Security of payments for NSW building workers — new legislation

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Security of payments for NSW building workers — new legislation

Amending legislation in New South Wales seeks to ensure that progress payments in the building industry flow down the contract chain.

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Amending legislation in New Soutn Wales seeks to ensure that progress payments in the building industry flow down the contract chain.
 
A number of awards (see below) are impacted by the recent change to the (NSW) Building and Construction Industry Security of Payment Act.
 
Changes
 
The Act works by:
  • making unenforceable formal or informal pay-when-paid contractual terms or arrangements
  • allowing subcontractors to make a progress payment claim formally under the Act which then must be paid in full, on time, or the claimant can request an adjudication
  • requiring an adjudication must be completed quickly and the amount determined must be paid or recovery action can taken in the court
  • providing, in some circumstances, where the defaulting contractor cannot pay the adjudicated amount recovery can be taken to recover from the principal from money which the principal is yet to pay to the defaulting contractor
  • providing that if a party to an adjudication disagrees with the verdict that person can bring full blown court proceedings to finally determine the true amount which should be paid, but these court proceedings do not stop the payment of, or recovery of,the adjudicated amount. The outcome of such court proceedings may mean that there is a subsequent repayment or additional payment some time later.
 
Principal to withhold amounts
 
The new amendment means that a claimant who is seeking an adjudication can also require the principal to withhold the amount claimed in the adjudication from the contractor who has not paid the progress payment. This is designed to help ensure that there is money to pay the adjudication outcome.
 
The amendment came into effect on 29 November and applies to any undecided adjudication.
 
Legislation
 
For a link to the amending Act, click here.
 
The amendment also provides that proceedings for breach of the security of payment legislation are dealt with summarily by the Local Court.
 
Source: Dick Grozier, Director Industrial Relations, Australian Business Industrial (NSW Business chamber) provided the information in this article.
 
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