Pay When Paid Provision
‘I’ll pay you when I get paid’ – This is Illegal under the Security of Payments Act!
If the person you have done work for (the Respondent) is not paying you because they have not been paid, this is not your problem!
Each Security of Payments Act legislation has in it a provision that prohibits the Respondent from withholding payment from you on the basis that they have not been paid yet by a Principal/Head Contractor.
Can the Principal Contractor withhold payment under the Security of Payments Act?
Depending on your state and situation, you may be able to issue a ‘Payment Withholding Request’ under the Security of Payments Act, prohibiting the Principal Contractor from paying the Respondent the amount outstanding to you until you have been rightfully paid.
If the Respondent still refuses to pay, the Principal Contractor under the Security of Payments Act is legally obliged to use the money they have withheld from the Respondent to pay you directly.
BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT ACT NSW 1999 Section 26A: Principal contractor can be required to retain money owed to respondent “(1) A claimant who has made an adjudication application for a payment claim can require a principal contractor for the claim to retain sufficient money to cover the claim out of money that is or becomes payable by the principal contractor to the respondent. (2) Such a requirement is made by serving on the principal contractor a request (a “payment withholding request”) in the form approved by the Director-General of the Department of Services, Technology and Administration.”Section 26B: Obligation of principal contractor to retain money owed to respondent “(1) A principal contractor who has been served with a payment withholding request must retain, out of money owed to the respondent, the amount of money to which the payment claim relates (or the amount owed by the principal contractor to the respondent if that amount is less than the amount to which the payment claim relates).”
Can I stop work/supply under the Security of Payments Act?
Under the Security of Payments Act and depending on the situation you are in, you may be able to stop works and/or the supply of goods and services to the Respondent given you meet the specific timeline requirements set out in the Security of Payments Act relevant to your situation.
BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT ACT NSW 1999 Section 27: Claimant may suspend work “(1) A claimant may suspend the carrying out of construction work (or the supply of related goods and services) under a construction contract if at least 2 business days have passed since the claimant has caused notice of intention to do so to be given to the respondent under section 15, 16 or 24.”
So if the person/company who owes you money has refused to pay you because they have not been paid, do not give up… use it to your advantage – contact Recoup today and ask what options are available to you for your individual situation.