If you’re in the construction industry in Queensland, you really need to know about Payment Claims and how they work. Thanks to stringent legal requirements, managing invoices and Payment Claims in the Queensland building sector can be complex.
This article will provide you with a clear breakdown of what you need to know about Payment Claims under the Building Industry Fairness Act 2017 (Qld) (the BIF Act) and how they operate within the Queensland Building and Construction Commission Act 1991 (Qld), which is commonly known as the QBBC Act.
While the QBCC Act has been around now for sometime, the BIF is more recent and replaces a number of older pieces of legislation including the Building and Construction Industry Payments Act 2004 (BCIPA) and the Subcontractor’s Charges Act 1974.
In short, Payment Claims are requests for payment by a person or company who has carried out work or provided goods and services under a contract. They are typically made by contractors, subcontractors, suppliers, and consultants in the building and construction industry and are a prerequisite for invoking the powerful payment remedies under the BIF if you aren’t paid in full.
Please note this article should be read in conjunction with our article on Payment Schedules, as it explains the legally required response someone must give when issued with a Payment Claim, particularly if they are not intending to pay the amount in full.
How are Payment Claims presented?
There’s a standard form for a Payment Claim found on the QBCC website. It’s intended for general use and can be found here: https://www.qbcc.qld.gov.au/resources/template/payment-claim-template.
While this template is fine for basic claims, it’s not well suited to larger or more complex claims, including where some of the work is pursuant to variations or is out of scope.
How often can I make a Payment Claim?
Contractors can only submit one payment claim per “reference date” outlined in their contract or the BIF Act. If no date is stated, it defaults to the last day of each month.
This means you generally can’t submit more than one claim per calendar month, unless your contract allows additional reference dates. If you invoice early, you’ll have to wait until the next reference date to claim remaining works.
Here’s an example to further explain the concept:
Alex has staff to pay and decides to claim for his business’ carpentry works on 21 January. The upcoming reference date is 31 January and the previous reference date was 31 December. His previous payment claim was dated 30 December. By claiming on 21 January, he is essentially claiming early.
This payment claim can therefore seek payment for works done from 31 December to 21 January.
It cannot claim for work completed from 22 January to 31 January (the next reference date) as that work has not been done yet.
Because only one payment claim can be made per ‘reference date’, Alex won’t be able to claim for work done between 22 January to 31 January until the period relating to the next reference date, which will be 28 February 2021. This will probably impact Alex’s cash flow for the work he’ll be doing in that last week of January.
Importantly, it is one claim per reference date, not by the reference date. You can make a payment claim after a reference date if you haven’t already submitted a claim for that reference date. Contract provisions which say words to the effect of “if you miss this reference date, you must wait till the next” are unlawful and should be ignored.
Can I reclaim for previously claimed work?
Absolutely, the BIF Act allows for inclusion of amounts previously claimed. This flexibility aids contractors in persisting with payment requests and accessing ‘rapid adjudication’ for missed deadlines on prior claims.
You can read more about that here, in Section 75(5) of the BIF.
What happens if I don’t receive a Payment Schedule or get paid?
The good news is – you’re covered. The BIF and QBCC Acts ensure your right to ‘progress payments’ for work completed to date. The law states you are entitled to receive a Payment Schedule and be paid (or provided with an explanation of why not) within 15 days from the delivery of your Payment Claim. This legal requirement holds and can’t be overwritten by your contract terms.
If you are not provided with a Payment Schedule you’re legally entitled to the entire claim value as a payable debt, with the client having minimal grounds for dispute (with the exception of very limited ‘jurisdictional’ circumstances, see sections 77 and 78 of the BIF).
What if the Payment Schedule isn’t paid in full?
If the actual payment you receive falls short of the scheduled amount, the specified amount becomes due immediately, and it would be extremely difficult for your client or higher tier contractor to challenge this.
At Simpson Quinn, we specialise in dealing with the complexities of these matters and would be pleased to help you navigate them. Reach out to us today for a free consultation to see how we can safeguard your financial interests and ensure smoother payment for work done in the Queensland construction industry.