Victoria is implementing significant reforms to its Security of Payment legislation, taking effect on 1 September 2026. These are some of the most substantial changes to construction payment law in Victoria in over two decades, and they expand the rights of subcontractors and suppliers to claim payment.

What's Changing

• Removal of 'excluded amounts'. Subcontractors will be able to claim for delay costs, latent conditions, and variations not yet agreed. Previously, these were excluded from payment claims under the Act.
• Removal of reference dates. Payment claims will no longer be tied to fixed dates in the contract, giving subcontractors more flexibility in when they submit claims.
• Protection against unfair time bars. Contract clauses that impose unreasonable time limits for submitting claims will be unenforceable.
• Interest on unreleased performance security. Where retention or security is held beyond the required period, interest will accrue.
• Christmas shutdown provisions for adjudication. New rules recognise the industry shutdown period and adjust adjudication timelines accordingly.

What This Means in Practice

For subcontractors, these reforms strengthen your position in claiming payment for work done. Variations that were previously hard to claim under the Act become claimable. Time bar clauses that have historically been used to knock back legitimate claims will be restricted.

For head contractors and builders, the reforms mean tighter payment administration. Your systems need to accurately track variations, delay costs, and claim timelines. Disputes that were previously resolved by excluding amounts from claims will now need to be dealt with differently.

How to Prepare Before September

1. Review your standard subcontract terms for any clauses that may be affected by the reforms, particularly around time bars and excluded amounts.
2. Ensure your variation tracking and claim management systems can handle the expanded scope of claimable amounts.
3. Brief your project managers on the changes. The reforms apply retrospectively to existing contracts, so current projects will be affected.
4. Consider your cash flow implications. If subcontractors claim more categories of cost, payment cycles may change.