Executive Summary

On 11 September 2025, the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 (the Bill) was released and read for a second time in Victoria’s Legislative Assembly.¹

The Bill introduces sweeping changes to the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act) that aims to:

• modernise the SOP Act to streamline the process of making claims and adjudication; and
• better align Victoria’s regime with the security of payment legislation in other Australian jurisdictions.

Background

In November 2023, Victoria’s Legislative Assembly’s Environment and Planning Committee (Committee) conducted a parliamentary inquiry into the non-payment of subcontractors. Following the inquiry, the Committee released its report on 28 November 2023 (Report) making 28 recommendations to reform and improve the SOP Act.²

On 17 October 2024, the Victorian Government responded to the Report and formally indicated its support for the 28 recommendations.³ Of the 28 recommendations, the Victorian Government supported 16 in full and 12 in principle.

The Bill proposes to implement the first tranche of amendments to the SOP Act, being the 16 recommendations that were supported in full by the Victorian Government, including:

• repealing Victoria’s unique ‘excluded amounts‘ regime;
• repealing the concept of ‘reference dates‘;
• prohibiting ‘new reasons‘ for withholding payment not included in a payment schedule;
• extending the time for an adjudicator to make a determination; and
• amending the concept of business day to exclude the Christmas shutdown period.

Summary of key amendments

Removal of ‘excluded amount’ and ‘claimable variations’ regime

The Bill proposes to remove the concepts of ‘excluded amounts‘ and ‘claimable variations‘ by repealing sections 10A and 10B of the SOP Act. This will allow a claimant to include in its progress claims amounts which are currently “excluded“, including amounts related to latent conditions, time-related costs, changes in regulatory requirements and certain non-claimable variations. This change broadens the scope of what is claimable under the SOP Act and reduces the complexity of the adjudication process. It also aligns Victoria with other Australian jurisdictions.

Removal of the concept of ‘reference dates’

The issue of identifying the correct reference date is one of the most litigated issues in adjudications under the SOP Act.⁴

The Bill proposes to remove the concept of ‘reference dates‘ for the purposes of calculating when a payment claim must be made. This will be replaced with a right for a claimant to make one payment claim on and from the last day of the month in which work was first carried out, and each subsequent month in which further work is carried out or an earlier date specified in the contract.⁵

A new section 14A provides that a payment claim submitted early is not invalid. Instead, it is treated as being served on the earliest day for service of a payment claim, being on and from the last day of each named month in which work is carried out.

Moreover, the Bill makes clear that a claimant’s entitlement to serve a payment claim is not affected by termination or purported termination.

Power to nullify unfair notice-based time bars

Modelled after the WA equivalent of the SOP Act, the Bill inserts a new section 13A which empowers a decision maker (adjudicator, a court, an arbitrator or expert determiner) to declare a notice-based time bar clause ‘unfair’ if it considers that compliance would be unreasonably onerous or not reasonably possible.

A notice-based time bar provision that is declared to be unfair will be nullified and have no effect in relation to the payment claim that is the subject of the adjudication or proceeding. However, it is noted that the relevant clause will still have effect in other circumstances arising under the same or related contract.

New reasons prohibited

The Bill proposes to prohibit respondents from raising new reasons for withholding payment that were not identified in their original payment schedule. This will mean any reasons not included in a payment schedule cannot later be raised by the respondent or considered by an adjudicator during the adjudication process.

Performance security

The Bill will make it clear that the release of performance security (including retention money, performance bonds, or guarantees) can be claimed and adjudicated under the SOP Act.

The Bill also seeks to introduce a 5-business day written notice period in all construction contracts prior to a party being entitled to have recourse to the whole or a part of a performance security.

Christmas shutdown period

The definition of ‘Business Day‘ will be amended to exclude the period from 22 December to 10 January. This recognises that the construction industry traditionally shuts down over the Christmas period and will prevent respondents from being “ambushed” with adjudication applications lodged immediately before Christmas.

Other major recommendations to be implemented

The Bill will also seek to implement the other recommendations including:

• extending the time limit on claiming payment from three to six months; and
• imposing a maximum time limit on payment terms of no more than 25 business days after the payment claim has been made.

Implications

There is currently no proclaimed date, however we expect its provisions will take effect no later than 1 September 2026 and will apply to all construction contracts entered into before, on, or after the commencement date.

These changes significantly broaden the scope of the SOP Act, establishing a more claimant-friendly regime. We can expect that the changes will likely lead to more adjudication applications being made and a reduction of adjudication applications being rejected on technical legal grounds.

This article was written by Paul Graham, Partner, Fin Neaves, Senior Associate, and Joseph Li, Solicitor.

¹ Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025.

² Legislative Assembly Environment and Planning Committee, Employers and contractors who refuse to pay their subcontractors for completed works (Report, November 2023).

³ The Victorian Government, Government’s response to Parliamentary inquiry into non-payment of subcontractors (Report, October 2024) <gov-response-subcontractors-inquiry.pdf>.

⁴ Ibid, page 13.

⁵ To account for the Christmas shutdown period, a claimant will be entitled to make a claim for works carried out between 1 and 21 December on and from 22 December. Claims for works carried out from 22 to 31 December are to be claimed on and from 31 January in the following year.