Pay-when-paid clause
A pay-when-paid clause makes the builder's obligation to pay you conditional on the builder first being paid by the principal, and it is void under security of payment legislation in every Australian state and territory.
Void means void: the clause can sit in the signed document and still have no effect on your statutory rights. Variants ("pay-if-paid", payment timed to the builder's receipt of funds) are caught by the same provisions.
Why it matters to subbies
"We haven't been paid yet" is a cash-flow explanation, not a legal defence. Your payment claim machinery runs regardless of what is happening above your contract.
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General information for Australian subcontractors, not legal advice. Contract drafting and state legislation vary and change; your document and your state's Act govern. Written by Mat Kennedy at The Construction Contracts Co.