How much retention is normal on an Australian subcontract?
The market-normal position is retention (or combined security) capped at 5% of the subcontract sum, typically released half at practical completion and half at the end of the defects liability period. Ten percent held until practical completion is a red flag. In NSW, retention money owed to subcontractors on larger projects must be held in trust, and QLD runs statutory trust arrangements on some projects.
Retention is your money, at their risk
Retention is cash you've earned, held against defects you mostly won't cause, unsecured against a builder you can't control. If the builder becomes insolvent while holding your retention, you're generally an unsecured creditor for it — which is precisely why NSW mandates trust accounts for subcontractor retention on larger projects and QLD has been extending statutory trusts. The percentage matters, but so does where the money sits.
Check the release mechanics as hard as the rate: what triggers release, whose certificate it depends on, and whether "practical completion" means yours or the head contract's. Retention released at head-contract PC can hold your money months after your trade finished.
What to negotiate
Five percent combined cap across retention and any bank guarantees; release of the first half at your practical completion, not the project's; a defined defects period with automatic release at its end; and where available, retention in trust. Swapping cash retention for bank guarantees also keeps working capital in your business.
Know where your contract stands
Clause-by-clause risk report against your state's Security of Payment laws in about 90 seconds.
Scan my subcontract freeCommon questions
Can the builder hold both retention and bank guarantees?
Contracts often ask for both — the number that matters is the combined total. Market position is 5% combined; 5% retention plus two unlimited bank guarantees is not 5% security.
When do I get retention back?
Whatever the clause says, which is the problem: watch for release tied to head-contract milestones, certificates in the builder's discretion, or defects periods that restart. The market position is half at practical completion of your works, half at the end of a defined defects liability period.
Keep reading
General information for Australian subcontractors, not legal advice — statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.