As the Christmas shutdown period approaches, construction businesses often bring forward invoicing and payment claims to manage cash flow over the break. While understandable, this is also a time when simple compliance issues can arise under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).
We have recently seen several cases where otherwise valid claims were delayed or disputed due to avoidable technical issues. The following points are worth checking before issuing or receiving claims over the holiday period.
When issuing a payment claim to a head contractor or principal, the Act requires the claim to state that it is made under the Building Industry Fairness (Security of Payment) Act 2017.
Including this statement is important because it clearly identifies the document as a statutory payment claim and triggers the timeframes in section 76 of the Act for the respondent to issue a payment schedule.
Importantly, a failure to include this statement does not automatically invalidate the payment claim. However, omitting it can create unnecessary uncertainty or arguments about whether the statutory payment regime applies.
As a practical risk management step, construction businesses should ensure this wording is included as standard on all payment claims issued upstream.
On the receiving side, it is important to understand that a document does not need to be labelled a “payment claim” to be treated as one under the Act.
In many cases, a standard invoice issued by a subcontractor or supplier will still constitute a valid payment claim if it meets the required criteria. If that occurs, the statutory timeframe to issue a payment schedule may already be running.
This means invoices should not be ignored or assumed to be informal. Businesses should have processes in place to promptly identify incoming documents that may qualify as payment claims and respond within the required timeframes.
A common issue around Christmas is payment claims being issued early because offices are closing or staff are taking leave.
For a payment claim to be valid, it must be issued on or after the relevant reference date under the contract. Issuing a claim early, even with good intentions, can result in the claim being invalid.
Before bringing forward claims due to the shutdown period, it is critical to confirm the applicable reference dates and ensure the claim is issued in accordance with the contract and the Act.
The payment security regime is designed to protect cash flow across the contracting chain, but only where the technical requirements are met. A short review of payment claim templates, invoice wording, and internal review processes before the Christmas break can help prevent disputes, delays, and compliance issues in the new year.
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