What a set-off clause actually lets them do

It lets the main contractor reduce your payment by amounts it says you owe it: back-charges for rework, alleged defects, its own delay costs, plant hire, sometimes amounts claimed under another contract between you. The money never moves — the deduction is a line on a payment schedule, and you find out when the payment lands short. Set-off sits with the clauses that move risk onto you, and it is often amended before the subcontract reaches you.

Six checks to run on your own set-off clause

  1. What triggers it. Read whether set-off is limited to amounts due under this subcontract, or extends to anything the contractor says you owe, including on other jobs. The wider the trigger, the less certain your progress payments become.
  2. Whether the amount has to be established first. Some wording allows a deduction for an amount merely claimed; other wording requires it to be certified, agreed or determined. That decides whether you argue before the money goes or after it.
  3. What notice you get. Check whether they must tell you before deducting, how far ahead, and in what form. A deduction you first meet as a short payment gives you no chance to correct a wrong back-charge.
  4. Which money they can reach. Set-off is often drafted to reach retention and security, not just progress payments. If retention is in scope, read it alongside retention money: what to check — money already held is the hardest to get back.
  5. How a disputed deduction gets resolved. Look for the dispute path and its timing: who you notify, within how long, and whether you can keep making payment claims meanwhile. No path means chasing the money commercially.
  6. Whether the shortfall is really about the head contract. If you are short because the contractor has not been paid from above, that is not set-off — it is the pay-when-paid clause wearing a different hat, and the legislation treats it differently.

What a suspension clause does to you

Two things sit under the one word. The first is the contractor's right to suspend your work — for convenience, on an instruction from above, or because it says you are in breach. Read what that costs you: whether you are paid for work done and materials on site, whether standing labour and plant are recoverable, and whether the completion date moves. The second is your own right to stop when you have not been paid, and that one usually comes from statute rather than the subcontract.

Three things to check in the suspension wording itself:

  • What grounds let them suspend you, and whether the instruction has to be in writing.
  • What you are paid for while work is stopped — standing labour and plant, materials already on site, storage, remobilising.
  • Whether the date for completion moves with the suspension, and what happens if it never lifts.

Can you stop work if you have not been paid?

Not on an unpaid invoice alone — your state's security of payment Act sets out the route, and it starts with a payment claim. Queensland as a worked example: under the Building Industry Fairness (Security of Payment) Act 2017 (Qld), where a respondent does not pay the amount owed in full by the due date, the claimant may give written notice of an intention to suspend work under section 98 (s 78(1), (3)) — as it may where an adjudicated amount goes unpaid (s 92(1)). The notice must state it is made under the Act (ss 78(4), 92(2)). Section 98(1) then allows a suspension once at least 2 business days have passed since that notice, and the right runs until payment is received, plus 3 business days (s 98(2)).

Two consequences matter. A claimant who suspends this way is not liable for loss or damage the respondent suffers because the work stopped (s 98(4)); and if the respondent removes work from the contract while the suspension runs and that costs the claimant, the respondent is liable for that loss or expense (s 98(3)). Those are Queensland's sections and timeframes — every state has its own Act, with its own notice requirements and periods, so check the one covering your project. It depends too on getting security of payment claims right first.

Why the payment schedule decides most set-off arguments

Because the reasons for withholding have to be written down at the time. Queensland again: where the amount proposed to be paid is less than the amount claimed, the payment schedule must state why, including the reasons for withholding any payment — s 69(c) of the same Act. It is due within the period set by the contract or 15 business days after the payment claim, whichever ends first (s 76(1)). A respondent that gives no schedule is liable to pay the amount claimed on the due date (s 77(2)) and cannot give an adjudication response (s 82(2)); one that does cannot put reasons for withholding payment into that response which were not in the schedule (s 82(4)). A back-charge nobody wrote down is harder to run later.

What to record while money is held or work is stopped

These arguments turn on what happened on the day. Keep the payment claim and every schedule with the dates each was given and received. Keep the back-charge — what was claimed, for what work, on what evidence. Photograph work said to be defective before anyone touches it. Log when a suspension starts and lifts, who instructed it, and what labour and plant stood idle. Built on a phone as it happens, that record beats one reconstructed weeks later; our free tools hub is a place to start.

None of that tells you whether a clause holds up on your job — that turns on the wording and the state you work in, and it is one for your own adviser. It does tell you which sentences to read twice, and which records to keep the day a deduction lands.