Victoria has made major changes to its Security of Payment Act, and most of them have applied since 15 April 2026. In short: subcontractors and suppliers can now claim amounts that used to be excluded (such as unagreed variations and delay costs), claims follow a simple monthly cycle instead of contract "reference dates", there is a statutory way to get retention money and other security released, payment terms are capped, and courts and adjudicators can set aside unfair notice-based time bars. The changes apply to existing contracts as well as new ones.
The changes come from the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025, which amends the Building and Construction Industry Security of Payment Act 2002. Both are published on the Victorian Legislation website. The amending Act received Royal Assent on 13 November 2025, and the amending Act itself set 1 September 2026 as the latest start date for any part not started earlier. This is a plain-English summary, not legal advice; check your contracts with a construction lawyer.
What changed
- "Excluded amounts" are gone. The old Act listed amounts that could not be included in a payment claim, including variations that weren't "claimable variations", latent conditions, time-related costs, changes in regulatory requirements and damages claims. That section has been repealed, so these amounts can now be included in a claim and taken to adjudication.
- Reference dates are replaced by a monthly cycle. A payment claim can be served from the last day of each month in which work was done or goods and services were supplied. A contract clause that pushes the earliest claim date later than that has no effect.
- December has its own rules. Work done from 1 to 21 December can be claimed from 22 December. Work done from 22 to 31 December can be claimed from 31 January. The days from 22 December to 10 January no longer count as business days for the Act's time limits.
- Payment terms are capped. A contract term has no effect to the extent it makes a progress payment, or the release of a performance security, due later than 20 business days after the claim is served. If the contract says nothing, payment is due 10 business days after the earliest day the claim could be served.
- Retentions and other security can be claimed. The Act now gives a right to claim the release of "performance security", such as retention money, with its own claim and adjudication process. Interest may be payable on security that is due but not released, at the higher of the contract rate and the penalty interest rate.
- Unfair time bars can be set aside. A clause that makes payment, an extension of time or the release of security depend on giving notice by a deadline can be declared unfair if compliance wasn't reasonably possible or would be unreasonably onerous. An adjudicator, court, arbitrator or expert can make that call. The party claiming unfairness has to prove it, and the declaration only affects the entitlement in that dispute.
What this means in practice
For subcontractors and suppliers, the changes strengthen your hand. Delay costs, latent conditions and variations that haven't been agreed can now go into a payment claim. Retention money has a clear path to release. A missed notice deadline is no longer automatically the end of a claim.
For head contractors and builders, it means tighter payment administration. Monthly claims can include more types of cost and need a timely response, and held security needs tracking against due dates because interest can apply.
How to get your systems ready
- Review your subcontract templates. Look at clauses on claim timing, payment terms, notice deadlines and security release. Some may no longer have effect.
- Track variations properly. Every variation, agreed or not, should be recorded against the job with its date, value and status. Unagreed variations can now turn up in claims, so you need your own record. Our post on the variation that never got billed covers the basics.
- Put claim and payment dates on a calendar. Record when each claim was received, when a payment schedule is due, and when payment falls due, using business days with the December to January exclusion built in.
- Track retentions and other security by job. Record what is held, under which contract, and when it falls due for release. Our guide to retentions and progress claims in Xero explains one practical way to do this.
- Look at cash flow. If more types of cost can be claimed, and security must be released on time, your cash flow forecast needs to reflect that.
Frequently asked questions
When did Victoria's Security of Payment changes start?
Most of the changes to the Security of Payment Act started on 15 April 2026. The amending Act set 1 September 2026 as the latest date for any part not started earlier, so the reforms are now in force.
Do the changes apply to contracts signed before the reforms?
Yes. The amended Act applies to construction contracts entered into before, on or after the changes started. Payment claims served, and adjudication applications not yet decided, before the start date generally stay under the old procedure.
Can subcontractors now claim for delays and latent conditions?
Yes. The list of excluded amounts has been repealed, so these can be included in a payment claim. Whether the amount is actually owed still depends on the contract and the evidence.
If you want help setting up variation, claim and retention tracking that copes with the new rules, book a free initial chat.