The Christmas rush is when payment claims get missed
This year is the final year subcontractors can try to ‘sneak in’ a payment claim right before Christmas. And many will. December is when contractors are stretched thin, sites are closing, and admin teams are distracted. It’s the perfect time for a claim to slip through unnoticed — and one missed claim can quickly become a costly problem.
From 2026, changes to the Security of Payment Act will block this end-of-year tactic. But for now, the risk is very real. That’s why contractors need to get ahead of it before the break.
Know exactly when a subcontractor can serve a payment claim
A subcontractor can serve a payment claim from each reference date under the subcontract. If the subcontract doesn’t say when a reference date occurs, the Act sets the date instead.
A subcontractor doesn’t need to still be on site performing work to serve a claim. That catches many contractors off-guard.
A payment claim can be served within the later of:
- the period determined by or in accordance with the subcontract; or
- three months after the reference date that relates to that progress payment.
Because of this flexibility, some subcontractors hold off serving a claim in September, October or November so they can drop it in during December, when it’s most likely to be missed.
Service can happen in more places than you think
A payment claim can be served by:
- personal delivery,
- lodgment at your ordinary place of business,
- post or fax, or
- any method set out in your subcontract.
This means contractors must monitor every possible service point, including:
- the address stated in the subcontract,
- your ordinary place of business,
- your principal place of business, and
- your registered office (which is often your accountant’s address).
A claim counts as “served” even if no one sees it. That’s why monitoring is critical in late December and early January.
Missed claim? The clock starts immediately
If a payment claim is served, you must issue a payment schedule within the earlier of:
- the time in the subcontract; and
- 10 business days after service.
If you don’t respond in time, the subcontractor can take the full amount to Court as a debt.
Only a few days are excluded over the break
When calculating the 10 business day period over the upcoming holiday period, only the following dates are excluded this year:
- 25 December 2025 (Christmas Day);
- 26 December 2025 (Boxing Day);
- 27 December 2025 (Saturday, non-business day);
- 28 December 2025 (Sunday, non-business day); and
- 1 January 2026 (New Year’s Day).
Payment claims and adjudication applications can still land during the holiday period
If you receive a payment claim or an adjudication application over the break, contact KCL Law as soon as possible. Our Construction and Infrastructure team will have lawyers on standby throughout the holiday period to assist if needed.
2025 is the last year subcontractors can use this Christmas ‘loophole’
Major changes to the Security of Payment Act are coming in 2026. The Government’s Bill, which will bring about these extensive changes, received Royal Assent last month.
One of the key changes: the definition of “business day” will expand. Days from 22 December to 10 January will not count as business days.
This will close the door on the “Christmas ambush” strategy. But that rule is not in place for the 2025 Christmas period.
What this means in practice
Example:
Under the current Act, if a payment claim is served on Friday 19 December 2025, the payment schedule would be due by Wednesday 7 January 2026 (assuming a 10-business-day response).
If that payment claim is sent to your registered office (which, for many contractors, this is their accountant), the payment claim may not be noticed until the payment schedule is already due.
If the new rules were already operating, the payment schedule would be due 23 January 2026 instead.
Key message for contractors
This December is high-risk.
- Monitor all service addresses daily.
- Make sure someone checks the registered office.
- Have a plan for payment claims and adjudication applications received over the break.
From next year, the law will give contractors more breathing room. But this year, you’re still exposed.
More information
For information or for advice, please contact:
Dominic Brown, Special Counsel
(03) 8600 8851 or djbrown@kcllaw.com.au
Note: This update is a guide only and is not intended to constitute legal advice.