Understanding the Building and Construction Industry (Security of Payment) Act 2021 (WA)
Protecting the Right to Be Paid in the WA Construction Industry
The Building and Construction Industry (Security of Payment) Act 2021 (WA) is designed to ensure that contractors, subcontractors, and suppliers in Western Australia’s building and construction industry are paid on time and can resolve payment disputes quickly.
Whether you’re a head contractor, subcontractor, supplier, or developer, it’s important to understand your rights and obligations under this legislation — and how it may apply to your contracts.
What Is the Purpose of the Legislation?
This legislation was introduced to improve cash flow in the construction industry by providing a clear and fast process for recovering payments. It does so by:
- Establishing a statutory right to make a payment claim;
- Imposing strict time limits for payment responses;
- Allowing for adjudication of disputes outside the court system; and
- Discouraging the use of “pay-when-paid” clauses and unfair contract terms.
Ultimately, the Act aims to provide certainty, reduce the power imbalance between large contractors and smaller subcontractors, and maintain financial stability in the construction supply chain.
How the Process Works – In General Terms
- Making a Payment Claim
A contractor or supplier who has carried out construction work or supplied related goods or services can issue a payment claim. This can be done monthly or as otherwise agreed in the contract. - Responding to a Payment Claim
The recipient of a payment claim must respond with a payment schedule within 15 business days (or earlier if specified in the contract). If they don’t, they may become liable to pay the full claimed amount — even if they dispute it. - Adjudication
If there is a dispute, the claimant can apply for adjudication — a fast and informal process designed to resolve payment issues quickly. An adjudicator will usually issue a determination within 10 business days of accepting the application. - Enforcement
Adjudicated amounts can be enforced through the courts if they are not paid, and in some cases, the claimant can suspend work until payment is made.
Key Timeframes to Be Aware Of
- 15 business days: The usual deadline for a payment schedule in response to a claim.
- 20 business days: Time limit for applying for adjudication if no payment schedule is received.
- 10 business days: Typical timeframe for an adjudicator to issue a decision.
Strict compliance with timeframes is crucial. Missing a deadline can affect your ability to recover payment or defend against a claim.
Who Does the Act Apply To?
The Act applies broadly across the construction industry in Western Australia, including:
- Builders
- Subcontractors
- Suppliers
- Consultants (e.g., engineers, architects)
- Developers (in some cases)
It covers most types of construction work and related goods and services — from residential builds to major commercial infrastructure.
Why Seek Legal Advice?
While the Act provides a powerful framework to recover payments quickly, it also imposes strict obligations. Getting legal advice early can:
- Help ensure your contracts comply with the Act;
- Assist in preparing or responding to a payment claim or adjudication;
- Avoid costly disputes or payment delays;
- Provide you with a clear strategy to protect your cash flow.
At Douglas Lawyers we have experience advising builders, subcontractors, and property developers on all aspects of the Security of Payment Act. Whether you’re issuing a claim, responding to one, or involved in a dispute, our construction law team can help.