Security of payment in Victoria: what the 2025 rewrite changed

For twenty years, Victoria's security of payment act was the odd one out. It had excluded amounts — categories of claim, chiefly certain variations and damages, that an adjudicator was forbidden to consider. Victorian adjudications turned on what could be argued rather than on who was right, and advisers in other states treated Victoria as a special case — the shape of the other seven regimes is in eight jurisdictions, eight sets of deadlines.

Act No. 43 of 2025 removed that, and a good deal else. Version 015 of the Building and Construction Industry Security of Payment Act 2002, in force from 24 June 2026, is a materially different statute. This article walks through what a business that invoices in Victoria has to do differently.

Excluded amounts are repealed

The Act's own annotations record it plainly:

"S. 4(1) def. of excluded amount inserted by No. 42/2006 s. 5(a), repealed by No. 43/2025 s. 5(2)."

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"Ss 10A, 10B inserted by No. 42/2006 s. 11, repealed by No. 43/2025 s. 9."

Section 10B was the operative provision — the one that listed what an adjudicator had to ignore. It is gone, together with the definition that fed it and the "claimable variations" machinery in s 10A.

If you have a template payment claim or payment schedule that carves out or flags excluded amounts, it is now describing law that does not exist.

No contract may set a due date past 20 business days

Section 12(1) still lets the contract set the due date, or supplies 10 business days after the earliest day a claim could have been served if the contract is silent. What is new is subsection (1B):

"A term or provision in a construction contract has no effect to the extent that it provides for the payment of a progress payment or the release of a performance security later than the day that is 20 business days after — (a) a payment claim is served under Division 1 of Part 3 in relation to the progress payment; or (b) a performance security claim is served under Division 1A of Part 3 in relation to the performance security."

Two consequences follow immediately.

Your existing subcontracts may be partly void. Thirty-day, forty-five-day and end-of-month-plus-thirty terms are common in Victorian subcontracts. To the extent they push past 20 business days from service, they have no effect.

Retention and bank guarantees are inside the same cap. Paragraph (b) applies the twenty-business-day ceiling to the release of a performance security. That is new, and it connects to Division 1A below. New South Wales reached a similar ceiling years earlier, though only over the progress payment itself and not over retention — see 20 business days, 10 to answer.

Payment claims now have a statutory calendar

Section 14 used to carry the timing rules. Section 15(4) of Act No. 43/2025 repealed subsections 14(4) to (9), and sections 14A to 14D took their place.

Section 14A — earliest service. A payment claim may be served "on and from the last day of the named month in which the construction work was first carried out under a construction contract" and each subsequent named month in which further work is carried out, with a parallel rule for related goods or services.

The two December rules, in s 14A(2), are unique to Victoria:

"(a) in the period starting on 1 December and ending on 21 December in any year, the payment claim may be served on a person on and from 22 December of that year; or (b) in the period starting on 22 December and ending on 31 December in any year, the payment claim may be served on a person on and from 31 January in the following year."

So December work does not wait for 31 December. Work up to the 21st can be claimed from the 22nd — before the industry shutdown, not after it.

Early service is no longer fatal. Section 14A(5):

"If a claimant serves a payment claim on a person before the earliest day that a payment claim may be served under this section (the earliest day) — (a) the payment claim is not invalid; and (b) the payment claim is taken to be served on the earliest day; and (c) the time within which the person may serve a payment schedule on the claimant does not commence until the earliest day."

That single subsection removes one of the most common technical knockouts in Australian security of payment practice.

Termination does not end the right. Section 14A(6): "The claimant's entitlement to serve a payment claim on a person is not affected by the termination, purported termination or expiry of the construction contract."

Section 14B — what a contract may not do. A provision has no effect to the extent it "provides that the earliest day for service of a payment claim in respect of any type of progress payment must be on a day that is later than the last day of each named month", or "provides that a payment claim for a milestone payment … must be served less frequently than once a month." The only permitted exception, in s 14B(2), is that 31 January date for 22–31 December work.

Section 14C — latest service. No later than the day before the latest of: the contractual date; six months after practical completion of all construction work; and six months after the supply of all related goods and services.

Section 14D — frequency. One claim per named month unless the contract allows more, but you may still combine progress payments in one claim, re-include an unpaid amount from an earlier claim, or claim this month for last month's work.

Payment schedules: ten business days, and silence still costs everything

Section 15(4) is unchanged in substance:

"If — (a) a claimant serves a payment claim on a respondent; and (b) the respondent does not serve a payment schedule on the claimant — (i) within the time required by the relevant construction contract; or (ii) within 10 business days after the payment claim is served; whichever time expires earlier — the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates."

Section 16 then gives the claimant the debt claim, the adjudication route, and the right to serve notice of intention to suspend — and in Victoria that notice must now "be in the prescribed form (if any)" following the 2025 amendment to s 16(2)(b).

Division 1A: claiming your bank guarantee back

This is the genuinely new instrument, inserted by s 20 of Act No. 43/2025.

Section 17A lets a person entitled to the release of a performance security serve a claim on whoever is liable to release it. The claim must identify the work, "specify the type and amount of performance security claimed", state that it is made under this Act, and be in the prescribed form if there is one. Section 17A(3) makes the right survive termination or expiry of the contract.

Section 17B sets the earliest day: the earlier of "a day that is at least 20 business days after the end of the relevant defects liability period" and any day or event specified in the contract. As with payment claims, serving early is not fatal — the claim is taken to be served on the earliest day.

Section 17C sets the latest: the later of the contractual date and "the last day of the named month following the named month in which the last defects liability period set out in the construction contract (if any) ends."

Section 17D then protects all three: a contract provision purporting to override the right to serve a claim, or to move the earliest day earlier or the latest day later, "has no effect".

Section 17E mirrors the payment schedule. A performance security schedule must identify the security, identify the amount proposed to be released if different, indicate when the respondent proposes to release it, and give reasons if less is proposed. And s 17E(4): failing to serve one within the earlier of the contract period and 10 business days makes the respondent liable to release the claimed amount on the due date.

Section 17F gives the claimant a court order or an adjudication under s 18A.

For a subcontractor, this is the first Australian mechanism that treats an unreturned bank guarantee the same way the law treats an unpaid invoice. Retention that has been "under review" since the defects liability period ended is now a claim with a ten-business-day clock on the other side. Queensland reaches a related protection by a different road — cash retention held in a statutory trust rather than a claimable performance security — set out in 15 business days to answer.

Pay when paid, unchanged

Section 13(1) still provides that a pay when paid provision "has no effect in relation to any payment for — (a) construction work carried out or undertaken to be carried out under the contract; or (b) related goods and services supplied or undertaken to be supplied under the contract."

Before any of it: registration

Victoria attaches a hard consequence to unregistered domestic work, and it sits in two Acts.

Building Act 1993, s 169F(1): "A person must not carry out domestic building work under a major domestic building contract unless the person is a registered builder or a licensed building employee." Penalty: 500 penalty units for a natural person, 2,500 for a body corporate. Subsection (2) preserves the position of employees and subcontractors of a registered builder.

Domestic Building Contracts Act 1995, s 29(1) prohibits entering into a major domestic building contract unless registered and authorised — and s 29(3) removes the money:

"A person who enters into a major domestic building contract in contravention of this section is not entitled to consideration under the contract unless the amount claimed — (a) is not more than the amount of the costs reasonably incurred by the person in supplying materials and labour for carrying out work under the contract; and (b) does not include — (i) an amount for the supply of the person's own labour; or (ii) an amount of profit …"

Section 29(4) goes further: the client "may recover from another person in a court of competent jurisdiction, as a debt due to the person, any amount the person paid to the other person in respect of anything the other person did in contravention" of the section.

A "major domestic building contract" is one where the amount the builder will receive is more than the amount fixed by regulations. Regulation 6 of the Domestic Building Contracts Regulations 2017 fixes it: "an amount of $10 000".

What to do this month if you invoice in Victoria

1. Read your Victorian subcontract payment terms against s 12(1B). Anything past 20 business days from service is text without effect.
2. Delete excluded-amount wording from claim and schedule templates.
3. Put the December rules in the calendar now: claim 1–21 December work from 22 December; claim 22–31 December work from 31 January.
4. List your outstanding bank guarantees and cash retention, find the defects liability period end dates, and diarise 20 business days after each. From that day you can serve a performance security claim, and they have ten business days to answer it.
5. Keep the naming line on the claim. Sections 14 and 17A both require the claim to state that it is made under this Act.

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Checked on 29 August 2026 against version 015 of the Act, in force 24 June 2026, on the Victorian legislation register, and against version 149 of the Building Act 1993, version 094 of the Domestic Building Contracts Act 1995 and version 004 of the Domestic Building Contracts Regulations 2017. Several of the new provisions refer to a "prescribed form (if any)"; check the current regulations before relying on a template. This is a description of the legislation, not legal advice.

What Zirko does: it records when a document was created and sent, and keeps quotes, invoices and time against a project. What Zirko does not do: it does not produce Victorian payment claims, payment schedules or performance security claims in any prescribed form, and it does not calculate statutory due dates.