Security of Payments Act Western Australia (WA): What Contractors Need to Know

Timely payments are critical for keeping projects on track and protecting subcontractors from cash flow issues. 

In Western Australia, The Building and Construction Industry (Security of Payment) Act 2021 s provides contractors and suppliers with a clear legal pathway to secure payments, without needing to escalate to court. 

It gives contractors the legal right to be paid as the job progresses, and explains exactly how to ask for payment, respond to a claim, and get help if there’s a dispute.

Key Rights Under the West Australia’s Security of Payment Act

Under the Security of Payment Act (SOPA), eligible claimants in WA can:

• Progress payments: Contractors can claim for construction work or related goods/services, even if the contract doesn’t allow for it
• Right to issue a payment claim: Claims must identify the contract, describe the work or goods supplied, show the amount claimed and how it was calculated, and reference the Act
• Obligation to provide a payment schedule: Respondents must reply within the earlier of the contractual timeframe or 15 business days, and justify any withheld amounts
• Adjudication pathway: If payment is delayed or underpaid, claimants can apply for adjudication without going through court
• Debt recovery mechanism: Adjudicated or scheduled amounts not paid on time can be recovered as a debt in court
• Automatic liability for non-response: If a payment schedule isn’t provided on time, the respondent is liable for the full amount claimed
• Right to suspend work: Contractors can suspend work if unpaid, without being held responsible for resulting project delays
• Interest on overdue payments: Interest is payable at either the contract rate or the rate under the Civil Judgments Enforcement Act 2004, whichever is higher
• Review by a second adjudicator: Certain determinations can be reviewed, provided the disputed amount is paid into trust

In addition, “Pay when paid” clauses are banned. This means payment cannot be made conditional on the contractor or builder receiving funds from another party.

Who Can Make a Claim?

In Western Australia, any party performing construction work or supplying related goods and services under a construction contract may claim a progress payment.

This includes:

• Head contractors: Claiming against project principals
• Subcontractors: Claiming against head contractors
• Suppliers and consultants: Providing construction-related goods or services
  

The right to claim exists regardless of whether the contract includes explicit payment provisions, but many subcontractors struggle with the business know-how needed to understand or act on these rights.

What Work can be Claimed?

The Security of Payments Act (SOPA) 2021 covers a broad range of construction work and related services performed under contract in Western Australia.

It provides clear definitions to ensure wide industry coverage, including both physical works and professional services.

Claimable work includes:

The SOPA also outlines what kinds of work can’t be claimed, which include:

• Mining-related activity, such as the construction of pits, shafts, or quarries for oil, gas, or mineral extraction
• Work performed under a contract of employment
• Contracts that form part of a loan, guarantee, or insurance arrangement
• Non-cash contracts, where payment isn’t tied to the value of work or goods supplied
• Work carried out outside WA

Timeframe and Deadlines

The Security of Payments Act (WA) sets out strict timeframes for issuing claims, providing payment schedules, and initiating adjudication. Missing these deadlines can result in lost rights or automatic liability.

Default Payment Deadlines

If the contract doesn’t specify earlier dates, the following statutory defaults for payments apply:

• Principal to head contractor: Within 20 business days after the payment claim is served
• Head contractor to subcontractor: Within 25 business days after the payment claim is served

Serving a Payment Claim

Payment claims can be made:

• On or after the end of the month in which work or supply occurred, unless the contract allows earlier claims
• After termination of the contract
• Within the later of the timeframe in the contract or 6 months after the last work or supply

For final payments, claims can be made up to 28 days after the defects liability period or 6 months after completion, whichever is later. Unless otherwise agreed, only one claim can be made per named month.

Providing a Payment Schedule

Respondents must issue a payment schedule within the earlier of 15 business days or the timeframe stated in the contract.

If a payment schedule isn’t served on time, the respondent becomes liable for the full claimed amount and loses the right to respond in adjudication.

Applying for Adjudication

Application deadlines depend on how the respondent acts:

• If a schedule is issued but underpays: Apply within 20 business days after receiving the schedule
• If the scheduled amount isn’t paid on time: Apply within 20 business days after the due date

If no schedule is issued and no payment is made:

• Serve a notice of intent to adjudicate within 20 business days of the due date
• Wait 5 business days for a response
• If no schedule is received, apply within 20 business days after that response period ends

Post-Adjudication Payment

If no specific due date is stated in the adjudication decision, payment must be made within 5 business days of receiving the determination.

The Payment Claim Process

The SOPA outlines a clear process for claiming and recovering payment. Each step must be followed precisely to stay compliant and preserve enforcement rights.

1. Prepare the Payment Claim

   The payment claim must:
   
   Describe the construction work or related goods/services being claimed
   State the amount claimed, including retention or performance security if applicable
   Clearly state that it is made under the Act
   
   There is no requirement in WA for head contractors to include a supporting statement about subcontractor payments, as is the case in many other states.

2. Serve the Payment Claim

   Claims must be delivered using an approved method, such as hand delivery, post, or another contract-specified method. Email is acceptable if agreed. Timing must comply with:
   
   The claim period specified in the contract, or
   The legislative defaults (typically monthly, or up to 6 months after last work/supply for progress claims)
   
   Only one claim can be made per named month unless otherwise agreed.

3. Respondents Must issue a Payment Schedule

   Respondents must issue a payment schedule that:
   
   Identifies the related payment claim
   States the scheduled amount they propose to pay
   Explains why any amount is withheld, if relevant
   
   This must be provided within the earlier of:
   
   15 business days, or
   The timeframe stated in the contract
   
   If no payment schedule is served on time, the respondent becomes liable for the full amount claimed and may lose the right to respond in adjudication — a risk that’s often overlooked when payment processes rely on informal communication.

4. Respondent Pays or Claimant Takes Action

   The respondent must pay the scheduled amount by the due date
   If unpaid, the claimant may recover the amount as a debt in court, apply for adjudication, and suspend work after giving 2 business days’ notice
   
   If no schedule is issued and no payment is made:
   
   The claimant must serve a notice of intent to apply for adjudication within 20 business days of the missed payment due date
   The respondent has 5 business days to issue a payment schedule
   If none is provided, the claimant can then apply for adjudication
   The application must be made within 20 business days after this entitlement arises

5. Adjudication (if required)

   If the scheduled amount is unpaid or is less than claimed, the claimant may apply for adjudication. The adjudicator will review the payment claim, schedule (if any), and any supporting evidence, then issue a binding determination.

6. Payment or Enforcement

   If the adjudicated amount is not paid:
   
   The claimant may request a certified determination and file it in court as a judgment debt
   The respondent cannot raise new defenses or counterclaims, unless appealing on the basis of jurisdictional error
   The claimant may suspend work with appropriate notice
   
   Payment must be made by the date in the adjudication determination or within 5 business days of the determination being received, if no date is specified.

Adjudication

Adjudication is a fast-track dispute resolution process under the SOPA 2021. It allows contractors and suppliers to resolve payment disputes quickly, without going to court.

A claimant can apply for adjudication if:

• The scheduled amount is less than the claimed amount
• The respondent fails to pay the scheduled amount by the due date
• No payment schedule is issued, and the full claimed amount remains unpaid by the due date (after following the required notice process)

Understanding WA’s Security of Payment Act is essential for protecting your right to prompt and fair payment

The Building and Construction Industry (Security of Payment) Act 2021 provides a clear legal framework for making, responding to, and enforcing payment claims. Knowing your rights, deadlines, and enforcement options helps reduce disputes and safeguard cash flow.

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