Knowing where you stand legally is incredibly important for businesses – so we’ve put your legal questions to our experts!

What should I do if a client refuses to pay for completed work?

Katie Richards, CEO of Virtual Legal, says:

The best avenue for recovering unpaid client fees often depends on the amount of money outstanding and whether you have a client agreement in place, including any protective terms.

If the amount is relatively small, say $500-$3,000, then the best option may be to engage a debt collector. However, you may lose a percentage of the invoice in debt collection fees.

Each state of Australia will have a small claims tribunal – for Queensland, it’s QCAT, and you can bring a claim for Debt Dispute without needing lawyers, provided the amount you’re claiming is up to and including $25,000. If the amount is over $25,000, you would need to make a Claim and Statement of Claim in the Magistrates court for any amount up to $150,000 or District Court for up to $750,000, though you likely will need a lawyer to assist with this. These amounts vary between states, so it’s important to look up your local small claims thresholds.

Another option where the debt is owed by a company (as opposed to a sole trader), the debt is over $4,000 and it is due and payable (i.e. there is no dispute about whether it is owing or not) is to file a creditors Statutory Demand in the Supreme Court and the creditor will have 21 days from the date they are served with the Demand to pay it in full or lodge their defence to the court.  If they don’t respond, you may request an Order from the court to wind up the creditor’s company as it is deemed that they are not solvent if they cannot pay their debts as and when they fall due. Legal fees for preparing a Creditor’s Statutory Demand may be as little as $1,500 plus court filing fees, depending on which law firm you engage.

Having client agreements that give you the right to charge interest on overdue amounts, and require the client to pay for any costs incurred in debt collection, is a great way to deter clients from falling behind on payments in the first place. Also, where you provide products to the client, having a retention of title clause and the ability to register a charge on the Personal Property Securities Register (PPSR) over those products, can also provide protection for recovery of the products if they are not paid for.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.

I often use subbies, but don’t have anything formal in place. What do I need? 

Oliver Morrisey, lawyer, says:

Using subcontractors without formal agreements might seem like it saves time, but it leaves your business open to disputes, liability issues, and financial risks. A subcontractor agreement can simplify your work relationships and shield you from unnecessary trouble.

The most important reason to have a subcontractor agreement is to clearly define responsibilities. Without this, misunderstandings can arise about who is responsible for certain tasks, delays, or even costly mistakes. I worked with a contractor who ran into trouble when a subcontractor they hired improperly installed wiring, causing delays and extra costs. Since there was no formal agreement, the contractor ended up covering the costs to maintain the client relationship. That was an expensive lesson for them.

A subcontractor agreement helps you avoid this by explicitly stating the scope of work, deadlines, and who is liable for issues. For example, it should include a clause requiring subcontractors to follow safety and industry standards and carry their own insurance. This protects you from claims and ensures they are responsible for correcting any mistakes.

You should also include terms for payment, timelines, and what happens if the subcontractor fails to meet expectations. By setting everything out in writing, you protect your business and create a professional relationship built on clarity.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.