You finished the job. You sent the invoice. Now — silence. The subcontractor or head contractor who engaged you has stopped returning calls, keeps promising “next week,” or simply refuses to pay.
Australian law gives tradies and contractors specific rights to recover unpaid money for construction work. You do not need a lawyer to enforce them.
Why subcontractors and head contractors don’t pay
Cash flow problems — The head contractor hasn’t been paid by the principal, so they delay paying you. Common, but not your problem legally.
Dispute over quality or scope — They claim the work was defective, incomplete, or not what was agreed. Even baseless disputes give them an excuse to withhold payment.
Insolvency — The company is insolvent or close to it. Act fast before they enter administration.
Deliberate avoidance — Some operators simply try to avoid paying subcontractors, knowing most tradies won’t chase them legally.
Retention withheld beyond the agreed period — Retention money is often held longer than the contract allows, sometimes indefinitely.
Your rights under security of payment laws
Every Australian state and territory has security of payment legislation designed to protect subcontractors and tradies in the construction industry. These laws give you a fast process to claim unpaid money without going to court.
The core principle: you have the right to progress payments for work completed, and disputes cannot be used as an excuse to withhold payment indefinitely.
These laws allow you to issue a payment claim — a formal demand for money owed. If the other party does not respond correctly within a strict timeframe (typically 10-20 business days depending on the state), you can apply for adjudication. Adjudication is a fast, binding process where an independent adjudicator decides who owes what, usually within 10-15 business days.
The adjudicator’s decision is enforceable as a court judgment, meaning you can use it to freeze bank accounts, seize assets, or wind up the company if they still don’t pay.
Step 1: Issue a payment claim under security of payment laws
If your contract is covered by security of payment legislation (most construction subcontracts are), your first move is to issue a payment claim.
A payment claim is not just an invoice. It must:
- Be labelled as a payment claim (the words “payment claim” should appear on the document)
- Identify the construction work or services performed
- State the amount claimed
- Refer to the contract or agreement (even if it was verbal)
- Be served correctly (typically by email, registered post, or hand delivery)
Once you serve a payment claim, the other party has a strict deadline to issue a payment schedule — a formal response either agreeing to pay, paying a lesser amount, or disputing the claim. If they fail to respond within the statutory period, they lose the right to dispute the claim and you can move straight to adjudication or enforcement.
Important: Payment claims must be issued within the timeframes set out in your contract or the legislation. If you wait too long, you may lose the right to use this process for that particular invoice.
Step 2: Serve a letter of demand
If the payment claim process does not apply to your situation (for example, the work falls outside the statutory definition, or you are outside the timeframes), or if you want to take a simpler first step, a letter of demand is the most effective tool.
A letter of demand is a formal written notice that:
- States the amount owed
- Describes the work performed and the agreement
- Cites the legal basis for the claim
- Gives a clear deadline to pay (typically 7-14 days)
- Warns of legal action if payment is not received
Most disputes are resolved at this stage. A properly drafted letter of demand signals that you are serious, that you understand your rights, and that you are prepared to escalate. Many contractors and subcontractors will pay immediately rather than face tribunal proceedings, adjudication, or damage to their reputation.
Send the letter by email and registered post to create a clear evidence trail.
Step 3: Escalate to adjudication or tribunal
If the letter of demand does not result in payment, you have two main options depending on your state and the amount owed.
Adjudication (security of payment process):
If you issued a valid payment claim and the respondent either failed to respond or issued a payment schedule for less than the claimed amount, you can apply for adjudication. An independent adjudicator reviews the claim and makes a binding determination, typically within 10-15 business days.
Adjudication is not a court process. It is designed to be quick, low-cost, and accessible without a lawyer. The adjudicator’s decision is enforceable as a judgment.
Civil tribunal:
If adjudication is not available or appropriate, you can file a claim in your state’s civil tribunal (NCAT in NSW, VCAT in Victoria, QCAT in Queensland). Tribunals handle disputes up to $25,000-$100,000 depending on the state, and the process is designed to be accessible without legal representation.
Tribunal claims take longer than adjudication (typically 2-4 months), but they are still faster and cheaper than going to court.
When to consider a statutory demand
If the debtor is a registered company (Pty Ltd or Ltd) and owes you $4,000 or more, you can serve a statutory demand under the Corporations Act.
A statutory demand gives the company 21 days to pay the debt in full or face presumed insolvency. If they do not pay or apply to set aside the demand, you can apply to wind up the company.
Most companies pay immediately rather than risk insolvency proceedings. However, statutory demands must be prepared correctly and served in strict compliance with the Corporations Act, or they can be set aside.
Common mistakes that delay payment recovery
Waiting too long to act — The longer you wait, the harder it is to recover the money. Memories fade, evidence is lost, and the debtor’s financial position may worsen.
Not keeping proper records — You need written evidence of the agreement (even if it was verbal, follow-up emails or text messages can confirm the terms), invoices, proof of work completed, and proof of delivery or service.
Issuing an invoice instead of a payment claim — If you are entitled to use security of payment laws, an invoice alone may not trigger the statutory timeframes. Label your claim correctly.
Sending vague or emotional demands — A letter of demand must be clear, factual, and legally grounded. Emotional language or vague threats undermine your credibility.
Not serving documents correctly — Security of payment claims, payment schedules, and statutory demands have strict service requirements. If you serve them incorrectly, they may be invalid.
How ClaimDone helps subcontractors recover unpaid money
ClaimDone generates legally precise letters of demand tailored to your situation — citing the applicable Australian law, referencing your evidence, and delivering the letter automatically to the debtor.
You complete a 5-minute intake form. You upload your invoice, contract, emails, and any other evidence. ClaimDone’s Proprietary AI Engine analyses your case, drafts a professionally formatted letter of demand, and sends it to the other party by email and registered post.
Flat fee. No subscription. Done in 60 minutes.
If the debtor does not pay, ClaimDone can also prepare your tribunal application, payment claim, or statutory demand.
Recover what you’re owed
When a subcontractor or head contractor doesn’t pay you, Australian law gives you powerful tools to recover unpaid money. Those tools have strict timeframes and procedural requirements.
Act fast. Keep your records organised. Issue a payment claim or letter of demand as soon as payment is overdue. If the debtor still refuses to pay, escalate to adjudication, tribunal, or statutory demand.
Generate a letter of demand in 60 minutes — $79 flat fee, sent automatically by email and registered post.
Frequently Asked Questions
Can I use security of payment laws if I don't have a written contract?
Yes. Security of payment legislation typically applies to verbal contracts as long as the work falls within the statutory definition of construction work. Gather any evidence of the agreement — text messages, emails, quotes, or invoices — to support your payment claim.
What happens if the head contractor claims the work was defective?
Under security of payment laws, the head contractor must issue a payment schedule within the statutory timeframe setting out the reasons for withholding payment. If they fail to do this, they lose the right to dispute the claim. If they do issue a payment schedule, you can apply for adjudication and the adjudicator will decide whether the claim is valid.
How long do I have to issue a payment claim?
This depends on your contract and the legislation in your state. Most contracts specify payment claim periods (e.g. monthly). If your contract is silent, the legislation sets default timeframes. Issue a payment claim as soon as payment is overdue to preserve your rights.
Can I issue a statutory demand for unpaid subcontractor work?
Yes, if the debtor is a registered company and owes you at least $4,000. A statutory demand is a powerful tool but must be prepared and served correctly. It is most effective when the debt is undisputed.
What if the subcontractor or head contractor goes into administration?
If the company enters administration or liquidation, you become an unsecured creditor and may recover little or nothing. This is why acting fast is critical — the earlier you issue a payment claim, letter of demand, or statutory demand, the better your chances of being paid before insolvency.
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