The Legislative Council passed the Construction Industry Security of Payment (“SOP”) Bill on 18 December 2024. This landmark legislation aims to address longstanding payment issues in the construction industry and enhance protections for stakeholders throughout the supply chain. Key benefits include ensuring timely payments, reducing wage arrears for workers, and lowering project procurement costs by reducing price premiums associated with payment risks.
Key Features of the Construction Industry Security of Payment Ordinance
The new Ordinance introduces several critical reforms:
Prohibition of Unfair Payment Terms
The Ordinance prohibits payment clauses such as “pay when paid,” which have historically caused delays and uncertainties in the payment chain.
Adjudication Mechanism
A speedy, cost-effective, and binding resolution process for interim payment disputes will now be available, ensuring disputes do not hinder project progress.
Comprehensive Coverage
The Ordinance applies to main contracts for construction work valued at not less than $5 million, and main contracts for supply of goods or services related to construction work valued not less than $0.5. Subcontracts along the same supply chain, regardless of value, are also included.
The Ordinance covers both public and private projects, with exceptions for:
Contracts for works on existing private residential buildings, such as interior renovations and maintenance.
Minor works on existing private non-residential buildings.
Implementation Timeline
The Ordinance will be gazetted on 27 December 2024.
The Secretary for Development’s authority to register and administer Adjudicator Nominating Bodies (ANBs) will take effect immediately upon gazettal date .
The remaining provisions will come into operation on 28 August 2025, governing construction contracts entered into on or after this date.
Here is the link to the government press release on the passing of the bill.
please stay tuned!
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