In brief
This article provides an update to our earlier Baker McKenzie insight published on 11 November 2025, which examined the proposed expansion of Victoria's Building and Construction Industry Security of Payment Act 2002 (Vic) ("SOP Act"). You can read that article here.
As of 15 April 2026, a majority of the proposed amendments to the SOP Act have now commenced, marking the most substantial reform to Victoria's security of payment regime since 2006. The amendments apply retrospectively to existing construction contracts, but do not apply to payment claims served, or adjudication applications made but not determined, before commencement.
Key reforms
The amendments give effect to the reforms foreshadowed by the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill (Vic), including:
- Removal of excluded amounts, meaning the scope of claims capable of being pursued under the SOP Act has been materially broadened (repealed from s 4(1)).
- Reference dates have been removed and replaced with a statutory monthly entitlement (ss 14A, 14B, 14D).
- Extension of the long-stop period to the latest of the contractual "latest day" (if any), six months after practical completion of construction work, or six months after supply of related goods and services (s 14C).
- No "new reasons" in adjudication responses unless those reasons were included by the respondent in the payment schedule (s 21).
- Mandatory maximum payment timeframes, under which progress payments and the release of performance security become due and payable no later than 20 business days after service of the claim (or 10 business days where a contract is silent) (s 12).
- Unfair notice-based time bars may be declared invalid by adjudicators, courts, arbitrators and expert determiners, if compliance is not reasonably possible or would be unreasonably onerous (s 13A).
- Performance security is subject to a new statutory regime permitting claims for its release, including retention money (ss 17A-17G).
- Notice before recourse to security must be given in writing at least 5 business days before (s 17H).
- Christmas shutdown period from 22 December to 10 January is now excluded from the definition of "business day" (s 4(1)).
Recommendations
- Review contracts to amend payment terms, time bars and performance security provisions.
- Update payment claim, payment schedule templates, and payment approval processes.
- Train project teams on the new statutory timeframes and notice requirements.
- Revisit dispute strategies, particularly for delay and variation claims.
For further information and to discuss what this development might mean for you, please contact us.