Queensland’s construction industry operates within one of the most heavily regulated legal environments in Australia. Contractors and developers must navigate a web of statutory requirements that extend from licensing and contract formalities, to the handling of payments, and even the products used in construction. The consequences of overlooking these obligations are significant.
This article highlights four important compliance considerations for anyone undertaking building work in the state.
Building licences – why they matter
The starting point for compliance in Queensland is licensing. Under the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act), anyone who carries out or undertakes to carry out building work must hold the appropriate licence, unless an exemption applies.
“Building work” is defined broadly. It includes the obvious activities such as constructing or altering a building, but it also extends to site work like retaining walls, the preparation of plans or specifications, and administrative or supervisory services tied to the construction of a building.
Importantly, “carrying out” building work does not simply mean physically performing the work. A person can be taken to carry out building work if they directly or indirectly cause the work to be performed, or if they provide building work services such as project management or contract administration. This expansive definition means that project managers, superintendents, and consultants may also need to hold a QBCC licence depending on their role.
The consequences of working without the correct licence are severe. Performing unlicensed building work is an offence, with fines exceeding $40,000 for a first breach and escalating for repeat contraventions, potentially including imprisonment. The law also treats it as an “executive liability provision”, meaning company officers can be personally liable if they fail to ensure compliance.
Beyond the regulatory penalties, licensing directly affects payment. The QBCC Act provides that a party who carries out unlicensed building work is not entitled to full payment for that work. At best, recovery may be limited to reimbursement for materials or third-party labour, but not for the contractor’s own labour or profit. Licensing status can also determine access to other statutory rights including under security of payment laws.
Finally, licensed contractors must ensure that those they engage are also appropriately licensed. The QBCC Act prohibits a contractor from engaging an unlicensed party to perform building work, with particularly strict rules for fire protection and mechanical services. The message is clear: proper licensing is not only about protecting your own position, but also about ensuring compliance throughout the contracting chain.
Minimum legal requirements for contracts
The QBCC Act also prescribes minimum requirements for building contracts. These provisions apply to contracts for building work in Queensland, including subcontracts, and failure to comply is an offence.
The Act regulates how much security or retention money can be withheld. Before practical completion, security or retention under a head contract must not exceed 5% of the contract price. Subcontracts are subject to the same 5% limit, but unlike head contracts this limit cannot be contracted out of. After practical completion, the maximum reduces to 2.5% across both head contracts and subcontracts.
To reinforce this, the legislation now provides a statutory defects liability period. If a contract is silent on when retention or security is to be released, the law imposes a 12-month defects liability period starting from practical completion, after which retention must be returned.
Payment timing is also addressed. Under the QBCC Act, subcontractors must be paid within 25 business days of a payment claim, while head contractors must be paid within 15 business days. Any contractual provision that allows longer timeframes is void.
Non-conforming building products
Queensland has also led the way nationally in regulating non-conforming building products. This framework extends responsibility across the entire supply chain, from manufacturers and importers, through to designers, suppliers and installers.
A building product is considered non-conforming if its use in a building is unsafe, if it does not comply with relevant regulatory requirements, or if it does not perform to the standard it is represented to meet. The legislation deliberately casts a wide net. A “building product” means any material associated with a building, and “building” itself is defined as a fixed structure enclosed by walls or roofed.
Each person in the chain of responsibility has a primary duty to take all reasonably practicable steps to ensure that a product is not non-conforming for its intended use. What is “reasonably practicable” depends on factors such as the likelihood of a safety risk, the potential harm, what the person knew or ought to have known, and the availability and cost of steps to remove the risk.
There are also specific duties to provide prescribed information when supplying products, to notify the regulator if a non-conforming product is identified, and to cooperate with recalls. These duties cannot be contracted out of or transferred; each participant carries their own responsibility.
The penalties for breach are significant. Failure to meet the primary duty or the duty to provide required information carries fines exceeding $150,000. Company officers are also required to exercise due diligence to ensure compliance, with personal liability if they fail to do so.
Project trust accounts
Another uniquely Queensland obligation is the requirement for project trust accounts under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). The regime has been progressively introduced and now captures a large sector of the construction industry.
A project trust account is a dedicated bank account into which the principal pays all progress payments. The head contractor then pays subcontractors and themselves from that account, ensuring that funds intended for subcontractors are quarantined and cannot be diverted elsewhere. Where retention money is involved, it must be held in a separate retention trust account.
As of January 2023, project trust accounts are required for state, local government, hospital and health service, and private projects where the contract price is at least $10 million (or $1 million for state and hospital projects) and more than half of the contract relates to “project trust work”.
“Project trust work” is defined broadly and includes the construction of buildings, renovations, alterations and extensions, installation of services, and associated site works such as earthmoving.
Operating a trust account comes with strict requirements. Contractors must only make payments permitted by the legislation, keep detailed records, and comply with a suite of notification obligations – for example, advising the regulator when accounts are opened, when subcontracts are entered into, and when payments are made. Penalties for non-compliance are substantial, so contractors need systems in place to administer these accounts correctly.
Conclusion
Compliance in Queensland’s construction industry is multi-layered and non-negotiable. Holding the right licence, ensuring contracts meet statutory standards, verifying product conformity, and administering trust accounts are all essential. Each area carries heavy penalties and, in some cases, loss of entitlement to payment if ignored.
For contractors and developers, the practical lesson is that compliance must be built into everyday operations – from the way contracts are drafted and subcontractors engaged to how payments are processed and products selected. By taking these obligations seriously, businesses not only avoid penalties but also secure their right to be paid and to deliver projects effectively.
