Getting Security of Payments Right

Subcontractors often come to us at the eleventh hour for help when they haven’t been paid, but there are some common pitfalls that can put the benefit of the Security of Payments Act out of their reach. In this article I have summarised some of the most frequent problems encountered.

security of payment act adjudication application

1. Failure to Endorse the Payment Claim

For work done or supplies made subject to a contract entered into on or after 21 October 2019, the Payment Claim must include an endorsement stating that it is a Payment Claim made under the Building and Construction Industry Security of Payments Act 1999 or words to that effect.

2. Failure to Adequately Describe the Work Claimed

The description of the work appearing on the Payment Claim should be sufficiently clear to allow the recipient to identify what work is being claimed for.

3. Submitting Payments Claims at the Wrong Time

Payment Claims may only be made;

  1. on or after the last day of the month in which work was done unless an earlier date is provided by the Contract; and
  2. within 12 months after the construction work claimed was last carried out unless the Contract provides for an earlier date(s).

There is an exception to the above if the Contract has been terminated, in which case a Payment Claim can be made on or from the day of termination.

4. Submitting Multiple Payment Claims

Only one Payment Claim may be made in any given calendar month unless the Contract expressly provides otherwise. The effect of submitting multiple Payment Claims in a single calendar month absent a contractual entitlement to do so will be to render all but the first Payment Claim made in that month invalid for the purposes of the Act.

A common pitfall is made by Claimants that submit separate Payment Claims for contract scope works and variations respectively.

5. In General

Failure to align Payment Claim preparations, submissions and service with the contractual provisions relevant to the particular work claimed for can jeopardise a Claimant’s access to the benefits of the Act.

At Roberts Legal, we can review your Contracts and provide;

  • advice before you sign the contract,
  • an understanding of the essential terms of the contract relating to the timing and service methods for valid Payment Claims,
  • a plain English summary of the Contract that can be referred to with confidence explaining how to effectively administer the Contract in response to key events such as progress payments, delays and extensions of time.

If you are a Head Contractor or Subcontractor that provides your own Contracts for construction work or the supply of materials, we also offer a number of practical solutions including:

  • preparation of standard form contracting documents including Quotation templates, Purchase Order forms, Terms & Conditions of Trade, Variation Forms and Credit Applications,
  • preparation of long form plain English Construction Contracts and Contract Matrices for larger projects, and
  • advice in relation to one-off Construction Contracts and the preparation of a Contract Matrix for future reference and ease of administration.