Subcontractor Not Getting Paid in NZ — The Recovery Ladder From Unpaid Invoice to Adjudication (2026)
You did the work. You invoiced it. The due date has come and gone, the phone calls get vaguer each week, and the next progress claim is already due. For a NZ subcontractor, an unpaid invoice is not just a nuisance — it is the single most common way a solvent trade business becomes an insolvent one. The Construction Contracts Act 2002 gives you a recovery ladder most subbies never fully use.
By Steve Parker · Trueworks · NZ construction estimation · 9 min
What you'll learn in this post
The recovery ladder — the six rungs from checking your paperwork through to adjudication, in the order that actually protects your position.
The deadlines that decide these disputes — why "20 working days" is only the default, and how the contract you signed can change every timeframe in the Act.
What it costs to wait — conservative numbers on what sitting on an unpaid construction invoice actually costs a trade business.
Quick answer: In a subcontractor payment dispute in NZ, your leverage comes almost entirely from the Construction Contracts Act 2002 (CCA). Serve a valid payment claim with the prescribed Form 1 notice attached. The payer must respond with a payment schedule within the time the contract sets — or, if the contract is silent, within 20 working days. No schedule and no payment means the full claimed amount becomes a debt due: you can recover it in court with the payer barred from raising set-offs, and you can suspend work after five working days' notice. If the amount is disputed, adjudication under the CCA is the purpose-built forum for construction payment disputes — weeks, not years. Retentions are held on trust for you by law. Trueworks prepares the numbers and the documents behind these steps; the formal legal moves themselves need a construction lawyer.
Step 1 — Check the contract before you check the courts
Every recovery step under the CCA runs off two documents: the construction contract and the payment claim. Before anything else, establish four things.
What the contract says about payment. The Act's timeframes — 20 working days for the payment schedule, 20 working days to the due date for payment — are defaults. They apply only where the contract is silent. Most head contracts and subcontract forms (NZS 3910:2023 derivatives, bespoke head-contractor subcontracts) set their own claim dates, schedule deadlines and due dates, and those govern. Read the payment clause before you count a single working day.
Whether what you sent was a valid payment claim. An ordinary invoice is not automatically a payment claim under section 20 of the CCA. A valid claim must be in writing, identify the contract and the relevant period, identify the construction work claimed, state a claimed amount and a due date, show how the amount was calculated, and state that it is made under the Act. Since the 2015 amendments it must also be accompanied by the prescribed form — Form 1 of the Construction Contracts Regulations 2003 — on all contracts, commercial and residential alike. Miss these elements and the pay-now-argue-later machinery of the Act may never have been engaged, which is exactly what the payer's lawyer will argue first.
What a "working day" means. Under the CCA it excludes weekends, public holidays and the period from 24 December to 5 January. A claim served mid-December runs on a slower clock than one served in March.
Whether you are chasing certified money or claimed money. An amount the payer has already scheduled or certified but not paid is the strongest position on the ladder. An amount you have claimed but they dispute sits lower and usually points to adjudication.
Step 2 — Serve a proper payment claim
If the paperwork behind the unpaid amount was never a valid payment claim, the usual fix is simple: serve one now, done properly. A payment claim can cover work carried out in earlier periods, and a final payment claim — the one that captures retentions, final variations and closing measure — is covered by the same regime as progress claims.
We keep a full walkthrough with the required content and the Form 1 notice here: payment claim and Form 1 template for NZ contractors. The short version: serve it in writing, attach Form 1, state the calculation, and serve it the way the contract requires (email service is fine only if the contract or the parties' conduct allows it — when in doubt, serve by more than one route and keep proof).
If the money in dispute is variation work the head contractor never signed off, the claim strategy is slightly different — see unpaid subcontractor variations under the CCA.
Step 3 — No payment schedule? An unpaid construction invoice in NZ becomes a debt due
This is the rung where most disputes are actually won. Once a valid payment claim is served, the payer has a fixed window — the contract's stated period, or 20 working days by default — to respond with a payment schedule that states what they will pay and, if it is less than you claimed, exactly why.
If no valid schedule arrives in time and the money is not paid by the due date, section 23 of the CCA does three things at once:
The full claimed amount becomes a debt due. You can recover it in court as a debt, plus the actual and reasonable costs of recovery the court awards.
The payer loses the argument, for now. In debt recovery proceedings for an unanswered payment claim, the payer generally cannot raise a counterclaim, set-off or cross-demand as a defence. Defects, contra charges and "we'll sort it at final account" wait until after you are paid. This is the Act's pay-now-argue-later principle.
You gain the right to suspend work. Serve a notice of intention to suspend; if the amount is still unpaid five working days after that notice, you may lawfully down tools. Suspension under the Act is not a breach of contract, and the clock keeps running on your time-related entitlements. The notice has to be done precisely — the mechanics are here: suspending work for non-payment under the CCA.
The same consequences apply where a schedule was provided but the payer failed to pay the scheduled amount: that certified sum is enforceable as a debt too.
One discipline point: do not suspend, and do not issue proceedings, on the strength of a payment claim you have not had checked. If the claim itself was defective, every step built on it is exposed.
Step 4 — Adjudication: the purpose-built forum for construction payment disputes
Where the payer did serve a payment schedule and simply disagrees with your numbers — the genuine contractor payment dispute — court is rarely the first stop. The CCA created adjudication precisely for this.
The shape of it:
Any party to a construction contract can refer a dispute about payment, or about rights and obligations under the contract, to an adjudicator. You cannot contract out of it.
It is fast. The respondent's reply is typically due within a few working days of the claim, and the adjudicator must generally determine the dispute within 20 working days of the response (extendable to 30, or longer by agreement). Most payment adjudications resolve in roughly one to two months end to end — against two years or more for litigation.
It is comparatively cheap. Each side usually meets its own costs, and the adjudicator's fee is commonly shared or allocated in the determination. For a documents-only payment dispute the adjudicator's fee often lands in the low thousands of dollars — material, but a fraction of court costs.
It is binding and enforceable. A determination that money is payable can be enforced through the courts as a debt, and it binds the parties unless and until the dispute is reopened in court or arbitration — which, in payment disputes, rarely happens.
Adjudication is won on documents: the contract, the claims and schedules, the variation trail, the measure, the programme. That evidence bundle is exactly the analytical work Trueworks does — see our full guide to adjudication process, costs and timeframes in NZ — but the referral itself, and the strategy around it, should be run with a construction lawyer or an experienced adjudication advocate.
Step 5 — Retentions are held on trust — check yours
If a head contractor is slow-paying progress claims, the retentions they hold on you deserve immediate attention. Under the Construction Contracts (Retention Money) Amendment Act 2023, retention money on commercial construction contracts entered into or renewed on or after 5 October 2023 is held on trust for you automatically, the moment it is retained. The holder must keep it in a separate bank account (or a complying instrument), keep proper records, and report to you regularly on what is held. Failures carry fines — up to $200,000 for the firm and $50,000 for each director — and the trust status means retentions are ring-fenced from the head contractor's general creditors if it fails. Contracts entered into before 5 October 2023 sit under the weaker 2017 retentions regime — retentions are still held on trust, but without the automatic-trust and separate-account machinery.
If you are owed retentions and are not receiving the required reporting, that is a warning sign in its own right. The full regime is here: retentions held on trust under the CCA.
Step 6 — Disputes Tribunal or District Court for a contractor payment dispute
When the ladder ends in enforcement, forum matters:
Disputes Tribunal — civil claims up to $60,000 (the limit doubled from $30,000 on 24 January 2026). No lawyers appear, filing fees are modest, and decisions are binding. For smaller trade debts where the CCA machinery was never engaged, this is often the economic route.
District Court — claims up to $350,000, and the usual venue for entering an unanswered payment claim or an adjudication determination as a debt. Where section 23 applies, summary judgment is the standard path because the payer has so little room to defend.
High Court — claims above $350,000 or where insolvency remedies (statutory demands, liquidation proceedings) come into play.
A statutory demand against a company that clearly owes an undisputed debt is a powerful lever, but it is a lawyer's tool — used against a genuinely disputed debt it can backfire with costs against you.
What it costs to wait
Doing nothing has a price, and it compounds. Conservative, generic numbers:
Financing the gap — carrying an unpaid $30,000 for three months on an overdraft at 10-14 percent costs roughly $750-$1,050 in interest, before any late fees on your own supplier accounts.
Losing the section 23 window — if you keep invoicing informally instead of serving valid payment claims, every month of work slides into "disputed account" territory where recovery means adjudication or court instead of summary debt enforcement.
Leverage decay — suspension rights only matter while you still have work to suspend. Once you are off site and the job is practised, your practical leverage drops to whatever the paperwork supports.
Counterparty risk — in a liquidation, unsecured trade creditors historically recover little or nothing. Retentions held on trust survive; unpaid progress claims generally do not.
Stale evidence — site diaries, photos and the people who remember the instruction all degrade. A claim assembled six months late is measurably weaker than one assembled the week the schedule failed to arrive.
Where Trueworks fits — and where a construction lawyer takes over
Trueworks is not a law firm and does not act for you in adjudication or court. What we do is the analytical layer underneath every rung of the ladder: checking whether your payment claims meet section 20 before you rely on them, quantifying the claim with a measured, code-cited build-up, reconstructing the variation and instruction trail, and preparing the numbers a lawyer or adjudicator can act on without re-doing the work. When the dispute turns formal — suspension notices on contested facts, adjudication referrals, statutory demands, proceedings — brief a construction lawyer, and hand them a file that is already in order.
FAQ — subcontractor and contractor payment disputes in NZ
The builder is not paying my invoices — do I have to keep working? Not indefinitely. If you served a valid payment claim and no payment schedule or payment arrived by the due date — or a scheduled amount went unpaid — you may serve notice of intention to suspend and lawfully stop work five working days later if the money still has not arrived. Suspension without that statutory footing, though, can put you in breach, so have the paperwork checked before you act.
What makes a final payment claim different from a progress claim? Legally, very little — the CCA's payment claim regime covers final claims as well as progress claims, so the same Form 1, content and response deadlines apply. Practically, a final payment claim carries the closing measure, final variations and retentions, so it is usually the largest and most contested claim on the job. It deserves the most careful build-up, not the least.
How long does adjudication take, and is the outcome binding? Most payment adjudications run roughly one to two months from notice to determination. The determination is binding on the parties and enforceable through the courts, unless the underlying dispute is later reopened in court or arbitration — which is uncommon for payment disputes.
Can the payer just raise defects to avoid paying my claim? Only through a valid payment schedule served in time, stating the amount they will pay and the reasons for any deduction. If no schedule was served, the Act's pay-now-argue-later rule generally bars them from raising defects, set-offs or counterclaims as a defence to debt recovery — those arguments wait until after payment.
Can I still serve a payment claim for work I did months ago? Generally yes — a payment claim can relate to work carried out in earlier periods, and many subbies rescue old accounts this way. The contract's claim regime still applies, and very old debts run into the six-year limitation period, so take advice before relying on a stale account.
Sitting on a variation, claim or contract clause you are not sure about? Send it with the contract — a written, code-cited answer back within 24 hours. Send us the drawings and the quote, tender or variation. You get a written, code-cited check back within 24 hours. No charge for your first check. No card, no obligation. NDA available. → Get the free check at trueworks.co.nz/contact — or email hello@trueworks.co.nz
About Trueworks
Trueworks is built by Steve Parker — 20 years on the analytical side of NZ construction. Variation reviews, contract advisory, programme review, and document-heavy estimation work. Trueworks is the productisation of that practice for NZ trades and builders: the same defensible analysis, at a price and pace a working contractor can actually use.
Every report is checked and signed off by me personally before it goes out. If you have a quote or tender you want a second opinion on, the easiest way to find out if Trueworks is useful is to send it.
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