John Lowry

Jan 30, 20182 min read

ENTITLEMENT – The Building and Construction Industry Payment's Act 2004 (The Payments Act) - The

The Payment's Act is the final piece of the payment puzzle. It sets up a legislated cash management process for the construction industry to guarantee prompt payment, if you elect to use it. It includes adjudication, a powerful method for quickly deciding disputed progress payments.

Payment's Acts now operate in all Australian states and territories. Similar Acts operate in new Zealand, Singapore and the UK. It is under consideration in Malaysia.

The message is, Payments Acts are here to stay. Nonetheless, even though they have been operating in Australia for almost 20 years, there is still a lot of ignorance about the purpose and operation of the Payments Act.

Many in the industry believe the Act is essentially a dispute resolution mechanism, to be triggered when there is a payment problem. This is not correct. The Payments Act is primarily a legislated cash, or credit, management system. It establishes the right to a progress payment in the construction industry and creates a regulated environment for claiming, negotiating and paying contractors in an orderly, timely manner. it includes a process for adjudicating disputed payment claims that is intended to be fast, reliable and inexpensive. The Act establishes a general method for claiming, negotiating and disputing payments and reasonable terms of trade for all parties.

In Queensland, that Act applies to almost everyone working in the construction industry, including cleaning and maintenance contractors, consultants and suppliers. It excludes only some mining, direct employees, resident home owners and certain financial instruments. It does not exclude developers, investors or owner-builders. Others are similar.

The Act refers to Claimants and Respondents. The Claimant is a person making a progress claim (a payment claim). A Respondent is the person who is required to make a payment for work done.

The supply chain is - supplier or consultant (claimant) > < subcontractor (claimant / respondent) > < head contractor (claimant / respondent) > developer, investor, commercial client. You can see that subcontractors and head contractors are both claimants and respondents under the Act.

This means that you must be aware of your rights and obligations both as a Claimant and a Respondent, in relation to both payment and to suspending work if you are not paid.

Deadlines for all actions and notices under the Payments Act are strict and deadly. You must know what they are and meet them.

If you have a system for invoicing and payment you should have no difficulty complying with the Act. Some simple adjustments to your system can make it very efficient, so that complying with the Act can make your invoicing and payment processes more efficient and effective.

In the end of the day, if you are acting honestly and ethically and you do not ignore the Payments Act, you will find it works for you and all the people you deal with.

The AIQSANA can advise you on how to make the Act work for you and how to avoid pitfalls.

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