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Subcontractors/Trades: Three Quick Tips to Getting Paid

19 June 2017

By Melissa Ban, Senior Associate and Fionna C Aitchison Reid, Director, Aitchison Reid Building and Construction Lawyers.

As a subbie, the fastest way to make sure you get paid is to use an Act that has been designed exactly for you – The Building and Construction Industry Payments Act 2004, or BCIPA for short[1].

The whole purpose of BCIPA is to speed up the process of getting paid and if there is a dispute, give you a fast and cost effective way of getting the dispute resolved.

Often we see subbies who sit on unpaid invoices taking no steps or just send a reminder notice or letter of demand, not knowing they could have been using BCIPA all along to speed up the process. However, there are strict time frames under BCIPA and if you miss them, you will lose your opportunity to use the many benefits of BCIPA. At the end of the day, BCIPA is all about speed.

So how can you use BCIPA?

  1. Know your Contract

Most of the time as a subbie you will have a contract with the head -contractor (or builder). Read your contract and get to know it well, it’s your new best friend.

Your sub-contract should spell out:

  • How often and exactly when you are entitled to issue invoices (these are your reference dates);
  • How they are to be delivered to the builder (service); and
  • When they will be due to be paid (due date).

If you don’t issue invoices in accordance with your contract, they may be invalid. This can cause delays due to the invalid invoices being ignored by the builder or payer.

If you don’t have a contract all is not lost as BCIPA has default provision for time frames for issuing of your invoices. If you are unsure what your time frames are, we recommend you seek legal advice.

  1. Make sure your Invoice is a Valid Payment Claim under BCIPA

To use BCIPA you must use Payment Claims.

A Tax Invoice in itself is not a valid Payment Claim, unless 3 specific requirements are met. A Payment Claim must:

  • Identify the construction work or related goods and services;
  • Must state the amount of the payment; and
  • Must state “This is a Payment Claim under the Building and Construction Industry Payments Act 2004”[2].

If you do not have all of the above requirements, it is not a valid payment claim and you can’t use BCIPA.

  1. Know what a Section 20A Notice is and use it

After you have issued a valid Payment Claim, if the builder disputes what you are claiming they have 10 business days to give you reasons why they dispute your claim. These reasons for non-payment are called a Payment Schedule[3].

If the builder does not:

  • Send a Payment Schedule within 10 business days; or
  • Pay you by the due date; then
  • You must send a section 20A Notice.

A Section 20A Notice must:

  • Be given to the builder within 20 business after the due date for payment; and
  • State the builder may serve a payment schedule on you within 5 business days after receiving the notice.
  • State that it is a Notice under the “Building and Construction Industry Payments Act 2004”

If you don’t give this notice by the required time, you cannot use BCIPA, it’s as simple as that.

Builders are often aware of this requirement so if they want to work the system, they sit back and do nothing, waiting until you issue a Section 20A Notice.

It is amazing how fast builders can react after receiving a section 20A Notice, frequently wanting to either pay or talk settlement.

In summary, the best way to make sure you are using BCIPA to your benefit, is to have good admin systems put in place at the start of each new job. With the correct procedures in place, you can:

  • increase your chance of getting paid on time; and/or
  • resolve any disputes that come up as quickly as possible.

In the end, no one wants to be involved in a long drawn out and expensive court battle.

Still not sure if you are using BCIPA in the right way for your business?

Contact Us

We can help you to:

  • Set up systems to ensure you comply with BCIPA; and/or
  • Guide you through the process of enforcing payment through BCIPA, including adjudication if you are involved in a dispute.

Call our friendly team at 07 3128 0120 or contact us here.

End Notes:
[1] The Act applies to construction work and the supply for related goods and services in Queensland with numerous exceptions including: carrying out of domestic building work if a resident owner is party to a contract (Building and Construction Industry Payments Act 2004, s 3).
[2] S. 17(2) Building and Construction Industry Payments Act 2004
[3] A payment schedule has specific requirements to be valid under section 18 of the Building and Constructions Industry Payments Act 2004.

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