 1 September 2026 (or earlier if proclaimed) and will apply to most construction contracts including electrical work, and including many contracts already in place, with some limited exceptions.