If you are a subbie, it is important you understand how payment schedules work for building contractors.
Here is the low down on payment schedules under the Building and Construction Industry Security of Payment Act (SOPA).
Because you want to get paid right?
Under the NSW Building and Construction Industry Security of Payment Act (SOPA), you can issue a builder a claim for progress payment. Your construction contract should specify the date within which you must issue a Progress Claim. This is called the reference date under the SOPA.
Once you issue a progress claim, the builder has the right to respond to you using a payment schedule.
A payment schedule, under the SOPA, is a document that should contain what the builder proposes to pay a contractor, including the reasons why payment is less than what the contractor claims to be entitled to.
So when is a payment schedule enforceable?
A payment schedule must comply with the requirements of the SOPA for it to be enforceable. With this in mind it must include:
- Details of the claim it is responding to (claim number, date)
- The amount the builder proposes to pay
- The reason why the builder is denying or withholding payment, if the amount he is proposing to pay is less than the claimed amount.
- Supporting pictures, reports and other documents that can support the builder’s reasons for denying or withholding payment.
- A payment schedule must be written and addressed to the supplier or contractor who issued a claim for payment to the builder.
- It must be issued by the builder to his supplier or contractor within the time required by the construction contract or within ten business days from the time he receives a claim for payment, whichever time expires earlier.
- When serving a payment schedule, the means of service must be allowed under the construction contract (for example by fax, email, post or hand).
What if a payment schedule is not issued?
A builder who fails to issue an enforceable payment schedule becomes liable for the amount of the contractor’s claim. The contractor can choose to collect payment either through an adjudication application under the SOPA or by filing a statement of claim with the courts.
What if I don’t not agree with the payment schedule?
A contractor who receives a payment schedule must review it to make sure it complies with the requirements of the SOPA. Here’s what to check:
– Was the payment schedule served within the time allowed by the construction contract or the SOPA?
– Does the schedule include the information required by the SOPA?
– Does the builder have valid reasons, under the contract or law, to withhold payment of the claim?
If the contractor believes the payment schedule does not comply with the SOPA or the builder does not have valid reasons for denying or withholding payment, the contractor can file an adjudication application under the SOPA.