Victoria's Security of Payment Act 2026 reforms: what every builder needs to know

This article is general information for Australian construction professionals, not legal advice. It summarises our reading of the Building and Construction Industry Security of Payment Act 2002 (Vic) as amended by the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (No. 43/2025), commenced 15 April 2026. Statutory interpretation is contract-specific. Before you change templates, refuse a claim, or commit to amended payment dates, get advice from a construction lawyer who has read your contract.

On 15 April 2026 the Victorian SOP Act was overhauled in its biggest rewrite since 2006. Every Victorian construction contract is now affected — whether or not the contract itself has been amended.

The headline changes

1. A 20 business day cap on payment after a claim is served (s.12(1B)). Contract terms longer than that are now void to that extent.
2. A new 10 business day default when the contract is silent on payment timing (s.12(1)(b)).
3. Reference dates and "excluded amounts" are abolished. Items previously carved out of SOP claims — notably variations and time-related amounts — can now be valued and included where they fit within the s.10 / s.11 valuation framework.
4. Notice-based time bar clauses can now be declared unenforceable (s.13A). If your subcontract says "no notice within 7 days = no entitlement", an adjudicator or court can set that aside for any entitlement where compliance was not reasonably possible or would be unreasonably onerous.
5. A new performance security claim regime (Division 1A, ss.17A–17H) — you can serve a formal claim to get bonds returned or retention released.
6. A mandatory 5 business day notice of intention before any recourse to performance security (s.17H). Cannot be contracted out.
7. Claims can be served throughout the project, plus 6 months after completion. During the project, you can serve one claim per named month under s.14A (or more often if the contract permits). The right to serve doesn't expire at practical completion — under amended s.14C you have up to 6 months after the latest of practical completion, supply of all related goods and services, or any contractually-specified latest day. Previously the post-completion window was 3 months.

The reforms apply to every payment claim served on or after 15 April 2026 — even under contracts entered into years earlier.

1. The 20 business day cap on payment (s.12(1B))

Old position. Many head contracts and subcontracts sat at 30, 45 or 60 days from invoice. The Act let the contract decide when payment fell due.

New position. Any contractual term that pushes payment due later than 20 business days after the claim is served is void to that extent. The cap measures from the date the claim was actually served on the respondent. It applies to every Victorian construction contract regardless of when it was entered into.

Default if the contract is silent (s.12(1)(b)): payment is due 10 business days after the earliest day the claim could have been served under s.14A — which is the last day of the named month the work was performed in.

The 20 BD cap and the 10 BD default measure from different anchor points. The cap measures from actual service; the default measures from the end of the named month. Two clocks. Same section.

What this means for you:

• Pull every active Victorian contract and check the payment clause. Anything longer than 20 business days from service is now legally unenforceable to that extent.
• You cannot "fix" old contracts by signing new terms unless they shorten the timeline. Section 48 prohibits contracting out. Any clause attempting to extend beyond 20 BD is void.
• Update your accounts payable assumptions. A historical 60-day cycle now compresses to 20 BD as soon as a contractor invokes the Act.

2. The new business day definition (s.4) — a true industry shutdown is now baked in

Before April 2026, "business day" under the Victorian SOP Act only excluded weekends and Victorian public holidays. That meant the Act's clocks kept ticking through the construction industry's near-universal Christmas-to-New-Year shutdown — so a payment claim served on 20 December could have its 10 BD schedule deadline land in the first week of January, with everyone on annual leave.

The amended s.4 fixes this. For the purposes of the Act, a business day now excludes:

• Saturdays and Sundays
• Public holidays observed throughout Victoria
• The entire period from 22 December to 10 January inclusive — a brand-new statutory shutdown introduced by the 2025 Amendment Act

This affects every clock in the Act — the 10 BD payment schedule deadline, the 20 BD payment cap, the 5 BD recourse notice, the 10 BD adjudication application window. Plan accordingly: claims served in mid-December are not due back in early January.

3. Reference dates are gone; named months are in (s.14A)

The old concept of a "reference date" — a contractually-defined trigger that opened a claim window — has been deleted. In its place: the named month rule.

A payment claim can be served:

• From the last day of the named month in which the work was first carried out
• From the last day of each subsequent named month with further work

Christmas / January exceptions (s.14A(2)):

• Work performed 1–21 December: claim may be served from 22 December the same year
• Work performed 22–31 December: claim may be served from 31 January the following year

Early service is not invalid (s.14A(5)). If a claimant serves before the earliest permitted day, the claim is deemed served on that earliest day. The 10 BD schedule-reply clock doesn't start until then.

Contracts can specify an earlier permitted day (s.14A(3)). They cannot push it later (s.14B(1)(a)) — that's void.

Why this is a bigger change than it looks. Under the old reference-date model, the 10 BD schedule-reply clock ran from the day the claim was actually served. A subcontractor invoicing on the 26th of the month put you on a 26th + 10 BD deadline. Under s.14A(5), an early-served claim is deemed served on the earliest permitted day. With a silent contract, that's the last day of the named month — so the same 26th-of-month submission now starts the 10 BD schedule clock from the 31st, not the 26th. The 20 BD payment cap also runs from the deemed date when service is deemed early. The clocks effectively get pulled back to month-end across the board.

If the contract specifies an earlier permitted day under s.14A(3), the clock starts from that earlier day instead — and a claim served before it is still deemed served on it.

Open question — existing reference-date clauses. Many pre-2026 contracts nominate a fixed monthly date (e.g. the 25th) as the "reference date" for claim purposes. The new Act doesn't transition the concept across explicitly, but a clause nominating a date earlier than month-end reads naturally as an "earlier permitted day" under s.14A(3) — which would carry it across cleanly. Clauses pointing past month-end are void under s.14B(1)(a) regardless. Worth getting existing contracts reviewed before relying on either reading.

4. The legal strategy: lock supplier claim timing to your billing rhythm

This is the practical move most builders are missing.

Most head contractors settle progress claims monthly, around month-end. Under the new regime your own head-contract claim has a fixed 10 BD default (or contract-specified, max 20 BD) clock from service. If your suppliers and subcontractors serve their claims to you mid-month, the asymmetry can force you to fund them before your principal pays you.

The Act gives you a head start on the fix. By default, s.14A(1) already makes the earliest day a payment claim can be served the last day of the named month in which the work was done. And s.14A(5) does automatic enforcement: a claim served before that day is deemed served on it, with the 10 BD schedule clock and 20 BD payment cap both starting from the deemed date — not from when the invoice landed in your inbox.

In other words, the Act already pushes mid-month invoices forward to month-end for SOP purposes. What a contract clause adds is clarity in writing and the option to shift the deemed date from "last calendar day" to "last business day" — important in months where the last calendar day falls on a weekend.

Sample clause:

The parties expressly agree that for the purposes of the Building and Construction Industry Security of Payment Act 2002 (Vic), a payment claim may only be served on or after the last business day of the calendar month in which the goods or services were supplied. Any invoice or document purporting to be a payment claim delivered prior to this date will be deemed to have been served on the last business day of that month.

This clause does three useful things at once:

1. Crystallises the month-end alignment in writing. Removes any argument from a supplier that their early invoice should start the clock from when it was sent.
2. Shifts the deemed-service date from last calendar day to last business day. In months ending on a weekend, this can push the SOP clock a day or two later — which is in your favour when you're paying.
3. Records the agreement for evidentiary purposes if the matter ever ends up in adjudication or court.

Two guardrails:

• You can't restrict frequency below once a month. Under the interplay of s.14A(1), s.14B(1)(a) and s.14D, a clause that effectively limits a supplier to claims less frequently than once per named month is void. End-of-month alignment is fine; less than monthly is not.
• Verbal agreements won't reliably work. While the Act's default already pushes early service to month-end, removing all ambiguity requires the contract to spell it out and be signed before work starts.

This isn't a loophole. It's the Act working as intended — Parliament preserved party autonomy over claim timing inside the statutory bounds, and the default rule already favours month-end alignment. A written clause makes it explicit and gives you a marginal extra day or two in months with a weekend ending.

5. Variations and previously-excluded amounts are back inside the claim

The 2006 reforms had introduced the concept of excluded amounts — categories of claim that couldn't ride inside a SOP Act payment claim, particularly certain variations and time-related amounts. That concept has been repealed.

Progress payments are still calculated on the basis of the value of construction work carried out and related goods and services supplied under the contract (s.10, s.11). What's changed is that the legislature no longer pre-emptively excludes whole categories from that valuation. Variations agreed by the parties — and variations otherwise reasonably valued — now travel inside the payment claim. The respondent's defence sits in the payment schedule, not in pre-emptive statutory exclusion.

(Pure damages claims standing on a separate cause of action — for example, common-law delay damages or breach-of-contract loss — still need to fit within the s.10 / s.11 valuation framework to be claimable under the Act. They're not automatically pulled in just because "excluded amounts" is gone. If in doubt, get advice.)

6. The new performance security regime (Division 1A)

Before April 2026, getting a bond returned or retention released was largely a contractual matter, with court enforcement as the backstop. Now there's a statutory claim process that mirrors the payment claim process.

• s.17A — Performance security claim. A formal claim, in prescribed form, identifying the work, the type of security (bond or retention), and the amount claimed.
• s.17B — Earliest service date. The earlier of (a) 20 BD after the end of the relevant defects liability period, or (b) a contractually-specified date or event.
• s.17C — Latest service date. The later of (a) any contractually-specified latest day, or (b) the last day of the named month following the named month in which the last defects liability period under the contract ends.
• s.17E — Performance security schedule. The respondent's reply, due within the earlier of contract time or 10 BD after service.
• s.17F / 17G — Consequences. Same shape as for payment claims: court order or adjudication.

Release of performance security has the same 20 BD cap and 10 BD default as payment (s.12(1A), s.12(1B)).

7. The mandatory 5 business day recourse notice (s.17H)

Before you can call on a performance bond or claw back retention, you must:

1. Serve a written notice of intention to have recourse, identifying the contract, the provisions you're relying on, the amount, and the circumstances entitling recourse
2. Wait at least 5 business days (or longer if the contract specifies)

These requirements are read into every Victorian construction contract under s.17H(3). They cannot be contracted out.

What to update: if your contracts give you a unilateral right to draw on bond, that right now operates only after the 5 BD notice. Refresh your template wording. If a dispute around performance is brewing, get the notice out earlier rather than later — the 5 BD clock is statutory and there's no rushing it.

8. When can you serve a claim? Throughout the project — and for 6 months after (s.14A and s.14C)

The new regime sets the timing of payment claims in two parts.

During the project (s.14A): you can serve one payment claim per named month, starting from the last day of the first named month in which work was carried out. The contract can permit more frequent service (s.14A(3)) but cannot push the earliest day later than the end of the named month (s.14B). Frequency cannot be restricted below once a month (s.14B(1)(a)).

After the project ends (s.14C): the right to serve a claim continues for up to 6 months after the latest of:

• (a) any contractually-specified latest day for serving a claim,
• (b) the practical completion of all construction work under the contract, or
• (c) the supply of all related goods and services under the contract.

That's a doubling of the previous 3-month post-completion window. If your project hit practical completion in the last 6 months and you have disputed amounts that were never claimed properly, your statutory right may still be alive.

Practical effect: under the old Act, missing the 3-month window after PC often meant you'd lost the statutory claim path entirely. The longer 6-month window gives final-account negotiations more room to play out before the door closes.

9. Notice-based time bars can now be set aside as unfair (s.13A) — and this is huge

This is the change that's going to land hardest in subcontract disputes.

Almost every Australian construction subcontract carries notice-based time bars: "if you don't notify of a delay within 7 days, you waive your right to an extension of time", or "variations not submitted in writing within 14 days are deemed waived". These clauses have historically been brutal for subcontractors — miss the deadline by a day, lose the entitlement entirely, regardless of whether the substantive claim was meritorious.

Under the new s.13A, an adjudicator, a court, an arbitrator, or a contract-appointed expert can declare a notice-based time bar unfair in relation to a particular entitlement if compliance with the clause:

• was not reasonably possible, or
• would have been unreasonably onerous.

If the time bar is declared unfair, it has no effect on that entitlement. The substantive claim — the extension of time, the variation, the cost — can proceed on its merits.

A few important nuances:

• The unfairness ruling applies only to that specific entitlement in that specific dispute. The clause continues to operate for other matters under the contract. So it's not a sweeping invalidation; it's a targeted carve-out, one entitlement at a time.
• The onus is on the party alleging unfairness to establish it. You can't just assert it — you need to point to facts that made compliance impossible or unreasonably onerous (incomplete information, no realistic opportunity, deadlines tied to events the party couldn't know about).
• Mandatory factors the decision-maker must weigh include: when the party would reasonably have become aware of the deadline, how notice was required to be given, the relative bargaining power of the parties at contract formation, whether the matters set out in the notice are final and binding, and presumptions about the contractor's commercial and technical competence.
• The decision-maker must NOT look at the provisions of any related contract, or what happened under any related contract. The fairness assessment is contained to the contract in dispute.
• This applies to notice provisions tied to (i) entitlements to be paid for construction work or RGS, (ii) extensions of time that affect such entitlements, and (iii) the release of performance security.

What this means for you:

• Subcontractors: if you've been told you've lost an entitlement because of a missed notice deadline, the path forward isn't necessarily blocked. Document what you knew and when. Document the practical impossibility (incomplete drawings, late variation instructions, deadlines starting from events you weren't told about). The adjudicator has a statutory hook to look past the bar.
• Head contractors and principals: the days of treating notice-based time bars as automatic "get-out-of-claim-free" cards are over. Don't draft your defence around the time bar alone. If the underlying claim has merit, expect the adjudicator to consider s.13A.
• Drafting going forward: notice provisions that require notice within unreasonably short windows from events the contractor couldn't know about are now meaningfully weaker. Time bars that key off events the party clearly has notice of (e.g. their own variation submission) remain robust.

s.13A is one of the most commercially significant changes in the 2025 amending Act, even though it sits quietly between the high-profile payment-cap rules and the new performance security regime.

10. What happens to claims and adjudication applications already in flight

The transitional rules (s.54) draw the line on the basis of claim service date, not contract date:

• Payment claims served before 15 April 2026 continue under the old Part 3 procedure.
• Adjudication applications made but not determined before 15 April 2026 continue under the old s.18 rules.
• Everything else served on or after 15 April 2026 uses the new regime — including under contracts entered into years ago.

The new Part 2 contractual rights (the 20 BD cap, the new business day definition, the performance security regime) apply to every Victorian construction contract, regardless of entry date.

What this means for ClaimStack users

We've already updated ClaimStack's core calculation engine for the new regime. Live now across the platform:

• Victorian payment due dates are calculated against the s.12(1B) 20 business day cap. Wherever a contract term tries to push past it, the cap is applied automatically.
• The 10 BD payment schedule deadline and the payment due date are tracked as separate clocks with their own anchor points (the schedule runs from actual service; the payment due date runs from either the actual service date capped at 20 BD, or — if the contract is silent — 10 BD from the earliest s.14A service date).
• The 22 December – 10 January shutdown is excluded from all Victorian business day calculations under the Act.
• A new payment_due_business_days field on contracts captures the contractual SOP payment term separately from any invoice payment term, so the cap and the contract can be reconciled per contract rather than at a project default level.
• Updated SOP Act declaration wording on the front page of every Victorian payment claim and payment schedule PDF.
• Performance security claims, schedules, and recourse notices are now first-class records in the database, ready to receive the lifecycle UI being built next.

Coming in upcoming releases:

• A dedicated performance security workflow — serve a s.17A claim, log a s.17E schedule, issue a s.17H 5 BD recourse notice and have the platform stop the recourse clock for you.
• Automatic s.14A deemed-service stamping at claim submission — so early-arriving claims show their legal service date, not just the invoice date.
• A s.14C 6-month validity indicator when serving final claims after practical completion.
• The Supplier Sync workflow — generate, send and digitally sign a standard month-end alignment addendum with each supplier or subcontractor, instead of bespoke legal drafting per contract.

Frequently asked questions

When did the new Victorian SOP Act rules commence? The amending Act commenced on 15 April 2026. The new Part 2 contractual rights apply to every Victorian construction contract from that date, regardless of when the contract was entered into. The new Part 3 procedural rules apply to payment claims served on or after 15 April 2026.

What is the maximum payment term under the amended Victorian SOP Act? 20 business days after the payment claim is served on the respondent (s.12(1B)). Any contractual term longer than 20 business days is void to the extent of the excess. The same 20 business day cap applies to the release of performance security.

What is the default payment timeframe if the contract is silent? 10 business days after the earliest day on which the claim could have been served under s.14A — which is generally the last day of the named month in which the work was performed.

Are reference dates still required for a Victorian payment claim? No. The concept of a reference date has been deleted from the Act. A claim can be served from the last day of the named month in which work was carried out, with December and January exceptions under s.14A(2).

Can a contract require less frequent payment claims than monthly under the new Victorian SOP Act? No. Section 14B(1)(a) voids any contract clause that restricts a claimant to serving less than one claim per named month. Contracts may permit more frequent service but not less.

How long do I have to make a final payment claim after practical completion in Victoria? You have up to 6 months from practical completion of all construction work, or from the supply of all related goods and services, to serve a final claim under the Act (s.14C). The previous deadline was 3 months.

Do the new rules apply to contracts signed before 15 April 2026? Yes for contractual rights under Part 2 — including the 20 business day cap, the new business day definition, and the performance security regime. The new Part 3 procedural rules (claim, schedule, adjudication mechanics) apply to payment claims served on or after 15 April 2026.

What is the new notice of intention to have recourse to performance security? A mandatory written notice that must be served at least 5 business days before any recourse to a performance bond or retention money (s.17H). The notice must identify the contract, the provisions relied on, the amount, and the circumstances. These requirements are read into every Victorian construction contract and cannot be contracted out.

Are excluded amounts (like variations and damages) still excluded from payment claims? No. The concept of "excluded amount" has been repealed. Variations and other previously-excluded items can travel inside a payment claim, valued under s.10 and s.11. The respondent's challenge belongs in the payment schedule.

Does early service of a payment claim invalidate it? No. Under s.14A(5), if a claimant serves a claim before the earliest permitted day, the claim is taken to be served on the earliest permitted day. The 10 business day schedule-reply window does not start until that earliest day.

Can a notice-based time bar still block my claim under the new Victorian SOP Act? Not automatically. Under s.13A, an adjudicator, court, arbitrator, or contract-appointed expert can declare a notice-based time bar unfair in relation to a particular entitlement if compliance with the clause was not reasonably possible or would have been unreasonably onerous. The clause still operates for other matters under the contract — only its effect on that specific entitlement is set aside. The party alleging unfairness bears the onus of establishing it.

Can I serve a payment claim during a project, or only after completion? Both. Under s.14A you can serve one payment claim per named month during the project (or more often if the contract permits). Under s.14C the right to serve continues for up to 6 months after the latest of practical completion, supply of all related goods and services, or a contractually-specified latest day.

Where to get advice

The reforms are substantial and the commercial implications go beyond what any blog post can cover. For your specific contracts and situations, talk to a construction lawyer or a quantity surveyor who has been working through the changes. If you want a software platform built around the new regime, book a call with us.

Sources: Building and Construction Industry Security of Payment Act 2002 (Vic), authorised version No. 014 as in force from 15 April 2026; Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (Vic), No. 43/2025; Victorian Building Authority guidance.

Disclaimer: This article was prepared by the ClaimStack team to help builders navigate the 2026 reforms in practical terms. It is general information only and does not constitute legal advice, nor does it establish a lawyer–client relationship. Reliance on the contents is at the reader's own risk. Before acting on anything in this article, please consult a qualified construction lawyer with your specific contract and circumstances.