Changes to the SOP scheme

Amendments and commencement

The Building and Construction Industry Security of Payment Act 2002 (SOP Act) has been amended by the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025.

The amendments take effect from 15 April 2026.

Statutory rights to progress payments and performance securities

The amended SOP Act provides a new entitlement to claim for the release of a performance security under a construction contract. This is in addition to the existing right to claim for a progress payment.

Claimable variations and excluded amounts repealed

The amended SOP Act removes the dual concepts of ‘claimable variations’ and ‘excluded amounts’.

• Claimants no longer need to determine whether a variation can be claimed in a payment claim.
• Claimants are also no longer prevented from claiming previously excluded amounts, such as an amount for compensation due to events arising from latent conditions, time related costs, damages for breach of contract, and any amount arising at law.
• Respondents are no longer prevented from claiming previously excluded amounts, such as liquidated damages for delay costs to set off a payment claim in a payment schedule.

Reference dates no longer required

Under the SOP Act prior to amendment, a payment claim could only be made where there was a valid reference date. The amended SOP Act introduces the following changes.

• Subject to any earlier date specified in a construction contract (but not a later date), claimants are able to serve payment claims on and from the last day of each month that work is carried out or goods or services are supplied. This is subject to a limited exception for work carried out or goods and services supplied in December.
• If a payment claim is served too early, the amended SOP Act will deem it to be served on the earliest day it could have been served.
• The amended SOP Act will also prohibit more than one payment claim being made each month but will not prohibit that payment claim including more than one progress payment, previous amounts claimed but not paid, for work carried out or goods and services supplied in an earlier month.
• The amended SOP Act provides that a claimant’s right to serve a payment claim will not be affected by the termination, purported termination or expiry of the construction contract. If a contract is terminated (or a notice of termination is served), a claimant can serve a payment claim on and from the day on which the contract provides is the day on which the contract is terminated.

More time to make a payment claim

The latest date on which a payment claim can be served will be the day before the date that is 6 months after practical completion or 6 months after the supply of all related goods and services, unless the construction contract provides a later date. This is an extension of the 3-month period allowed under the SOP Act prior to amendment.

Payment and release terms capped

While construction contracts will be able to determine the date on which a progress payment is due and payable or performance security is due to be released, the amended SOP Act will cap the due date for payment or release to a maximum 20 business days after a payment claim or performance security claim is served.

• If the contract does not specify a due date for payment or release, the default date under the amended SOP Act will be 10 business days after the earliest day on which a payment claim or performance security claim can be served under the Act.

Performance security claims

The amended SOP Act will provide a statutory framework for the release of performance securities in much the same way it provides a statutory entitlement to progress payments.

• A ‘performance security’ includes a guarantee, bond or retention money.
• Claims for the release of performance securities will need to comply with the requirements of the amended SOP Act.
• A claim can be served on the earlier of 20 business days after the end of the defects liability period, or on or after an event specified in the construction contract.
• A respondent may serve a performance security schedule which must include certain mandatory information.

Importantly, the amended SOP Act will make it mandatory for the person seeking to have recourse to a performance security to first serve a notice on the person who provided the performance security, and then wait at least 5 business days before having recourse to it (or any longer period specified in the construction contract). This requirement will form part of every construction contract and cannot be varied by agreement.

New notice-based time bar restrictions

The amended SOP Act introduces restrictions on the effect of notice-based time bars on a claimant’s ability to make a payment claim.

• A ‘notice-based time bar provision’ is essentially any clause in a construction contract that makes, for example, entitlements to payments, extensions of time or release of performance security, contingent on the provision of a notice within a certain time.
• A ‘notice-based time bar provision’ can be declared unfair if compliance with the provision is either not reasonably possible or would be unreasonably onerous.
• A number of factors are to be taken into account in determining if a provision is unfair, and the party who alleges it is unfair bears the onus of proving it.

Adjudication responses

Under the amended SOP Act, respondents are precluded from including in their adjudication responses any reasons which were not set out in a payment schedule or performance security schedule. Submissions are not able to include new reasons, or any reason for refusal if no payment schedule or performance security schedule was served by a respondent on a claimant. Adjudicators are precluded from taking any such reasons into account.

Additional time for respondent to serve a payment schedule

The amended SOP Act will extend the time a respondent can serve a payment schedule after they are notified of a claimant’s intention to apply for adjudication. Respondents now have 5 business days from receipt of the notice (previously 2 business days). The same timeframe applies to performance security schedules.

These timeframes are separate to the period within which a respondent must serve a payment schedule or performance security schedule in response to a payment claim or a claim for release of a performance security.

Adjudication determination timeframes extended

Under the amended SOP Act adjudicators will have additional time to make their adjudication determinations:

• within 10 business days of appointment or the last day on which a respondent may lodge an adjudication response (whichever is later)
  or
• within any further time (not exceeding 20 business days after the period described above) by agreement with both parties.

Any adjudication determination that is made late will not be invalidated solely because it is late. However, an adjudicator is not entitled to be paid any fees or expenses if they fail to make their decision on time.

Meaning of ‘business day’ changed

The meaning of ‘business day’ has been amended to exclude the period 22 December to 10 January. Those days will not count where the SOP Act imposes certain timeframes, including the strict adjudication deadlines.

Service of documents

Amendments have been made to modernise the way in which documents can be served.

Administrative amendments

Several amendments have been made relating to the administration of the SOP Act, including new procedures for one party’s failure to pay a portion of an adjudicator’s fees.

Review adjudications abolished

Review adjudication applications have been abolished.