The Victorian Parliament passed the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 on 30 October 2025, introducing significant amendments to the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act).

While parts of the amendments came into operation on 13 November 2025, the key amendments relating to payments were to commence by no later than 1 September 2026.

These key amendments have now been confirmed to commence on 15 April 2026 (Victorian Government Gazette). The amendments apply retrospectively to all existing construction contracts, regardless of when they were entered into.

What’s changing?

The following is a summary of the key reforms and how they may affect your business.

Opportunities for Claimants

• Broader claim scope: “Excluded amounts” and “claimable variations” are being repealed. Claimants can now pursue variations, latent conditions and delay costs through adjudication – significantly expanding the scope of recoverable amounts.
• No more reference dates: The complex “reference date” concept is abolished. Claimants may serve one payment claim on and from the last day of each month (or the date specified in the contract). Early claims are now valid rather than void.
• Performance security: Claimants can now pursue the release of retention and bank guarantees through adjudication, extending the powerful SOP mechanism beyond progress payments.
• Unfair time bars weakened: Adjudicators can now set aside contractual notice-based time bars that are found to be unfair, reducing the risk of claimants losing entitlements on procedural grounds.
• Payment terms capped: Maximum payment periods are capped at 20 business days from the date of the payment claim, improving cashflow certainty.

Risks for Respondents

• Greater exposure to time-related claims: With variations, latent conditions and delay costs now within scope, respondents face a broader range of claims in adjudication. Respondents may also raise liquidated damages as an offset, but must do so in the payment schedule.
• No new reasons in adjudication: Respondents are restricted to the reasons included in their payment schedule. Robust schedules with detailed reasons addressing both the merits and quantum of each claim item will be essential.
• Diluted time-bar defences: Adjudicators can set aside contractual time bars found to be unfair. Respondents can no longer rely on notice-based time bars as a primary line of defence and must address claims on their merits as alternative positions.
• Performance security obligations: A new mandatory notice regime requires respondents to give at least 5 business days’ written notice before calling on any security. Failure to respond to a performance security claim within 10 business days creates an obligation to release the full amount claimed.
• Proactive involvement required: Where time-related claims are anticipated, respondents will need proactive involvement at the payment schedule stage to manage exposure effectively.

For All Parties

• Holiday shutdown: 22 December to 10 January is excluded from the calculation of business days, providing relief from holiday-period claims for all parties.

What should you do now?

Whether you are a principal, head contractor, subcontractor, supplier or consultant, these reforms will affect how you manage payment claims, payment schedules and security across your projects. We recommend you:

• Review your current payment claim and schedule processes against the new requirements.
• Ensure your payment schedules contain comprehensive reasons for any amounts withheld, addressing both merits and quantum
• Understand the new performance security regime and its notice requirements.

How Calibrate can help

Calibrate’s contract administration and claims team has deep experience advising on SOP Act matters across all Australian jurisdictions. We can assist with preparing and responding to payment claims and schedules, adjudication applications and responses, and advising on the impact of these reforms on your existing contracts and processes.

If you would like to discuss how these changes affect your business, please get in touch with the Calibrate team.