Getting Paid, Not Chasing Paid: How the Security of Payment Act Actually Works
If you've ever done the work, sent the invoice, and then spent the next six weeks chasing your own money, you already understand why the Building and Construction Industry Security of Payment Act 1999 (NSW) exists.
At Law Team, we talk a lot about building the fence at the top of the cliff rather than the ambulance at the bottom. The Security of Payment Act (or "SOP Act", as most of the industry calls it) is one of the best fences the NSW construction industry has. It doesn't ask you to prove who's "right" in some drawn-out dispute. It simply asks: has the work been done, and has it been paid for? If the answer to the second part is no, the Act gives you a fast, statutory pathway to get paid, often in weeks rather than years.
Here's how the process actually runs, step by step.
Step 1: You serve a Payment Claim
The process starts the moment you (the claimant) serve a payment claim on the other party (the respondent). This isn't just a tax invoice with a due date on it. To do its job under the Act, it needs to:
Identify the construction work or related goods and services the claim relates to
State the amount you say is owing
Be clearly identified as a payment claim made under the SOP Act
You can only serve one payment claim per reference period (usually monthly), and it generally needs to be served within the earlier of the contract's own timeframe or 12 months after the work was last carried out.
Why this step matters: a payment claim that's missing the right language or detail can lose its statutory teeth entirely. This is the single most common, and most avoidable, mistake we see.
Step 2: The other side has 10 business days to respond with a Payment Schedule
Once served, the clock starts ticking, and it ticks fast. The respondent has 10 business days (or a shorter period if the contract says so) to serve a payment schedule in response.
A valid payment schedule must:
State the amount the respondent proposes to pay (even if that amount is nil)
If it's less than the claimed amount, give the reasons why, specifically, not vaguely
If no payment schedule is served in time, the respondent becomes liable to pay the full claimed amount, with no right to dispute it through adjudication. This is what makes the Act so powerful and why silence is the worst possible response to a payment claim.
Step 3: If there's a dispute, either side moves to Adjudication
If a payment schedule is served but the amount offered falls short, the claimant can apply for adjudication, an independent, document-based process designed to resolve the dispute quickly, without the cost and delay of court.
The applicable timeframe depends on what happened at Step 2:
Schedule served, but underpaying: the claimant can apply for adjudication within 10 business days of receiving the schedule
No schedule served at all: the claimant must first serve a further notice of intention to apply for adjudication (within 20 business days of the due date), give the respondent a final 5 business days to serve a schedule, and then apply within 10 business days after that
Schedule served, amount agreed, but simply not paid: the claimant can apply for adjudication within 20 business days of the due date for payment
The respondent then has a short window, 5 business days after receiving the application or 2 business days after being notified an adjudicator has accepted the appointment, whichever is later, to lodge an adjudication response.
Step 4: The Adjudicator's Determination
An independent, appropriately qualified adjudicator reviews the application and response (generally on the papers, not through a hearing) and issues a binding determination, usually within 10 to 15 business days. This determination sets out the amount payable and the date by which it must be paid.
Step 5: Enforcement
This is where the Act has real bite. If the respondent doesn't pay the adjudicated amount, the claimant can obtain an adjudication certificate and file it in court as a judgement debt, enforceable the same way as any other court judgement. A respondent wanting to challenge this generally has a strict window (commonly around 21 days) to apply to set it aside, and the bar for doing so successfully is high.
Why this matters for your business
The SOP Act isn't a substitute for good contract drafting, clear scopes of work, or well-documented variations, but it is an extraordinarily effective safety net when payment goes sideways. Used well, it protects cash flow. Used badly (or ignored), it can turn a manageable dispute into a full liability for the entire claimed amount, with no room to argue the toss.
Whether you're a builder, subcontractor, supplier, or consultant working on NSW construction projects, understanding these timeframes and building them into how your business issues invoices and responds to claims is one of the simplest, highest-leverage pieces of preventative law you can put in place.
This article is general information only and doesn't constitute legal advice. If you're dealing with a live payment claim, schedule, or adjudication deadline, the timeframes above are strict and unforgiving, so get advice early.
About the Author: Erin Vassallo
Erin Vassallo is the Principal Solicitor and founder of Law Team, a values-led law firm with a strong reputation across New South Wales and Queensland. With over two decades of experience in commercial, construction, and property development law, Erin is a trusted advisor to developers, landowners, and business owners navigating complex projects and legal risk.
Her hands-on experience includes joint ventures, structuring development deals, contract negotiation, risk mitigation, and project governance across residential, commercial, and mixed-use developments. Erin holds qualifications in law, political science, mediation, and disruptive strategy (Harvard Business School) and is the founder of Certified BCorp Law Team, committed to ethical business practices and social impact.
Frequently Asked Questions
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You become liable to pay the full claimed amount, with no right to dispute it through adjudication. Silence is effectively the same as agreeing to pay everything claimed.
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If a schedule was served but underpaid, you generally have 10 business days to apply. Once lodged, an adjudicator typically issues a binding determination within 10 to 15 business days, much faster than going to court.
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You can file an adjudication certificate in court as a judgment debt, enforceable like any other court judgment. The respondent has a strict window, commonly around 21 days, to challenge it, and the bar for success is high.