What payment terms can a subcontract set?

It depends on the jurisdiction, and the common claim that the acts cap payment terms everywhere is only half true. New South Wales, Victoria, Western Australia and the ACT each stop a contract making payment due later than the statutory date, so a long payment term there is already gone. South Australia, Tasmania, Queensland and New Zealand leave the contract's own date to govern, with the statutory period applying where the contract is silent.

Everywhere, a pay-when-paid clause has no effect, and every statutory clock counts from the date the payment claim was served rather than from an invoice or a certificate.

Three clocks, not one

The contract's payment terms say when the other side has agreed to pay, usually expressed from the end of the month in which the claim was made, or from certification.

The statutory due date is when payment falls due under the act, counted from the date of service. Every jurisdiction sets one, and it does not depend on the contract saying anything.

The schedule deadline is something else again: the date by which the respondent must reply in writing. It is usually earlier than the payment due date and it carries the sharpest consequence. See payment schedules.

All three figures, each with the section of the act they come from, are in the timing summary. Nothing on this page states a number, because they differ across eight jurisdictions and they belong beside their citations.

Where the act overrides the contract, and where it does not

In four jurisdictions the statutory period is a ceiling. New South Wales voids a contract term making payment due later than the statutory date (s 11(8)). Victoria does the same and extends it to the release of security (s 12(1B)). Western Australia and the ACT reach the same result by different drafting: payment falls due on the statutory date or any earlier date the contract provides, so a later contractual date never governs (WA s 20(1), ACT s 13(1)).

In the others the contract's date governs, and the statutory period is what applies when the contract is silent. South Australia (s 11(1)(b)) and Tasmania (s 15(2)) are drafted that way, and neither act voids a later contractual due date. New Zealand is similar: the Construction Contracts Act 2002 sets a due date at s 18 that a contract may displace. In these jurisdictions the term you signed is the term you have.

Queensland sits between the two. The contract's due date governs, with a statutory default where the contract is silent (s 73(1)(b)). But where the contract is a pay-when-paid contract, or breaches the due-date caps in the QBCC Act 1991 (ss 67U, 67W), s 73(4) deems it back to the statutory default. The cap is real; it lives in a different act.

Two things hold everywhere.

A contract can always be more generous, and that binds. Where a subcontract makes payment due earlier than the act requires, the earlier date applies. The act is a floor, never a ceiling.

Under most acts, a contract may shorten the payment schedule deadline but not lengthen it. They express that deadline as the earlier of the contract's time and the statutory one, so the reply window is capped even where the payment term is not. New Zealand's act is the exception: there the time the contract sets applies, and the statutory period applies only where the contract sets none.

Pay-when-paid has no effect

A pay-when-paid or pay-if-paid clause makes payment conditional on the payer being paid by someone above them. These have no effect in every jurisdiction covered here: New South Wales s 12, Victoria s 13, Western Australia s 25, South Australia s 12, Tasmania s 16, the ACT s 14, and New Zealand at s 13 of the Construction Contracts Act 2002. Queensland reaches it by deeming such a contract back to the statutory due date (s 73(4)).

That is the whole clause, not merely an unreasonable version of it. Being told the money has not come down from the principal describes a cash position, not a defence.

Two related clauses deserve the same suspicion: a payment obligation triggered by the principal certifying rather than by your claim, and one deferring payment until a milestone in a contract you are not party to.

The due date counts from service

The date every statutory clock counts from is the date the payment claim was served. Not the date on the claim, not the date a tax invoice issued, not the date the other side's system logged it, and not the date it reached the person who assesses it.

Serving is an act in its own right. Preparing a claim starts nothing, and in some jurisdictions email service needs a contractual basis or recorded consent. Serving it is a separate act from writing it.

A tax invoice is not a payment claim. The invoice is a separate document, whenever it is raised. It starts no clock, and treating its date as the start of payment terms hands the payer weeks they are not entitled to. Why a payment claim is not a tax invoice.

Certification does not set the statutory clock either. The due date counts from service whether or not anyone certifies, so a payer who never returns a payment schedule does not postpone it. They become liable for the full claimed amount on it: when no schedule arrives.

What "30 days end of month" actually means

The common formulation is longer than it sounds, and it is measured in calendar days while the act is not.

A claim served on 3 August, on 30 days end of month, falls due 30 days after 31 August. A claim served on 29 August falls due on the same day. The month boundary, not the claimant's effort, sets the date, which is why claiming early in the month buys nothing and claiming late costs nothing.

The statutory due date is counted in business or working days from the date of service, so the two clocks diverge most for the claim served early in the month. Which one governs is the question the section above answers.

Things that are not payment terms

Retention is not a payment term. It is money withheld from each claim as security, released on the events the contract names rather than on a date. See retention.

Backcharges and set-offs are not payment terms. Where the payer intends to withhold, it belongs in the payment schedule with a reason attached, and in most jurisdictions the reasons given there are the only ones they may rely on later.

A purchase order or an approval workflow is internal process. It does not extend a statutory due date, and a claim sitting in someone's approval queue was still served on the day it was served.

What to check in a subcontract

Four clauses, and it is a fifteen minute job before signing rather than a research project after a dispute.

• The reference date, meaning the earliest day each month a claim may be served. Contracts commonly nominate a day such as the 25th rather than month end, it is fixed for the life of the contract, and it decides whether a claim was validly served. See reference dates and claim periods.
• The stated payment terms, read against which of the three groups above the jurisdiction falls into rather than on their own.
• How service is permitted, especially whether email is named.
• The retention rate, cap and release conditions, which are the terms most likely to differ from what was assumed.

The words a contract uses for each of these, against the words the acts use, are in the glossary.