Two of the hardest things to recover in construction have always been retention money and disputed variations. Since 15 April 2026, Victorian law has changed decisively in the contractor's favour on both.
The Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 delivered the most significant overhaul of Victoria's security of payment regime in two decades. If you are a subcontractor, supplier, or contractor owed retention or variations, the tools available to you are now far stronger.
Owed retention money or disputed variations? The April 2026 reforms opened a direct path to recover both - but the timeframes are strict.
Book a Free Consultation →Retention Money - Now Claimable
Retention is money the head contractor holds back from each payment - typically 5% to 10% - as security that the work will be completed and defects fixed. In practice, retention is one of the most commonly withheld and hardest to recover amounts in the industry, often held long after it should have been released.
The April 2026 reforms created a dedicated statutory regime under new Division 1A. Any party who has provided performance security - and the definition expressly includes retention money and performance bonds - now has a statutory right to claim its release through the security of payment framework. This puts to rest the long-running controversy over whether a claim for retention was a claim for construction work. It is now claimable directly.
Equally, a party seeking to call on performance security - including cash retention or a bank guarantee - must now give at least 5 business days' written notice before doing so, giving the other side an opportunity to respond.
Variations - No Longer Excluded
Before April 2026, Victoria was the only Australian jurisdiction that prohibited a broad range of contractual claims from adjudication through its "excluded amounts" regime. Variations beyond a narrow "claimable variation" definition, delay damages, latent condition costs, and time-related costs were all excluded - meaning contractors could not recover them through the fast security of payment process and were forced into slow, expensive litigation.
The reforms repealed sections 10A and 10B, abolishing both the "excluded amounts" and "claimable variations" concepts entirely. There is no longer any distinction between claimable and non-claimable variations. Claimants can now include disputed variations, extension of time claims, delay damages, latent condition costs, and changes arising from regulatory requirements - all through the security of payment process.
What Else Changed
Several related reforms strengthen the contractor's position: payment terms are capped at 20 business days regardless of what the contract says; reference dates are abolished, replaced by a right to serve one payment claim per month; respondents cannot raise new reasons in an adjudication response that were not in their payment schedule; and notice-based time bars in contracts can be declared unfair and unenforceable.
The Timeframes Still Bind
The expanded rights do not remove the strict deadlines. A payment claim must be served within the window - now up to 6 months after practical completion. A payment schedule must be responded to correctly. An adjudication application must be made in time. Miss a step and the right is lost for that period.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, our construction litigation team prepares payment claims - including for retention and variations - responds to payment schedules, and represents clients in adjudication across Melbourne and Victoria.
The people who know the process recover faster than the ones who wait. If you are owed retention or variations, get advice before the timeframe closes.
Frequently Asked Questions
1. Can I claim retention money through security of payment in Victoria?
Yes. Since 15 April 2026, a Division 1A regime gives parties who provided performance security - including retention money and performance bonds - a statutory right to claim its release.
2. Can I claim disputed variations now?
Yes. The reforms abolished the excluded amounts and claimable variations regimes. Disputed variations, delay damages, and latent condition costs can now be claimed.
3. How much notice before calling on retention or a bank guarantee?
At least 5 business days' written notice is required before calling on performance security, including cash retention and bank guarantees.
4. Do the new rules apply to my existing contract?
Yes - they apply retrospectively to contracts entered before 15 April 2026, except payment claims already served. If you are owed money, book a free consultation with Phan Campbell & Associates.