How Does The Security of Payment Act Work?

Many industries employ contractors for assistance in larger projects. Their services are necessary for various different markets such as construction programming, design, etc. When you outsource talent to contractors, you create a contract that dictates how you will pay them for their services. In construction, the costs tend to vary and cause disagreements among parties involved. This often leads to contractors losing out on pay, even though they've provided the services that were requested.

Various Australian states have implemented legal measures to prevent this kind of situation and to provide personnel in construction and architecture with the payments they’ve earned. In NSW, the recently passed SOPA helps resolve disputes and provides a level of security to workers’ payments. While most states have implemented similar measures, SOPA has some specificities that set it apart from Queensland’s BIFA, for example. Here, we’ll do a quick overview of how it works and what it means for construction work and contractors.

How is construction work defined?

Before you can decide to take legal action under SOPA, you have to figure out whether or not the contractor work falls under its umbrella. While the act does address construction, there are a few related fields that are also protected.

The common-sense meaning of construction work is protected, alongside suppliers which provide materials for different kinds of construction. There are also forms of work that aren't conventionally considered construction, such as the installation of air conditioners, heating, and lighting, are protected as long as they are done during the construction process. Contractors that are hired to clean the location of construction are also protected.

What are related goods and services?

As previously mentioned, SOPA protects various other industries that provide services for construction work. Provision of labour for construction work is a key part of the construction and demolition of various buildings, which is why it’s covered. Alongside this, you’ll also find that any machinery and support for machinery will be protected, as it directly contributes to the ability of a contractor to do their job. 

Before construction can be done, architects, engineers, and surveyors need to overview the design and determine whether or not construction can be done, alongside how it’s going to be enacted. This relation allows these professions to be protected in the context of construction work. While it might not seem very related, exterior and interior design also play a big part in the process, meaning that SOPA covers this as well.

How do contractors file a payment claim?

Payment claims are a key part of contractor work. Once the services have been provided to a client, the contractor has a set amount of time to file for a claim. To make sure that the payment claim is made for the purposes of SOPA , the contractor must emphasize that the work done was construction, or in some way related to the industry. 

Once the claim is served, the client that hired the contractors has a set amount of time to pay. Should they fail to provide payment within the allocated amount of time, the claimant has a right to recover the full amount through a court process.

How are missed payments recovered?

Should the client not provide the full payment or if they delay the payment process, the claimant can ask for an adjudication. Once an application has been submitted, legal counsel will review the contract and whether or not clients have paid the amount that was agreed upon.

The application has to be submitted to an adjudicator nominating authority for review. It also must identify the exact payment claim and schedule which relate to the contract work. The help of legal counsel from Chedid Storey Lawyers is often requested by claimants, as it helps them form a better application. The application must be filled out properly and submitted as quickly as possible.

When must the client respond?

Once an adjudication application has been filed, the respondent will have five business days to respond and make their case. They are only able to respond if they have provided a valid payment schedule relating to the contract. 

The response must be in writing and identify the application that was submitted by the claimant. It can contain submissions that are relevant to the payment plan, but only if the payments were done according to the schedule provided. There can be no arguments included for not paying the designed sum that is written on the schedule. Other reasons for withholding payments can be disputed.

Conclusion

SOPA is a very helpful tool for contractors that feel that they’ve been wronged by their clients. Should these clients refuse payments and backpedal from the designated payment schedule, they are legally liable and these payments will be forced by a court of law. This act has and will help numerous contractors to receive payments for services provided, so long as they make use of the protections they are provided with.