Executive Summary – Subcontractor Agreements (South Australia, 2025)

1. Security of Payment Regime Changes (BCISPA, effective 1 May 2025)

What’s changed:

• The Building and Construction Industry Security of Payment Act 2009 (SA) (BCISPA) regime has been amended.
• Contracts with the Crown (SA Government) valued over $4 million (ex GST) are now exempt from key BCISPA provisions. This includes the ability to:
  • Require a payment schedule within statutory timeframes;
  • Seek adjudication for disputed claims; or
  • Suspend works due to non-payment under the Act.
• Contractors can still enforce contractual payment obligations, but statutory security-of-payment rights no longer automatically apply on these projects.
• This change applies retrospectively to contracts entered into before 1 May 2025 and to new contracts with the SA Government.

Implications for subcontractor agreements:

• Subcontractors working on government projects should not assume standard security-of-payment protections apply if the upstream contract is with the Crown and above the threshold.
• Consider contractual risk allocation, payment terms and dispute resolution clauses more carefully on large government-funded projects.

2. Standard Contract and Procurement Changes – Government Procurement Updates

• SA Government standard goods and services agreements (updated mid-2025) continue to emphasise:
  • broad compliance with laws, including subcontracting limits;
  • dispute resolution requirements;
  • termination and audit rights; and
  • restrictions on subcontracting unless approved in writing by the procuring agency.
• These templates are routinely updated to reflect legal and policy developments and should be reviewed in any subcontractor strategy or contract compliance process.

3. Revised Industry Standard Contracts – AS 4000:2025

• AS 4000:2025 General Conditions of Contract (widely used in construction contracts nationally) was released in mid-2025 with modernised language, enhanced dispute resolution guidance and clearer risk allocation principles.
• While not a legal requirement, many principals and contractors will now adopt or reference AS 4000:2025 in head contracts, which can influence downstream subcontracts (e.g., terms passed through to subcontractors, obligations and claims processes).
• Downstream subcontract agreements should be aligned with these updates and reviewed with legal input to manage risk and enforceability.

4. Contract Form Requirements for Building Work (Domestic)

• From 10 November 2025, South Australian building contract rules have been updated:
  • A written contract is required for domestic building work valued over $20,000 (up from $12,000).
  • Building indemnity insurance requirements now protect owners up to $250,000 for defective work if the contractor dies, disappears or becomes insolvent.
  • Statutory warranties and prescribed notice requirements remain mandatory.
• While this primarily governs head contracts, subcontract agreements must ensure consistency with the head contract’s obligations, insurance coverage, and compliance terms.

5. National Independent Contractor Law Changes Impacting Subcontractor Arrangements

Although not SA-specific, recent Fair Work Act changes (effective Aug–Nov 2024 onwards) affect subcontractor/independent contractor arrangements nationally:

• There is now a clearer ‘reasonableness’ test in sham contracting disputes (making it harder to defend a sham contracting claim).
• Contractors can challenge unfair contract terms in the Fair Work Commission or courts under certain conditions (contracts from 26 Aug 2024 onwards and below the “contractor high income threshold”, now $183,100 from 1 Jul 2025).
• This affects subcontractors where their contract could be interpreted as a service contract with employment characteristics, or if it contains terms deemed unfair.

Implications:

• Subcontract agreements in construction projects should be carefully drafted and reviewed to avoid inadvertently creating employment relationships or including terms vulnerable to regulatory challenge.

Practical Executive Takeaways

Risks for Leadership Attention

• Greater risk of payment disputes on large government projects due to security-of-payment exemptions.
• Potential contract vulnerability under national unfair contract law and sham contracting rules.
• Risk of inconsistency between head contract obligations and subcontract agreements (e.g., insurance, timelines, WHS).