What a termination clause actually lets them do

Most subcontracts give the contractor more than one way out. One is termination for a breach you have not fixed after a notice to remedy. A second is termination on insolvency. A third is termination for convenience, which ends the subcontract without you having done anything wrong.

The clause also sets what happens next: what you are paid, what you hand over, and how fast you are off site. That second half is where the money is. Read the executed copy and its amendments schedule, not a blank standard form: the words that bind you are in your copy, the same reason to work through your AS 4901 subcontract conditions.

Six checks to run on your own termination clause

  1. Which routes out it gives them, and whether any needs a reason. Mark which triggers require you to be in breach first. A right to terminate for convenience needs no fault on your part, so it changes how you price a long job and what you spend mobilising.
  2. The notice: how long, how it must be given, and when it takes effect. Note the number of days, whether they are business or calendar days, the form required and where it goes. That period decides how much standing labour and idle plant you are left holding.
  3. What you are paid up to the termination date, and what the clause leaves out. Read the payment formula: completed work, work in progress, materials on site, materials ordered, demobilisation. Convenience clauses often pay for work done but exclude profit on the work you never got to do, so what is missing is money you would argue for later.
  4. What happens to retention, security and set-off. Check whether retention is released on termination or held to the end of the defects liability period, whether a bank guarantee can be called, and what may be deducted. Termination is when all three clauses get used at once.
  5. What happens to your plant, materials and temporary works, and who pays to demobilise. Read whether the contractor can keep using your plant or formwork, who owns materials you have been paid for, and how long you have to clear site. These costs land in the week you can least afford them.
  6. Whether a termination up the chain flows down to you. Check whether the head contract ending also ends your subcontract, and what you are paid for work already done if it does. That is the same machinery as the rest of what flows down from the head contract.

What does “termination for convenience” actually mean?

It means the contractor can end the subcontract without you being in breach, for their own commercial reasons and usually on notice. It does not mean they can do it for nothing: what they owe you is whatever the clause says, which is why checks 3 and 4 matter more than the label.

Whether a particular convenience clause can be used the way a contractor wants, on your job, is a legal question this page cannot answer. Put it to a qualified adviser with the clause in front of them.

Does your payment claim die with the contract?

Not in Queensland, and the Act is specific about it. Under the Building Industry Fairness (Security of Payment) Act 2017 (Qld), the right to a progress payment runs from a “reference date”: from each reference date you are entitled to a progress payment if you have carried out construction work under the contract (s 70). Section 67(2) then deals with termination directly: if a contract is terminated and it “does not provide for, or purports to prevent, a reference date surviving beyond termination”, the final reference date is the date the contract is terminated. So there is a reference date on the day the job ends, even where the subcontract was written to stop one surviving.

The Act also sets how long you have. A final payment claim must be given before the end of whichever of these is longest: any period worked out under the contract; 28 days after the end of the last defects liability period; six months after completion of all the construction work; or six months after the complete supply of all related goods and services (s 75(3)). For a claim that is not a final payment, it is the longer of the contract's own period or six months after the work was last carried out (s 75(2)). And a “pay when paid” provision has no effect (s 74), so “we have not been paid from above” is not an answer to a claim for work done.

All of that is Queensland's Act. Every other state and territory has its own security of payment legislation, with its own wording and its own time limits, none of it stated here — check the Act covering the state your work is in. For how a claim is put together, see security of payment claims.

Termination, suspension and omission are three different things

Three clauses can stop your work and only one ends the subcontract. Suspension pauses it: the contractor directs you to stop, and the clause decides whether standing labour and plant are recoverable and whether the completion date moves — worth checking a suspension clause on its own terms. An omission strips scope out through the variations machinery and leaves the subcontract alive. Termination ends it. The one you are actually under decides what you can claim, so get the direction in writing.

What to do with your copy this week

Write the notice period and the payment formula from your termination clause somewhere you will see them, then read retention, set-off and suspension in the same sitting — termination is when all of them arrive at once. And make sure the records exist: what you are paid on termination is work done, materials on site and costs incurred, each of which has to be shown, dated, from the week it happened rather than reconstructed months later. If you have nothing set up for that, our free tools hub has the templates and calculators we build for keeping that record.