Victoria is set to align their Security of Payment laws with other jurisdictions, notably New South Wales, with the introduction of the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025. This Bill officially received Royal Assent on 13 November 2025, and the changes are effective from 1 September 2026, unless proclaimed earlier.
The reforms to the Building and Construction Industry Security of Payment Act 2002 (Vic) (‘Act’) mark a significant milestone in Victorian construction law and an aim to streamline progress payments and enhance fairness on jobsites.
Here’s a breakdown of the key changes and what they mean for you:
- Repeal of “Excluded Amounts” and “Claimable Variations” regime
Sections 10A and 10B of the Act have been repealed, removing the concepts of “excluded amounts” and “claimable variations”.
This effectively broadens the type of claims which can be referred to in Adjudication, allowing interim payment entitlements to better reflect contractual progress payment entitlements, reducing disputes over what can or cannot be claimed.
- Expansion of “Pay When Paid”
The definition of “pay when paid” provisions has been broadened to include any contractual condition making payment contingent on:
a. Liability to pay;
b. Due dates for payment;
c. Rights to claim money; and
d. Rights to claim release of performance security.
This closes loopholes that previously allowed payment delays based on related contracts.
- Time Bars and Unfair Notice Provisions
A new section 13A will be introduced into the Act, allowing notice-based time claims to be declared unfair if compliance is not “reasonably possible” or “unreasonably onerous”.
Adjudicators and Courts will consider factors such as:
a. The awareness of deadlines a party required to give notice would have reasonably had;
b. The notice requirements including when and how notice is to be given;
c. Relative bargaining power of the parties; and
d. Competence of the parties involved.
This change protects parties from rigid contractual time bars that may be unreasonable in practice.
- Removal of “Reference Dates”
The Bill replaces the concept of “reference dates” with a simpler framework:
a. Claimant’s may submit one payment claim per calendar month;
b. Payment Claims can be submitted on or after contract termination;
c. A claimant’s time for submitting Payment Claims has been expanded to expire six months after Practical Completion; and
d. Early payment claims are explicitly valid.
If a date by which a Claimant can submit a Payment Claim under a contract is longer than any of the dates provided for by the Bill, the Bill will prevail. This provides Claimants with more flexibility and certainty when submitting Payment Claims.
- Restrictions on “New Reasons” in Adjudication Response
Respondents can no longer raise new reasons for withholding payment in Adjudication Responses that were not included in the Payment Schedule.
This prevents parties from introducing new claims in Adjudication, increasing transparency and fairness.
- Recovery and Recourse of Performance Security
The Bill Introduces significant changes to the handling of performance security in section 17 of the Act, as follows:
a. Claimants may now serve a claim for the release of performance security, which must be released within 10 business days after the earliest claim date (or 20 business days after the defects liability period ends).
b. Any contract term that delays payment of release of performance security or a payment claim is void;
c. Interest may be payable if performance security is not released on time; and
d. A party who intends to have recourse to a whole or part of performance security under a contract to provide notice of intention to have recourse to the performance security at least 5 business days in advance.
Conclusion
The reforms introduced through the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 signal a decisive shift in how payment risk and contract administration will operate on Victorian projects.
Contractors, subcontractors and principals should review existing contracts and prepare for the new regime, which will affect payment claims, adjudication, time bars and performance security procedures. Early preparation will be essential to avoid disputes and maintain compliance upon the commencement of the reforms on 1 September 2026.