SOP NSW was created in 1999. Recent key changes were made in November 2013 with the Building and Construction Industry Security of Payment Amendment Act 2013 (NSW). The amendments apply to contracts entered into from 21 April 2014:
a) The removal of the requirement to endorse a payment claim
b) Mandatory deadlines for making progress payments
c) Head contractor supporting statement
d) Enforcement of compliance by head contractors.
Endorsement of claim under the SOP NSW
Prior to the Amendment Bill, a claimant needed to include the wording “This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW)”. The removal of this requirement is to promote wider use of SOP NSW.
Due Date Deadlines for Progress Payments
The time period for making a progress payment will differ depending on the level of the relationship between the parties. Unless the contract provides for earlier payment, progress payments must be made:
These changes cover all construction contracts except for exempt residential construction contracts, which deal with the carrying out of residential building work within the meaning of the Home Building Act 1989 (NSW).
Information to be provided by Head Contractor to Principal
As a result of the changes made in 2013, a head contractor will serve the payment claim on a principal alongside a supporting statement that relates to the particular claim. The requirements of the supporting statement include that all subcontractors have been paid all amounts that have become due and payable. The requirements of the supporting statement will be outlined in regulations that are yet to be provided. The regulations may reflect the need to consolidate supporting statement requirements with existing legal obligations relating to payroll tax, workers’ compensation, and employee remuneration.
To enforce compliance with the above new requirements, a new regime has been introduced. Authorised officers will be appointed by the Director General of the NSW Department of Finance and Services, who will be empowered to require head contractors to produce relevant evidence of their compliance with the SOP NSW.
If a head contractor fails to comply with a notice issued by an authorised officer, or provides false documents in relation to a notice, he or she will be liable to a maximum penalty of $22,000 and/or three months’ imprisonment.