In short, if the proposed Bill becomes law:
Victoria’s Security of Payment rules would change by 1 September 2026 at the latest.
You could claim more items, like some variations and delay costs, under Security of Payment.
There would be clearer rules for retentions, bank guarantees and payment timelines.
Strict time bar and pay when paid clauses could be easier to challenge.
A Christmas shutdown period would pause Security of Payment timeframes.
These changes are not law yet. They are proposals only. This article gives general information to help you understand what may be coming. It is not legal advice and we recommend you consult an authorised legal practitioner if you have questions relating to your specific situation.
Victoria is looking at some of the biggest Security of Payment changes the state has seen. The Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 has been introduced and, if passed, would change how payment claims, variations, delay costs and retentions are handled on Victorian jobs.
For subcontractors, the main idea is simple. You may be able to claim more, there would be stronger rules around performance security, and less room for contract tricks that block payment. The Bill has not passed yet, but if it does, the new rules are expected to start by 1 September 2026 and would impact existing Victorian construction contracts.
What is the Security of Payment Act in Victoria?
The Building and Construction Industry Security of Payment Act 2002 (Vic) is there to help subcontractors get paid for work and materials. It sets rules for:
How to make a payment claim.
How the other party should respond with a payment schedule.
A quick dispute process called adjudication, instead of going straight to court.
At the moment, Victoria has some unusual rules, including excluded amounts, that make it different from states like New South Wales and Western Australia. The Bill is trying to bring Victoria closer to those states so the system feels more consistent if you work in more than one state.
What are the key Security of Payment changes in Victoria?
Here are the main changes proposed in the Bill:
The excluded amounts rules would be removed, so more types of claims could go to adjudication.
There would be a new process for getting retentions, bank guarantees and other performance security released.
Payment claims would follow a clearer monthly cycle, with more time to lodge claims.
Respondents would not be able to add new reasons at adjudication that were not in their payment schedule.
Tough notice-based time bars could be declared unfair and ignored.
Pay-when-paid style clauses would be restricted even further.
There would be a Christmas blackout period where Security of Payment timeframes pause.
Most changes would apply to existing Victorian construction contracts once the law starts, with some exceptions.
If you are in civil, concrete, formwork, steel fixing or other commercial trades working in Victoria, these rules would shape how you claim and get paid.
Scrapping excluded amounts: what does it mean for subcontractors?
Right now in Victoria, the Security of Payment Act says you cannot claim certain excluded amounts through adjudication. This is set out in sections 10A and 10B. Excluded amounts include things like:
Some disputed variations
Some delay and disruption costs
Some liquidated damages
These items are carved out, which limits what you can chase under the Act.
The Bill proposes to delete sections 10A and 10B. If that happens, these types of amounts could be included in payment claims that go to adjudication.
For subcontractors, that would be a big shift. If a builder has been knocking back your variation or delay costs as an excluded amount, you may have a clearer path to run that claim through Security of Payment if the new rules start. It should also reduce arguments about what can and cannot be decided in adjudication.
How will the new rules on retentions and bank guarantees work?
A lot of your money sits in retentions, bank guarantees or bonds. Getting that security back can be slow and frustrating, especially at the end of a job.
The Bill proposes a new performance security claim process. If it becomes law:
You could serve a performance security claim to ask for retentions or guarantees to be released.
The other party could answer with a performance security schedule that says how much they will release and why.
If you do not agree, the dispute could go to adjudication and the adjudicator could decide whether the security must be released, and in what amount.
This follows the same pattern as payment claims and payment schedules, but just for security.
The rules for using retentions or bank guarantees would also tighten. Before anyone can use your performance security, they would need to:
Give you at least five business days written notice, unless the contract says longer.
Point to the clause in the contract they rely on.
Explain what happened on the job.
Show how they calculated the amount they want to take.
Any contract term that tries to get around these steps would not be valid.
For subcontractors, this should mean fewer surprise grabs on security and a clearer path to getting your money back when the work is done, if the Bill is passed.
How will payment claims and timelines change?
The Bill would move Victoria towards a simpler monthly claim cycle. If the changes go ahead:
You could make a payment claim on and from the last day of each month.
Contracts could still set an earlier date if that suits the project.
If someone serves a claim too early, it would be treated as served on the first allowed day, rather than being thrown out.
The timeframes for making claims would also be longer. You would be able to:
Serve a payment claim within six months after practical completion.
Lodge a payment claim within six months of doing the work.
This would give you more time to pull together accurate claims and pick up variations that only become clear later in the job.
On the other side, the Bill would extend the period in which a respondent can issue a late payment schedule in some cases, from two business days to five. That gives head contractors a little more breathing room if they miss the first deadline. It also makes it even more important that they give full reasons in their schedule, because those reasons would set the limits for any adjudication.
Will builders still be able to raise new reasons at adjudication?
A common story from subcontractors is that they get a short, vague payment schedule, then a long list of new excuses at adjudication.
Under the proposed changes, that would not be allowed. If the Bill passes:
Respondents would be locked into the reasons they gave in their payment schedule when they defend a claim at adjudication.
Adjudicators would not be able to consider new reasons that were not raised earlier.
For you, that means fewer moving goalposts. It should push builders and principals to be upfront at the payment schedule stage, not save arguments for later. It also means your own paperwork matters even more. You should always push to receive a proper payment schedule that clearly explains any amounts held back, not just a quick one line email.
When can unfair time bars be ignored?
Many construction contracts are full of tight notice rules. For example, you must give written notice of a delay within two days or you lose your claim. These are called notice-based time bars. Often they are take it or leave it, and hard to follow when you are running a busy crew.
The Bill would give adjudicators, courts, arbitrators and expert determiners power to mark some of these clauses as unfair and unenforceable. They could do this where it is not reasonably possible to follow the clause, or where it would be unreasonably hard. They would need to look at things like:
How notice must be given.
How much time you have.
Who had more bargaining power when the contract was signed.
The subcontractor who says a clause is unfair would need to prove it. If a clause is found to be unfair, it could be ignored so you are not cut off from payment just because you missed an unrealistic deadline.
Even if the Bill passes, you should still try to follow notice rules as best you can. Good records, site diaries, emails and photos will put you in a stronger position if you ever need to argue that a time bar is unfair. A digital site diary can capture content on site and store it in a secure and centrally accessible location.
See how Neo’s site diary feature does this. Book a demo to learn more.
Are pay when paid clauses still allowed in Victoria?
Most people know that “pay when paid” clauses are already heavily restricted.
The Bill would take this further by widening what counts as a pay when paid setup. Under the proposed rules, a contract term would be invalid if it makes any of these things depend on another contract:
Whether you get paid at all.
When you get paid.
Your right to claim payment.
Your right to get performance security back.
In simple terms, it would be harder for someone up the chain to say we will pay you when we get paid, or to tie your cash flow to some other dispute that has nothing to do with your work. It will not fix every problem, but it should reduce some of the pain when there is trouble further up the contracting chain, if the Bill becomes law.
What is the Christmas blackout period and how does it affect claims?
The Bill also reflects what everyone in the industry already knows. Construction in Victoria slows right down over Christmas and New Year.
The proposed changes would introduce a blackout period from 22 December to 10 January each year. During this time:
Security of Payment timeframes for things like adjudication responses and enforcement steps would be paused.
The days in that window would not count as business days under the Act.
Payment claims for work done between 22 and 31 December could be served from 31 January in the new year. For subcontractors, this would give a bit more breathing space over the break. It also means you should plan ahead. Make sure important claim dates and response dates are in the diary before everyone heads off.
When will the new laws start and do they affect existing contracts?
The Bill is not law yet so there is still a chance it will change, or not pass at all. However, many in the industry expect some form of these changes to go ahead.
If the Bill passes, the amendments covered in this blog would start either on a date chosen by the government or by 1 September 2026, whichever comes first.
One key point for subcontractors is that the changes would generally apply to contracts that were already in place before the start date. The main exception is for jobs where a payment claim has already been served, or an adjudication application has already been made but not yet decided, before the new rules begin. Those specific matters would mostly stay under the old rules.
The bottom line is that, if the Bill becomes law, many live Victorian construction contracts at that time would be pulled into the new system. The way you handle claims and disputes now should be set up with those possible future rules in mind.
What should Victorian subcontractors do now?
Even though the changes are not in force, and may still change, there are some practical steps you can take now.
1. Review your current Victorian contracts
Look at clauses dealing with:
Variations
Delay and disruption claims
Notice time bars
Pay when paid wording
Retentions and bank guarantees
Make a note of where you regularly hit a wall on claims or struggle to get security released. These are likely to be the same pressure points if the new rules start.
2. Tighten your paperwork and claim process
The proposed set up rewards subcontractors who keep solid records. Make sure you have:
A clear monthly claim process.
Simple templates that cover all key details.
Good records of instructions, variations, delays and site events as you go, not months later.
Train your team on how to prepare detailed payment claims and how to chase proper payment schedules, not just remittance advice.
Digital tools can help. Systems like Neo that track variations, delays, notices, collect site diary entries and approvals in one place make it much easier to prove what you are owed and stay on top of deadlines.
3. Get advice early if you need it
This article cannot replace legal advice. If you work on Victorian projects, it is worth talking to your contract administrator, lawyer or industry body about how these possible changes could affect you. They can help you update your contract reviews, site processes and training so you are not caught off guard if the new rules land.
FAQs: Victoria Security of Payment changes for subcontractors
Do these Security of Payment changes only apply to Victoria?
Yes. This Bill is proposed to change the Security of Payment Act for projects in Victoria. Other states already have their own Security of Payment systems. The Bill would bring Victoria closer to places like New South Wales and Western Australia, but it only applies within Victoria.
Can I claim disputed variations and delay costs through adjudication in Victoria?
If the Bill passes, then in many cases yes. Scrapping excluded amounts would let you include disputed variations, delay and disruption costs and some liquidated damages in an adjudication claim, as long as the claim fits within the rules of the Act.
Do I still have to follow notice and time bar clauses?
Yes. You should still do your best to meet notice deadlines and follow the process set out in your contract. The proposed rules would help you challenge clauses that are unfair or impossible in practice, but they do not remove the need for good paperwork and timely notices.
When should subcontractors start preparing for the new laws?
Now is a good time to start. The Bill is not law yet, but if it passes the changes could start earlier than 1 September 2026. Getting your contracts and claim processes in order now means less scrambling later, especially for longer projects that will run through any changeover.
Final thoughts
The proposed Security of Payment changes in Victoria are a big shift, but overall they look positive for subcontractors who keep on top of their paperwork. If the Bill becomes law, you may have more scope to claim for variations and delays, better protection around retentions and guarantees, and more power to push back on unfair contract clauses.
Now is the time to understand what might be coming, tidy up your processes and make sure your business is ready. Book a demo to see how Neo can help you get your paperwork in order and ensure you get paid.
