Payment claims and payment schedules: twenty working days

The Construction Contracts Act 2002 gives a contractor a remedy that no ordinary invoice has: if the other side does not answer your payment claim in time, they owe the whole amount, and the argument about defects and variations happens after they have paid.

The price of that remedy is precision. Section 20 lists what a payment claim must contain and what must travel with it, and a claim that misses an item is not a payment claim at all — it is an invoice, and an invoice has none of these powers. What an ordinary New Zealand invoice does have to carry is a shorter and quite separate list: Sample invoice, New Zealand: the document that stopped being a tax invoice.

Section 20(2): the six requirements

"A payment claim must — (a) be in writing; and (b) contain sufficient details to identify the construction contract to which the payment relates; and (c) identify the construction work and the relevant period to which the payment relates; and (d) state a claimed amount and the due date for payment; and (e) indicate the manner in which the payee calculated the claimed amount; and (f) state that it is made under this Act."

Four of these are the ones that get missed.

(c) the relevant period. Not just what work — which period of work. Section 17(2) supplies the default: "the period commencing on the day of the month on which construction work was first carried out under the contract and ending on the last day of that month (the first period)", then each month after. A claim that says only "works to date" does not identify a relevant period.

(d) the due date for payment. The claim itself has to state the date on which the money becomes payable. That means you must have worked it out before you send. If the contract is silent, s 18 gives you the answer: "A payment … becomes due and payable on the date occurring 20 working days after a payment claim is served under section 20 in relation to the payment."

(e) the manner of calculation. A lump sum with no working does not satisfy this. Rates times quantities, a percentage of a schedule item, a stage of a fixed price — whichever it is, the document has to show how the number was arrived at.

(f) the naming line. One sentence, and the most common single reason a claim fails.

Section 20(3): the attachments nobody sends

This is the requirement that most often separates a valid New Zealand payment claim from an Australian-style one.

"A payment claim must be accompanied by — (a) an outline of the process for responding to that claim; and (b) an explanation of the consequences of — (i) not responding to a payment claim; and (ii) not paying the claimed amount, or the scheduled amount, in full (whichever is applicable)."

And s 20(4): those matters "must — (a) be in writing; and (b) be in the prescribed form (if any)."

In practice this means every payment claim goes out with a short attached notice telling the payer how to respond and what happens if they do not. It is the same document every time. It is also the item most likely to be missing from a claim produced by general accounting software, because nothing in an ordinary invoicing workflow suggests that an invoice should come with instructions.

Section 22: twenty working days, or the contract period

"A payer becomes liable to pay the claimed amount on the due date for the payment to which the payment claim relates if — (a) a payee serves a payment claim on a payer; and (b) the payer does not provide a payment schedule to the payee within — (i) the time required by the relevant construction contract; or (ii) if the contract does not provide for the matter, 20 working days after the payment claim is served."

Note the structure: the contract's period governs if there is one. Many New Zealand subcontracts specify a shorter period than twenty working days, and it is the contractual period that then applies.

Note also what liability under s 22 is not. It is not a judgment and it is not an admission. It is a statutory liability that arises on the due date, and s 23 turns it into something enforceable.

Section 21: what the payer has to say

"(2) A payment schedule must — (a) be in writing; and (b) identify the payment claim to which it relates; and (c) state a scheduled amount. (3) If the scheduled amount is less than the claimed amount, the payment schedule must indicate — (a) the manner in which the payer calculated the scheduled amount; and (b) the payer's reason or reasons for the difference between the scheduled amount and the claimed amount; and (c) in a case where the difference is because the payer is withholding payment on any basis, the payer's reason or reasons for withholding payment."

If you are the payer, read subsection (3) as the definition of your case. Reasons you do not put in the schedule are reasons you will struggle to run later. If you are the payee, read it as your checklist: a "schedule" that states a lower number without calculation or reasons has not complied with s 21(3), and that matters when you take the next step.

Section 23: what silence buys you

"(2) The consequences are that the payee — (a) may recover from the payer, as a debt due to the payee, in any court, — (i) the unpaid portion of the claimed amount; and (ii) the actual and reasonable costs of recovery awarded against the payer by that court; and (b) may serve notice on the payer of the payee's intention to suspend the carrying out of construction work under the construction contract."

Two features are unusual and both favour the claimant.

Costs of recovery are part of the debt. Subparagraph (a)(ii) makes the actual and reasonable costs of recovery recoverable in the same proceeding, which is not the ordinary position in a debt claim.

The court's role is narrow. Section 23(4): "In any proceedings for the recovery of a debt under this section, the court must not enter judgment in favour of the payee unless it is satisfied that the circumstances referred to in subsection (1) exist." Those circumstances are that the payer became liable under s 22 and failed to pay. The merits of the underlying work are not among them.

Section 24 does the same where a payment schedule was given but the scheduled amount was not paid.

Section 24A: suspension, and the five working days first

Suspension is not immediate. Section 24A(1) requires three things:

"(a) any of the following circumstances applies: (i) a claimed amount is not paid in full by the due date … and no payment schedule has been provided …; (ii) a scheduled amount is not paid in full by the due date …; (iii) party B has not complied with an adjudicator's determination …; and (b) party A has served on party B a notice under section 23(2)(b), 24(2)(b), or 59(2)(b) …; and (c) the amount … is not paid, or the determination … is not complied with, within 5 working days after the date of that notice."

The protection once you do suspend is substantial. Section 24A(2): the suspending party "is not in breach of the construction contract", "is not liable for any loss or damage suffered by party B", "is entitled to an extension of time to complete the contract", keeps its contractual rights including any right to terminate, and "may at any time lift the suspension, even if the amount has not been paid".

One limit worth knowing: paragraph (c) says the extension of time comes without a statutory right to recover the costs of that extension. Section 24A(3) preserves whatever rights you have otherwise, but the Act itself does not add one. Where a payer instead fails to comply with an adjudicator's determination, that is itself one of the three triggers for suspension — the full timetable and enforcement route for a determination are covered in Adjudication in New Zealand: five working days to down tools.

Where the default rules come from

Sections 16 to 18 only apply if the parties have not agreed a mechanism. Section 15:

"If the parties to a construction contract fail to agree on a mechanism for determining any of the matters referred to in section 14, the relevant provisions of sections 16 to 18 apply to the extent that those provisions relate to any matter for which a mechanism has not been agreed on between the parties."

So a contract with its own progress payment machinery keeps it, and the Act fills only the gaps. What the contract cannot do is opt out of the payment claim and payment schedule regime itself — that machinery in Part 2, subpart 3 applies regardless.

Section 17 also sets out how a progress payment is valued when the contract is silent: by reference to the relevant period, the value of the work carried out during it, and "any relevant provisions in the construction contract (including, without limitation, provisions relating to the retention of money or liquidated damages)". Section 17(4) then falls back to "the reasonable value of the work" where the contract does not set rates or a price. Where a contract does hold retentions back from that progress payment, they run under a separate trust regime of their own — see Retentions are trust money, account or no account.

A working routine

1. Make the payment claim a template, not a document you draft each month. Six requirements, plus the two attachments, plus the naming line. Once it is right it is right every time.
2. Calculate and print the due date on the claim. It is a content requirement, and it also sets your own diary.
3. Record the date of service. Everything runs from service — the twenty working days, the due date, and the five working days before suspension.
4. Diarise the schedule deadline the day you serve. If nothing arrives, the s 22 liability is automatic, and the following step is a debt claim, not a negotiation.
5. If you are the payer, answer everything in the schedule. Section 21(3) requires the calculation and the reasons; leaving one out is how a defensible position becomes an indefensible one.

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Checked on 29 August 2026 against the Construction Contracts Act 2002 as at 5 October 2023 on the New Zealand Legislation website. Sections 20(4) and 21 refer to a prescribed form "if any"; check the current regulations before relying on a template. This describes the legislation and is not legal advice.

What Zirko does: it records when a document was created and sent, keeps quotes and invoices attached to the project they belong to, and keeps time per person per day — which is the working behind a claimed amount. What Zirko does not do: it does not produce a Construction Contracts Act payment claim with its statutory attachments, and it does not calculate the due date under s 18.