Department of Finance

Non-payment of subcontractors

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Assistance available for all subcontractors

On any construction project – government or private enterprise – subcontractors who have not been paid on time by the head contractor, or haven't been paid the full amount, can:

  • use the dispute resolution mechanism in their contract
  • seek rapid adjudication under the Construction Contracts Act 2004. Visit the Building Commission of WA web site or call 1300 489 099. Further details are below
  • obtain guided dispute resolution and mediation through the Small Business Development Corporation. Visit the SBDC web site or call 133 140
  • gain a determination through the Magistrates Court for minor claims for debt or damages. Visit the Magistrates Court web site or call 9425 2222
  • contact their industry association. It may have low-cost dispute resolution processes for members.

Subcontractor responsibilities

All subcontractors on construction projects have a responsibility to fully understand their risks, rights and obligations concerning contracts, credit management, debt recovery and dispute resolution before entering into any subcontracting arrangements.

Subcontractors are encouraged to obtain independent legal advice in relation to their activities.

If a head contractor goes into receivership, administration or liquidation, subcontractors may not receive any payment for amounts they are owed.

Additional assistance for subcontractors on BMW projects

The Department of Finance's Building Management and Works (BMW) is committed to assisting subcontractors receive timely payment. Subcontractors who have not been paid on projects managed by BMW should first speak to the head contractor on the project to seek resolution.

If no resolution is reached, subcontractors can contact the BMW project manager, the project consultant or talk to BMW's Feedback Officer, who can be contacted by:

BMW will investigate the claim, and report on the outcome. It is important that subcontractors give BMW any supporting documents (i.e. invoices, correspondence, claims) to support the complaint.

If the non-payment is the subject of a contractual dispute between the subcontractor and the head contractor, BMW is legally unable to intervene because it is not party to the contractual agreement between those two parties.

In these cases, the subcontractor will need to seek independent legal advice or contact the Building Commission of WA, or the Small Business Development Corporation, who may be able to help resolves disputes.

Subcontractors and the Construction Contracts Act

Taking legal action to recover money can be time-consuming and costly. Contracts in the construction industry are covered by the Construction Contracts Act 2004, administered by the Department of Mines, Industry Regulation and Safety’s Building Commission.

The Act has a rapid adjudication process to resolve disputes over payments that can happen when individuals and organisations enter into contracts for building and construction work.

Under the Act, an adjudicator can be appointed and there are time limits for the adjudication process. For more information on the Act please call the Building Commission on 1300 489 099.

Please note that the adjudication process under the Act is for contracts, not salary or wage disputes. For assistance with salary or wage disputes, please contact the Fair Work Ombudsman by telephoning 13 13 94.

On 15 December 2016, changes to improve the Act became law, including:

  • an application for rapid adjudication can now be lodged up to 90 business days after a payment dispute begins
  • applications can now be made for unresolved disputes from earlier claims
  • there are faster and more efficient means for enforcing an adjudication determination through the courts.

On 3 April 2017, the maximum payment term permitted in construction contracts was reduced to 42 calendar days.

Other helpful information

The Building Commission WA - Dispute Resolution - building complaints, payment disputes and information for subcontractors.

The Building Services (Complaint Resolution and Administration) Act 2011 provides a streamlined system of registration and approval for persons working in the building industry.

How to proceed with a claim through the Magistrates Court - Fact Sheet.

The Small Business Development Corporation resolving a dispute.

The Ombudsman Western Australia - How to make a complaint.

The Department of Mines, Industry Regulation and Safety building facts - Legislative Framework.

Western Australia's building laws - The Building Act

How to submit feedback and complaints for projects managed by the Department of Communities (Housing).

 

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