The four major changes you need to be aware of:
Parts of the Building Industry Fairness Act (Security of Payments) Act 2017 (‘the BIF Act’) commenced on 1 March 2018 (Project Bank Accounts), but the major overhaul of the security of regime will finally start on 17 December 2018. See our previous Project Bank Account news post here.
ARE YOU READY?
What impact will the Building Industry Fairness Act really have?
1) All invoices will now be Payment Claims
You will no longer need to refer to the Act on your Payment Claims. What this means is any invoice sent will most likely be a Payment Claim.
You no longer having the ability to choose to make an invoice a Payment Claim, every invoice you issue will fall under the regime of the BIF Act, whether you like it or not.
This means the strict time frames that apply under the BIF Act will apply from the day you send an invoice.
2) Payment Schedules will be compulsory
Every time you receive a Payment Claim, no matter how small or large, you will be required to issue a Payment Schedule, the only exception to this requirement is if you pay the payment claim in full and on time.
Under the BIF Act, this means even a small invoice from a supplier, will require the issuing of a Payment Schedule. Heavy penalties of up to 100 penalty units (currently $13,055.00) can be issued if you do not issue a Payment Schedule in response to a Payment Claim received.
QBCC have advised, they will be taking an ‘educational’ approach at the first instance for breaches of the BIF Act. Regardless, the penalties do exist and it is yet to be seen in what circumstances fines will be issued.
3) Second Chance Payment Schedules abolished
Under the Building and Construction Industry Payments Act 2004 (‘BCIPA’), a notice was required to be delivered to give a second chance to issue a Payment Schedule, under Section 20A. This second chance Payment Schedule will no longer exist under the BIF Act.
However, the notice system has not been abolished entirely. Instead there will be a need to issue a notice, under Section 99 of the BIF Act, of your intention to commence legal proceedings. This notice will be required to be delivered:
- After a Payment Claim has been issued; and
- The Payment Claim is not paid in full by the due date; and
- You intend to commence legal proceedings for recovery of the unpaid portion of the Payment Claim.
If you do not deliver this notice within the required time frames, you will not be able to rely on the BIF Act in any legal proceedings.
4) Significant changes in timeframes for Adjudication Applications
If you have previously used BCIPA you would be aware of the maze of time frames to navigate for Payment Schedules, Adjudication Application and Responses.
While the BIF Act was intended to streamline the process, unfortunately the complication with time frames has not been resolved, and there is a minefield of deadlines to comply with yet again.
The good news is, time frames to Applications for adjudications will be extended, giving more reasonable time frames to submit an application.
Talk to us for assistance with the new BIF Act
Not sure how to comply with the BIF Act? Download our BIF Act payment chart – a handy step-by-step diagram of the time frames applicable – below.
For a personal approach in helping your business get ready for these changes, contact our experienced Building and Construction Law team on 3370 5100 or fill out the contact form here.
