Security of Payment Act WA: how to use it

TL;DR

WA’s Building and Construction Industry (Security of Payment) Act 2021 applies to construction contracts entered on or after 1 August 2022. Most residential (owner-occupier) contracts under $500,000 are excluded from the Act at the head contractor/principal tier, but subcontracts on those same jobs are still covered. Serve a valid written payment claim with the statutory endorsement, then the respondent has 15 business days to serve a payment schedule or the full claimed amount becomes a statutory debt. If you receive a short payment schedule or no payment, apply for adjudication through an Authorised Nominating Authority (ANA) within 20 business days. Adjudicators must determine claims within 10 business days of the response deadline. The single costliest mistake: missing the 20-business-day adjudication window after receiving a disputed payment schedule.

In plain English

The Building and Construction Industry (Security of Payment) Act 2021 (WA) (“the Act” or “WA SoP Act”) replaced Western Australia’s old Construction Contracts Act 2004 regime for contracts entered on or after 1 August 2022 (verified 2026-05-09, MinterEllison, A new era for security of payment in WA). Contracts signed before 1 August 2022 remain under the Construction Contracts (Former Provisions) Act 2004 (verified 2026-05-09, MinterEllison, A new era for security of payment in WA).

The Act gives builders, subcontractors, and suppliers a fast-track right to recover unpaid progress payments without going to court. Serve a valid payment claim, wait for the respondent’s payment schedule, and if payment is withheld or short, apply for adjudication. An adjudicator’s determination is enforceable as a court judgment. The Act also introduced an Australian-first retention money trust scheme (Stage 2 from 1 February 2023 and expanded in Stage 3 from 1 February 2024).

What it requires

Who is covered

The Act applies to persons carrying out construction work or supplying related goods and services under a construction contract in WA (verified 2026-05-09, WA Government, Subcontractor payment disputes). This includes:

Head contractors claiming from principals (owners, developers)
Subcontractors claiming from head contractors
Suppliers of related goods and services

Contracts may be verbal, written, or a mix. The Act applies regardless of contract form for all contracts entered into on or after 1 August 2022.

Compared to the old Construction Contracts Act 2004, the new Act also covers the fabrication and assembly of plant used for extracting or processing oil, natural gas, or minerals: previously excluded activities are now brought within scope (verified 2026-05-09, K&L Gates, Western Australia set for commencement of new progress payment regime).

Residential exclusion (home building work, s 10)

The Act’s payment claim and adjudication regime does not apply to a construction contract that satisfies all of the following conditions (verified 2026-05-09, WA Legislation, Building and Construction Industry (Security of Payment) Act 2021 s 10):

Condition	Detail
Individual principal	The principal is an individual (not a company or developer)
Not multi-dwelling or development	The work is not for multiple dwellings and is not for the purposes of a residential development business
Under $500,000	The contract value does not exceed $500,000
Not a subcontract	The contract is not between a head contractor and a subcontractor, and not between two subcontractors

This means that for a standard owner-occupier home build under $500,000, the head contractor (builder) cannot use the Act against the homeowner. However, the exclusion does not flow down the chain: a subcontractor engaged by that head contractor is still covered by the Act and can claim against the head contractor using the Act’s process.

For home building work not excluded by s 10 (for example, contracts over $500,000), the payment due date is 10 business days after the payment claim, if the contract does not specify a date (verified 2026-05-09, Crisp Law, Key obligations under WA’s Security of Payment regime).

Step 1: Payment claim (s 24)

A claimant serves a written payment claim on the respondent on or after a reference date. Under the Act, a reference date arises on the last day of each named calendar month in which construction work is carried out, unless the contract provides another date. Claims must be made within six months of the work, goods, or services being last performed or supplied (verified 2026-05-09, WA Government, Making a claim under the Security of Payment Act).

A valid payment claim must include (verified 2026-05-09, K&L Gates, Western Australia set for commencement of new progress payment regime):

Requirement	Detail
Written form	Must be in writing
Claimed amount	State the claimed progress payment amount
Work description	Describe the construction work, items, quantities, goods, or services claimed
Statutory endorsement	Include the statement: “This is a payment claim made under the Building and Construction Industry (Security of Payment) Act 2021”

No prescribed form is required: an invoice containing the above elements is sufficient.

Payment due dates after a valid claim (verified 2026-05-09, Ashurst, Security of Payment in Western Australia Stage 1 in force):

Claimant type	Default due date
Head contractor (from principal)	20 business days after the payment claim is made
Subcontractor (from head contractor)	25 business days after the payment claim is made
Home building work (where Act applies)	10 business days after the claim, if contract silent

Contracts may set shorter payment terms but cannot set longer terms than the statutory defaults.

Step 2: Payment schedule (s 25)

The respondent must serve a written payment schedule within the earlier of: any contractual deadline, or 15 business days after the payment claim is received (verified 2026-05-09, K&L Gates, Western Australia set for commencement of new progress payment regime). The payment schedule must:

Be in writing and identify the payment claim it relates to
State the scheduled amount the respondent proposes to pay (which may be nil)
Set out all reasons for withholding any portion of the claimed amount

If the respondent fails to serve a payment schedule within the 15-business-day window, the full claimed amount becomes a statutory debt immediately payable. There are no exceptions (verified 2026-05-09, WA Government, Making a claim under the Security of Payment Act).

Once a payment schedule is issued, the respondent cannot raise new reasons in adjudication that were not included in the schedule.

Step 3: Adjudication application (s 28)

If the respondent serves a payment schedule for less than the claimed amount, or fails to pay by the due date, the claimant may apply for adjudication. The application is submitted to an Authorised Nominating Authority (ANA) (verified 2026-05-09, WA Government, Authorised nominating authorities, adjudicators and review adjudicators). Any contract term that nominates a specific ANA is void.

Application windows (s 28) (verified 2026-05-09, K&L Gates, Western Australia set for commencement of new progress payment regime):

Scenario	Application window
Respondent served a payment schedule below the claimed amount	Within 20 business days after receiving the payment schedule
Respondent served no payment schedule and did not pay by the due date	Give notice (s 28(2) notice) within 20 business days of the due date; allow the respondent a further 5 business days to serve a schedule; if no schedule is served, apply within a further 20 business days

Missing the application window extinguishes the right to adjudicate for that reference period. Only claimants may apply for adjudication under the 2021 Act (unlike under the old Construction Contracts Act 2004, respondents cannot apply).

Step 4: Adjudication response

Once an ANA appoints an adjudicator, the respondent has 10 business days to lodge an adjudication response (verified 2026-05-09, MPH Lawyers, Building and Construction Industry (Security of Payment) Act 2021 (WA)). The respondent may only rely on reasons included in the original payment schedule. New reasons cannot be raised in the adjudication response.

Step 5: Adjudicator’s determination (s 37)

The adjudicator must make their determination within 10 business days of the date the adjudication response was (or was required to be) lodged. With the parties’ written agreement, this period may be extended to a maximum of 20 business days (verified 2026-05-09, K&L Gates, Western Australia set for commencement of new progress payment regime).

The respondent must pay the adjudicated amount within 5 business days of the determination. If they fail to pay, the claimant can register the determination as a court judgment and enforce it.

Adjudication review

A limited review mechanism is available where the adjudicated amount differs from the amount in the payment claim or payment schedule by $200,000 or more, or where the adjudicator determines they lack jurisdiction and the claimed amount exceeds $50,000. The party seeking review must apply to an ANA within 5 business days of receiving the determination. The review adjudicator has 10 business days to make their determination. A respondent who failed to provide a payment schedule or an adjudication response on time loses the right to seek a review (verified 2026-05-09, Crisp Law, Key obligations under WA’s Security of Payment regime).

Retention money trust scheme (Stage 2 and 3)

From 1 February 2023, a retention trust account (RTA) regime applies to construction contracts over $1,000,000, requiring retention money to be held in a separate trust account. From 1 February 2024, this expanded to all construction contracts over $20,000 (verified 2026-05-09, MinterEllison, Introduction of Stage 2 of Security of Payment in WA). Most home building work is exempt from the retention trust requirements.

What it doesn’t cover

Employees: employment relationships are outside the Act. Contractors and subcontractors are covered; workers engaged under an employment contract are not.
Residential owner-occupier contracts under $500,000: the head contractor/principal contract is excluded (see s 10 above). Note that subcontracts on these jobs are still covered.
Contracts before 1 August 2022: governed by the Construction Contracts (Former Provisions) Act 2004, not the 2021 Act.
Work outside WA: the Act applies only to construction work performed in Western Australia.
Pay-when-paid clauses: voided by the Act. Any contract term making payment to a subcontractor conditional on the head contractor receiving payment from the principal is unenforceable.

Practical implications

For builders and subcontractors

The Act is a cashflow tool, not a final dispute resolution process. Use it when a client or head contractor:

Refuses to pay without serving a payment schedule
Serves a payment schedule for far less than the work actually done
Pays late past the statutory due date

Get the payment claim paperwork right before serving. The statutory endorsement and the work description are technical requirements that adjudicators will check. An invoice without the statutory endorsement is not a valid payment claim under the Act.

Set calendar reminders for the adjudication windows. The 20-business-day window after receiving a disputed payment schedule is strict. A missed window means the claim waits until the next reference date.

Work suspension is available if the respondent fails to serve a payment schedule and does not pay by the due date. Two business days’ written notice is required before suspending (verified 2026-05-09, Crisp Law, Key obligations under WA’s Security of Payment regime).

For principals and clients

The Act creates real consequences for ignoring payment claims. If a respondent receives a valid payment claim and does not serve a payment schedule within 15 business days, the full claimed amount becomes a statutory debt regardless of any dispute about quality or completion. The only path then is to pay and pursue an overpayment claim separately.

Every dispute about a progress payment must result in a written payment schedule served in time, specifying which amounts are withheld and why. Blanket withholding without a schedule is the most expensive mistake a respondent can make.

Adjudication fees

Adjudicators charge hourly rates, with maximum fee caps for claims up to $50,000 (verified 2026-05-09, WA Government, Applying for adjudication):

Claim amount	Maximum adjudicator fee
Up to $5,000	$900
$5,001 to $15,000	$1,500
$15,001 to $50,000	$7,250
Over $50,000	No cap; charged at hourly rate

Both parties generally share adjudicator fees equally (50% each).

Building and Energy WA

Building and Energy (formerly DMIRS, Department of Mines, Industry Regulation and Safety) administers the Act. The Building Commissioner authorises ANAs and adjudicators, publishes the ANA register, and issues practice notes (verified 2026-05-09, Building and Energy WA, Security of Payment).

Source link

Building and Construction Industry (Security of Payment) Act 2021 (WA) on WA Legislation.

WA Government, Subcontractor payment disputes (Security of Payment Act) (verified 2026-05-09).

References

Building and Construction Industry (Security of Payment) Act 2021 (WA) (verified 2026-05-09)
WA Government, Subcontractor payment disputes (Security of Payment Act) (verified 2026-05-09)
WA Government, Authorised nominating authorities, adjudicators and review adjudicators (verified 2026-05-09)
WA Government, Applying for adjudication (verified 2026-05-09)
WA Government, Making a claim under the Security of Payment Act (verified 2026-05-09)
MinterEllison, A new era for security of payment in WA (verified 2026-05-09)
MinterEllison, Introduction of Stage 2 of Security of Payment in WA (verified 2026-05-09)
K&L Gates, Western Australia set for commencement of new progress payment regime (verified 2026-05-09)
Ashurst, Security of Payment in Western Australia Stage 1 in force on 1 August 2022 (verified 2026-05-09)
Crisp Law, Key obligations under WA’s Security of Payment regime (verified 2026-05-09)
MPH Lawyers, Building and Construction Industry (Security of Payment) Act 2021 (WA) (verified 2026-05-09)
Building and Energy WA, Security of Payment (verified 2026-05-09)
WA Department of Mines, Industry Regulation and Safety