Significant amendments to Victoria’s Security of Payment Act are now in effect

What you need to know

• On 15 April 2026, significant new amendments to Victoria’s Building and Construction Industry Security of Payment Act 2002 (Vic) (Vic Act) came into effect.¹ The amendments mark a change of course for Victoria's security of payment regime. These reforms, which repeal a number of amendments made in 2006, bring Victoria's security of payment regime back into closer alignment with security of payment regimes in other jurisdictions in Australia.²
• The amendments importantly apply retrospectively to construction contracts entered into before they came into effect last week.³ However, payment claims already served before the date the amendments came into effect and adjudication applications not yet determined are to be dealt with under the Vic Act as it applied before the amendments came into effect.⁴

What you need to do

Parties in the construction sector in Victoria should take the following steps now that the amendments have come into effect:

• Review contracts to:
  • ensure that the exchange of payment claims and payment schedules, along with the payment of any scheduled amounts, occur in compliance with the Vic Act; and
  • consider the potential for any time-bar clauses to be declared 'unfair' and therefore void in an adjudication or other dispute process.
• Be mindful of the expanded scope of amounts that may be claimed in payment claims: time-related costs (such as delay costs and liquidated damages), and costs that arise from latent conditions and changes in regulatory requirements.
• Ensure that payment schedules include all reasons for withholding any payments.
• Be mindful of the new requirements with respect to performance security (including a notice requirement that must be satisfied prior to having recourse to any performance security).

A change of course

Victoria enacted the first iteration of the Vic Act after the introduction of security of payment legislation in NSW at the turn of the century and for a number of years the two regimes were closely aligned. However, amendments were made to the Vic Act in 2006 that marked a divergence between the two regimes, and arguably watered down the practical application of the Vic Act regime when compared to the NSW regime and the other regimes modelled on it.

The Victorian Government has now changed course and amended the Vic Act following a lengthy period of consultation with parties in the construction sector.

'Excluded amounts' amendments have been repealed

The most significant reform is the repeal of the amendments in relation to 'claimable variations' and 'excluded amounts' made in 2006.⁵ There is no longer any concept of claimable or non-claimable variations.

Claimants may now include claims for time-related costs (such as delay costs and liquidated damages), and costs arising from latent conditions and changes in regulatory requirements.

The concept of ‘reference dates' has been abolished

The requirement that a 'reference date' must first accrue in order to make a payment claim has been abolished.⁶ Claimants may serve a payment claim on and from the last day of the named month in which construction works were first carried out (or related goods and services first supplied) and each subsequent named month.⁷ A payment claim served earlier under the contract is not invalid – it is taken to have been served on the earliest day it could have been served.⁸ The time within which a payment schedule may be served also does not commence until the earliest day a payment could have been served.⁹ Termination of a contract does not affect the entitlement to serve a payment claim.¹⁰

An extended time to serve payment claims

The latest time a payment claim may be served has been extended from 3 to 6 months after practical completion (or later if permitted under the contract).¹¹

Payment schedules must include all reasons for withholding payment

Respondents are now prohibited from raising new reasons for withholding payments in any adjudication response. They can only rely on the reasons for withholding payments set out in their payment schedule.¹² This is a departure from the former regime under which a respondent could include new reasons for withholding payment that were not included within its payment schedule in an adjudication response.¹³

Updated payment deadlines

Unless a longer period is expressly provided for under the contract, payment claims or performance security claims must now be paid within 10 business days.¹⁴ However, any clause in a contract that purports to extend payment beyond 20 business days is deemed to be void.¹⁵

Holiday shutdown period

The definition of 'business day' has been amended to exclude the period between 22 December and 10 January each year. This effectively imposes a Holiday shutdown period for the operation of the Vic Act similar to other jurisdictions, preventing what at times in Victoria had been the practice of serving a payment claim just before Christmas with the respondent not having the benefit of any shutdown period.¹⁶

Time bar provisions can be declared 'unfair' and void

Adjudicators, expert determiners, courts and arbitrators are now empowered to declare time bar provisions 'unfair' and therefore void where compliance with them is not reasonably possible or would be unreasonably onerous.¹⁷ Several factors must be taken into account when determining whether a time bar provision is 'unfair', including when the party giving notice would reasonably have become aware of the last day to give notice and the relative bargaining power of the parties.¹⁸

New performance security requirements

New requirements with respect to performance security feature throughout the Vic Act and include the establishment of a statutory regime to claim the release of performance security and the service of performance security schedules.¹⁹ Parties are also not entitled to have recourse to performance security unless they have served a notice of intention to do so and at least 5 business days have passed (or any longer period specified in the contract).²⁰ Parties cannot contract out of this notice requirement.²¹

Ashurst can support you to address the amendments

The Global Construction Disputes Group at Ashurst has extensive experience advising clients in relation to the Vic Act and other security of payment regimes in Australia and across the world, and we can support you to address the significant new amendments to the Vic Act.

Please reach out to your Global Construction Disputes Group contact if you would like to discuss the implications of the significant new amendments.

Other authors: Santiago Morande, Paralegal