WA’s New Subcontractor Payment Protection Laws: What Construction Businesses Need to Know
For a subcontractor, finishing the job should mean getting paid. Yet when a head contractor becomes insolvent, even a well-run trade business can face unpaid invoices after covering wages, materials and equipment costs.
Western Australia’s Parliament has passed new legislation intended to strengthen payment protection for subcontractors on eligible State Government construction projects. The central change is a statutory construction trust scheme designed to better protect subcontractor payments when a head contractor encounters insolvency. [1]
The Building and Construction Industry (Security of Payment) Amendment Act 2026 received Royal Assent on 21 October 2026. However, businesses must distinguish that milestone from the commencement of its operative requirements. [2]
For construction businesses, the practical questions are straightforward: which projects qualify, whose payments receive protection and what should your team prepare?
At Induct For Work, we help construction businesses organise contractor information before work begins. A consistent contractor induction process gives teams a clearer record of the site information people received and the documents they supplied.
Payment protection raises separate legal and accounting questions. However, both areas benefit from clear responsibilities and reliable records. This guide explains the new WA framework, the limits of the announcement and practical steps your business can take to prepare.
This article provides general information as of 30th of October 2026; obtain advice on the rules and deadlines applying to your particular contract.
What has changed in WA subcontractor payment protection?
The WA Government says construction trusts will replace the project bank account arrangements used widely across State Government projects since 2019. Its stated aims include stronger insolvency protection, simpler administration and greater certainty for project participants. [1]
Under the existing project bank account model, a dedicated trust account facilitates payments from the principal to the head contractor and participating subcontractors. Government procurement documentation includes agreements and deeds supporting those arrangements. [3]
The new approach establishes the trust through legislation. Parliament’s explanation describes a framework that protects relevant payments and payment entitlements without depending on the same specialised banking products and contractual paperwork. [4]
For businesses, this changes the legal framework behind payment protection. Nevertheless, project teams will still need accurate information about contractors, work, entitlements and payments.
Which projects are expected to qualify
The reform focuses on eligible WA State Government construction contracts. It does not introduce a universal construction trust requirement for every private building project in Western Australia. [4]
Understanding the $1.5 million threshold
The Government’s October announcement describes projects worth more than $1.5 million. The parliamentary explanation specifies an intended threshold of $1.5 million or more, including GST. The Act leaves the prescribed threshold and exemptions to regulations. Consequently, a contract at the boundary needs checking against the regulations that apply when the scheme starts. [1][2][5]
This is a head-contract eligibility question. A subcontractor should not assume its own invoice or subcontract must exceed $1.5 million.
Position in the contracting chain matters
Parliament identified subcontractors and suppliers directly engaged by the head contractor as the intended beneficiaries. Government trading enterprises can also opt eligible contracts into the scheme. However, a business engaged by another subcontractor should not assume identical protection simply because everyone works on the same site. [5]
Before pricing a job, establish who will engage your business and request confirmation of the project’s payment arrangements.
Check exemptions before relying on coverage
The second reading explanation identifies intended exceptions for professional-services-only contracts, maintenance work, short projects and residential housing. Final regulations and project documents require attention; the project’s description alone cannot establish eligibility. [5]
Therefore, ask a specific question: “Does this contract fall within the construction trust scheme, and what confirms that?”
Has the new construction trust scheme started
Royal Assent does not automatically activate every provision. Section 2 provides for the operative amendments to commence by proclamation, potentially on different dates. The current legislation compilation lists Part 2 of the amendment as awaiting proclamation. The construction trust requirements should therefore not be treated as already operating. [2][8]
For now, businesses should prepare for implementation while continuing to follow the requirements governing their existing contracts.
The parliamentary explanation anticipates existing project bank accounts continuing for contracts predating commencement. Transitional rules also need checking before treating later subcontract work as covered by the new scheme. [4]
Before signing a new contract, review current Building and Energy guidance, the legislation and the tender conditions. Record the version and date of the guidance your team used so a later reviewer can understand the decision.
How construction trusts can reduce insolvency exposure
The scheme aims to give subcontractors a protected interest in relevant project payments. Parliament describes this as separating their entitlements from the head contractor’s broader financial position. [4]
That matters because a subcontractor may have already paid employees and suppliers before receiving the corresponding progress payment. A failure higher up the contracting chain can therefore create an immediate cash-flow problem for a business that completed its own work properly.
However, stronger protection should not become an assumption that every invoice carries a government guarantee. The Act includes provisions addressing insufficient trust funds during external administration. [2]
Commercial discipline remains essential. Review the customer, understand the contract and keep a reliable record of what your business supplied. Likewise, investigate overdue amounts promptly instead of relying on the existence of a trust to resolve every problem.
Construction trusts and retention trusts serve different purposes
These terms sound similar, but they concern different payment arrangements.
Arrangement | Main purpose | What to check |
Project bank account | Existing mechanism for directing payments through a dedicated trust account on participating government projects. | The project’s current contract and PBA documents. |
New construction trust | Statutory protection for relevant payments and payment entitlements under eligible contracts. | Commencement, eligibility, regulations and contractual position. |
Retention money trust | Protection for eligible retention money held as security for contractual performance. | Whether retention rules apply to the particular contract and funds. |
WA already operates a retention trust scheme. Official guidance explains that eligible retention money must go into a retention money trust account. From 1 February 2024, the scheme expanded to eligible contracts over $20,000 including GST, subject to its rules and exceptions. [6]
Accordingly, a contractor may need to consider progress payments and retention money separately. Ask your adviser to review both when assessing a contract’s payment protections.
Seven practical steps construction businesses can take now
The following steps are our operational recommendations. They help teams organise information while the legal and accounting requirements receive the appropriate specialist attention.
1 Identify the contracting parties properly
Record the legal name and ABN of the business engaging you. Also identify the principal, head contractor and the person authorised to issue instructions.
A trading name on a site sign may differ from the entity on the contract. Resolve that difference before setting up your records. Otherwise, your accounts team may pursue one business while the project team files documents under another.
Clear general contractor responsibilities help everyone understand who coordinates the project and who can approve an instruction.
2 Make the scope and approval process clear
Describe the agreed work, exclusions, pricing basis and process for authorising changes. Then give supervisors a practical way to record instructions as they occur.
For example, additional excavation might affect time, labour and plant costs. Capture the instruction, location, date and supporting photographs promptly. An administrator should be able to connect that information with the relevant variation without reconstructing the conversation weeks later.
3 Keep payment records separate and complete
Your commercial file should bring together the signed contract, variations, claims, schedules, correspondence and payment records.
Meanwhile, nominate someone to monitor dates and escalate unpaid amounts. WA’s official security of payment guidance distinguishes contracts entered into before 1 August 2022 from those entered into on or after that date. Consequently, copying a process from an older project can create problems. [7]
Seek advice promptly when payment becomes disputed. Preparing a tidy file helps your adviser assess the position; it does not extend a deadline.
4 Collect contractor documents before mobilisation
Give each contractor a clear list of the evidence your project requires. Depending on the work, this may include licences, insurance certificates, relevant competencies, contact details and safety documentation.
Then assign responsibility for reviewing submissions. A file upload confirms receipt, but someone still needs to consider whether the document suits the work and remains current.
Induct For Work’s contractor pre-qualification tools support document collection, review decisions and expiry tracking.
5 Explain the project’s working procedures
Contractors should know who handles site access, changed instructions, safety concerns and administrative queries. A short, practical briefing can prevent requests circulating between several people without an answer.
Use your online induction to introduce site rules and relevant contacts before arrival. Keep detailed payment instructions in the appropriate contract and commercial onboarding documents.
On larger projects, commercial construction online inductions can give different contractor groups a consistent introduction to the site while keeping their training relevant to the work.
6 Maintain records as the job changes
Update contractor contacts when personnel change. Review expiring documents and retain the correct versions of instructions, forms and acknowledgements.
Safety documentation also needs attention when work methods change. Our free SWMS template guide provides a starting point for understanding that separate process.
Importantly, an induction completion record or SWMS acknowledgement does not establish that a particular invoice is payable. Each record serves its own purpose.
7 Check whether someone else can find the evidence
Choose one active contractor and ask a colleague to locate the current agreement, approved variations, induction history and relevant documents.
If the answer depends on a supervisor’s phone or an administrator’s memory, improve the filing process. Use consistent project references and name the person responsible for each record set.
A consistent contractor management system helps the team maintain those responsibilities as projects, subcontractors and personnel change.
A practical example of records on one project
Imagine an electrical subcontractor preparing to work on a government construction project in Perth. The head contract may qualify for the new scheme once the relevant requirements commence, but the business still needs confirmation of coverage.
Before mobilisation, the contractor provides its company information, relevant insurance and worker credentials. The team completes the site induction and receives the supervisor’s contact details.
Later, the project requires additional cable runs. The subcontractor records the instruction and follows the agreed variation procedure. Its accounts team then prepares the relevant claim using the commercial records.
These activities support different decisions. Induction records help establish what site information workers received. Credentials support checks about the work they may undertake. Variation records help explain the additional scope, while payment records show the amount claimed and the response.
If a problem develops, the team can retrieve each record for its intended purpose. Conversely, a folder containing every worker’s induction certificate cannot explain the commercial basis for an additional charge.
This example illustrates an administrative approach, not a determination that a particular contract qualifies or that a claim will succeed.
What head contractors should review internally
Head contractors should bring their commercial, finance and project teams together before changing procedures. Start with a list of projects that may fall within the new arrangements, then allocate responsibility for obtaining advice and implementing confirmed requirements.
Finance staff need an accurate view of payment commitments. Contract administrators need current agreements and variations. Meanwhile, site managers need dependable information about contractor readiness and the work underway.
Those responsibilities overlap, but they should not rely on one person holding all the information. For example, decide who confirms a contractor’s legal identity, who maintains the commercial file and who checks worker documents.
Good contractor management starts with these responsibilities, so the project team can address missing information before it holds up work.
As implementation guidance becomes available, update the relevant procedures and brief the people who use them. Record changes clearly so teams can distinguish a confirmed requirement from an earlier planning assumption.
If a payment is already overdue
An existing payment problem needs attention under the arrangements that apply now. Waiting for a new scheme to start can leave your business with less time to understand its options.
Begin by assembling a short chronology. Include the contract date, work period, claim date, delivery method, responses received and payments made. Then identify the amount outstanding and any explanation the other party has given.
For example, a disagreement about an unapproved variation needs different evidence from a missing payment for an accepted claim. Separating those issues helps your adviser understand the problem faster.
WA’s official subcontractor payment dispute guidance is a useful starting point for identifying the relevant framework. Obtain contract-specific advice about notices, adjudication and any proposed suspension of work. A general article cannot determine those steps for your business. [7]
Meanwhile, keep communication factual. Confirm telephone discussions in writing and retain the original records. Avoid quietly changing an earlier document to make it fit a later account of events; record a correction or explanation separately.
Finally, continue checking the commercial position of new work. A stronger payment protection framework should sit alongside sensible decisions about customer exposure, outstanding balances and the commitments your business can afford to carry.
Where Induct For Work fits into the process
Payment protection brings renewed attention to how construction businesses manage their subcontractors. Our role is to help with the people, induction and supporting-document side of that relationship.
Induct For Work supports online contractor induction, document collection and acknowledgements. Administrators can review submitted evidence and keep relevant records accessible for follow-up.
Our record keeping features help bring induction history, training results and supporting documents together. This gives authorised team members a clearer starting point when they need to check what a contractor completed or supplied.
Trust accounting, payment claims and legal entitlements need their own appropriate systems and advice. Using induction software does not establish a construction trust or guarantee compliance with security of payment legislation.
When comparing tools, consider how your team will retrieve information across the systems it already uses. Our contractor management software Australia guide sets out practical questions to consider before choosing a platform.
Give your construction team a clearer starting point
A well-organised project starts with clear responsibilities and records people can use. As WA prepares to introduce the new construction trust arrangements, review how your business collects contractor information and keeps it current.
Induct For Work can help your team prepare contractors before arrival, collect required documents and retain induction records throughout the working relationship.
Request a demonstration to discuss your construction induction and contractor document requirements with our team.
Frequently asked questions
The 2026 amendment establishes a statutory construction trust framework aimed at strengthening payment protection on eligible State Government construction projects. It is intended to replace project bank account arrangements as the new requirements take effect.
No. Eligibility depends on the project, contract and contracting relationship. Businesses working on private projects or further down the subcontracting chain should check their position instead of assuming the announcement covers their payments.
Royal Assent occurred on 21 October 2026, but operative provisions require commencement by proclamation. The current compilation checked on 2 November 2026 lists the relevant amendments as awaiting proclamation. Check current official guidance before relying on the scheme.
No. The new construction trust framework concerns relevant project payments and payment entitlements. Retention trusts concern eligible money held as security for contractual performance. Businesses need to assess both arrangements where relevant.
They can help a business locate useful information. However, payment entitlement depends on the relevant law, contract and evidence. Keep commercial records such as claims and variations alongside the separate systems used for induction and safety documents.
Induct For Work helps manage inductions, contractor documents and related records. Construction trust banking, accounting and payment administration require appropriate financial processes and professional advice. Our platform supports the contractor administration side of your project.
Start a free trial or book a demo to see how INDUCT FOR WORK can support your workplace processes.
Author: Ari Parz
Published: 30/10/2026
Updated: 02/11/2026
