A subbie leaves a job looking finished. Three weeks later the customer rings: a leak through a roof penetration, an isolator that’s taken on water, or an inverter that keeps tripping. By then the subbie has invoiced, you’ve moved on to twenty other jobs, and the only proof of what was done that day sits in a group chat somewhere.
That is how most back-charge disputes start. The defect is real, the repair costs real money, and you can’t prove who caused it. I’ve watched this happen across a lot of install businesses over twenty years. The ones that recover their costs aren’t the ones with the toughest attitude. They’re the ones with the best records.
This article walks through how to back-charge a solar subcontractor properly: what evidence you need, the sequence to follow, what your agreement has to say, and how to settle the dispute before it ends up with a regulator. It is general information, not legal advice. If real money is at stake, get a lawyer to look at your agreement and your state’s rules.
Why a defect in solar costs more than the repair
In general building work, a defect usually costs you the repair. In solar it often costs more, for three reasons.
The first is the return visit. A callback means a crew travelling to site, maybe access equipment, and a day’s schedule thrown out. The repair might take forty minutes, but you pay for half a day.
The second is compliance exposure. Small-scale Technology Certificates (STCs) are created from an eligible system’s deemed generation, and their validity depends on the system meeting scheme requirements, installed by an accredited person and properly documented (Clean Energy Regulator, n.d.-a). STCs are not a rebate. They’re tradeable certificates that liable entities buy and surrender, and the customer usually assigns their right to create them to you in exchange for an up-front discount. If an install turns out non-compliant, or the photo evidence behind the claim is missing, you’re the one exposed. If you need the mechanics explained to newer staff, I’ve covered them in why STCs are not a rebate.
The third is reputation. The customer doesn’t know or care that a subbie did the work. Your name is on the contract, and under the Australian Consumer Law the problem is yours to fix with the customer, whatever you later recover from the subbie.
So when you work out what the subbie owes you, the repair labour is only part of it. Your contract decides how much of the rest you can actually recover.
Evidence first, or don’t bother
A back-charge without evidence is just an argument. Before you send any notice, get the file in order.
Job photos
The Clean Energy Council’s documentation guidance sets out what accredited installers are expected to record on a job (Clean Energy Council, n.d.). For battery installs, the Clean Energy Regulator publishes a dedicated photo guide covering what needs to be captured (Clean Energy Regulator, n.d.-b).
Those photos are there for audits, and they also happen to be your best evidence in a dispute. A timestamped photo of a properly sealed penetration protects the subbie. A missing photo, or one that shows the shortcut, protects you. If your crews still send photos through WhatsApp and nobody files them against the job, fix that before anything else. I’ve written about job photo capture for solar installers separately.
Completed checklists
A signed install checklist shows what the subbie said they checked. If the checklist says the DC isolator enclosure was sealed and it wasn’t, you’ve got a clear discrepancy on paper. If you don’t have a checklist at all, you’ve got the subbie’s word against yours.
Sign-off and the defect record
You need the subbie’s completion sign-off, the customer’s handover sign-off if you collect one, and a dated record of the defect: when the customer reported it, what they said, and photos taken by whoever attended. Write it down the day it happens. Memory turns into opinion within a fortnight.
The back-charge sequence
This is the order I’d follow every time. Skip a step and you weaken your position.
1. Defect found and logged
Log the customer’s report against the job with a date and time. Don’t diagnose cause yet. Just record the symptom.
2. Evidence gathered
Pull the install photos, checklist and sign-off. Get photos of the defect itself, ideally from someone other than the subbie in question. Work out whether it’s workmanship (the subbie’s problem) or equipment (a warranty claim with the manufacturer or supplier). Plenty of inverter faults are hardware, and back-charging a subbie for a faulty unit is the fastest way to lose a good installer.
3. Written notice
Send the subbie a written notice. Email is fine, as long as it’s specific:
- the job address and install date
- the defect, with photos attached
- which part of the agreement or install standard you say it breaches
- what you want: rectification by a set date
- what happens if they don’t: you’ll engage someone else and recover the cost
Keep the tone factual. You may want to keep working with this person, and a notice written in anger reads badly if a mediator or adjudicator ever sees it.
4. A fair rectification window
Give the subbie a real chance to fix their own work. It’s usually cheaper for everyone, and most agreements require it anyway. What counts as “fair” depends on the defect. A water leak or safety issue might justify 24 to 48 hours. A cosmetic issue can wait a week or two. Put the window in the agreement so you’re not inventing it on the day.
If the defect is a safety risk, make the site safe first and talk later. No contract clause is worth an electrical hazard on a customer’s roof.
5. Rectification
Either the subbie fixes it, or the window passes and you send a replacement crew. If it’s the replacement crew, document their visit just as carefully: arrival and departure times, photos before and after, materials used and an invoice that itemises the work.
6. Back-charge for the actual cost
Issue a back-charge that itemises the actual, reasonable cost of rectification. Not a penalty, and not a round number you’ve pulled out of the air. Attach the replacement crew’s invoice and your evidence. If the agreement allows set-off, you deduct the amount from the subbie’s outstanding invoice and send a statement showing the calculation.
On paperwork: make sure the subbie’s original invoice is a valid tax invoice, and record the back-charge cleanly so your bookkeeper can reconcile it. The ATO’s rules on tax invoices apply to both sides of this (Australian Taxation Office, n.d.). Talk to your accountant about how the deduction should be documented for GST.
What your subcontractor agreement must say
Most back-charges fall over at this step. If the agreement doesn’t give you a right to deduct, withholding payment can turn into your breach rather than theirs. Sprintlaw’s guide to solar subcontractor agreements covers the core terms a solar business should have in place (Sprintlaw, n.d.), and the Clean Energy Council has published material on subcontractor agreements for accredited installers (Clean Energy Council, n.d.-b).
For back-charging specifically, your agreement needs five things.
A defect definition. What counts: work not done in accordance with the agreement, the applicable Australian Standards, manufacturer instructions, accreditation requirements or the job specification.
A notice process. How you notify (in writing, to a nominated email), and what the notice must contain.
A rectification period. How long the subbie has to fix it, with a shorter period for urgent or safety defects.
A right to engage another contractor and recover costs. If the subbie doesn’t rectify in time, you can get someone else in and recover the reasonable cost.
Set-off. The right to deduct those costs from any money owing to the subbie.
Here is the kind of wording I’d ask a lawyer to adapt. It’s a starting point for that conversation, not a clause to paste in unreviewed:
Defective Work. If the Principal reasonably considers that any work performed by the Subcontractor is defective, incomplete or not in accordance with this Agreement, applicable Australian Standards, manufacturer installation instructions or accreditation requirements, the Principal may give the Subcontractor written notice identifying the defect and supporting evidence.
Rectification. The Subcontractor must rectify the defect at its own cost within 10 business days of the notice, or within 48 hours where the notice states the defect presents a safety risk or risk of property damage.
Failure to rectify. If the Subcontractor fails to rectify within the required period, or the Principal reasonably determines the Subcontractor cannot do so safely or competently, the Principal may engage another contractor to rectify the defect. The reasonable, documented cost of rectification is a debt due from the Subcontractor to the Principal.
Set-off. The Principal may deduct any debt due under this clause from any amount payable to the Subcontractor under this or any other agreement, provided the Principal gives the Subcontractor a written statement itemising the deduction.
Have the agreement signed before the first job, not after the first argument. I cover the wider selection side in how to select solar subbies.
A worked example
This one is hypothetical. The numbers are illustrative only, so plug in your own rates.
Say a subbie installs a residential system and invoices you $2,800 on your normal terms. Before you pay, the customer reports water staining near a roof penetration. Your install photos show no flashing shot at that penetration, and the checklist item for it is ticked anyway.
You send written notice with the customer’s photos. The subbie is booked solid and doesn’t respond within the 48-hour window you set because the leak is causing damage. You send a replacement crew.
| Item | Cost |
|---|---|
| Replacement crew, two installers, 3 hours at $95/hr each | $570 |
| Call-out and travel | $150 |
| Flashing and sealant | $80 |
| Return visit to recapture missing compliance photos | $190 |
| Admin time to manage the rectification, 2 hours at $60/hr | $120 |
| Total back-charge | $1,110 |
You deduct $1,110 from the $2,800 invoice, pay $1,690, and send the subbie an itemised statement with the replacement crew’s invoice and the before and after photos attached.
A few points on this. The admin line is the one subbies push back on most, so only claim it if your agreement allows recovery of reasonable administration costs. The customer’s water-damaged ceiling is a separate question and could cost far more than the repair; whether you can recover it from the subbie depends on your agreement and insurance, so involve your insurer early. And the missing photo is the line that should sting most, because a gap like that is exactly what turns a routine audit into a problem.
Resolve it informally first
Most of these disputes should end with a phone call and a written summary, not a tribunal.
Have a structured conversation. Call the subbie, walk through the evidence and listen. Sometimes they’ve got photos you haven’t seen, or there’s a genuine argument that the fault is equipment, not workmanship.
Put the outcome in writing. Send an email the same day confirming what was agreed: the amount, how it’ll be deducted, and that it settles the matter.
Negotiate if it’s close. If the evidence is mixed, splitting the cost is often cheaper than fighting about it. A good subbie is worth more than a few hundred dollars.
Use mediation if you’re stuck. A neutral third party costs a lot less than an adjudication and keeps the relationship intact more often than you’d expect.
When the regulator becomes relevant (Queensland)
Know what the subbie can do if they think your deduction is wrong. In Queensland, a subcontractor who is owed money can give notice of a claim of charge over money payable further up the contractual chain, and the QBCC explains how that process works (Queensland Building and Construction Commission, n.d.-a). Security of payment laws also give contractors a statutory path to claim progress payments, and a deduction you can’t justify may not survive that process (Queensland Building and Construction Commission, n.d.-b). That’s the strongest reason to document everything.
In the other direction, the QBCC runs a defective work complaint process (Queensland Building and Construction Commission, n.d.-c) and publishes a procedure on accountability for subcontractor defects (Queensland Building and Construction Commission, n.d.-d). Whether those processes cover a particular solar job depends on whether the work falls within the QBCC’s jurisdiction. Electrical work is generally regulated separately by the state’s electrical safety regulator, so check which body applies before you assume the QBCC route is open. Other states have their own regulators and rules.
Queensland also has trust account rules, including retention trusts, that may apply to some contracting arrangements (Queensland Building and Construction Commission, n.d.-e). If you hold retention money from subbies, find out whether those rules apply to you before you rely on retention as your defect buffer.
Prevention beats recovery
Every back-charge costs you time, goodwill and usually a bit of money you never get back. The better play is to need fewer of them.
Track quality per subbie over time. Record callbacks, defects and audit findings against the installer who did the job. After six months the pattern is obvious, and you’ll know who to give the premium jobs to. Random spot checks help a lot here, and I’ve covered how to run them in spot-checking solar install quality.
Pay for quality, not just speed. If your pay structure rewards jobs per day and nothing else, you’ll get jobs per day. Paying on complete photo evidence and a clean checklist changes behaviour faster than any number of toolbox talks.
Set clear retention terms. A modest holdback released after a defect-free period gives you something to set off against, provided it’s in the agreement and complies with any trust or retention rules in your state.
Run rectification as proper jobs. A callback shouldn’t live in someone’s head. Treat it as a job with an owner, a due date and a closing record, the way I describe in solar defect rectification job management.
This is a big part of why I’m building CurrentFlow. It’s designed to keep job photos, completed checklists and subcontractor sign-off attached to each job record, and to track defects and rectification visits per subbie over time. Then when you do need to issue a notice, it rests on a clear, timestamped record rather than scattered messages and memory. It’s not live yet, but if that sounds useful, join the early access waitlist.
Until then, the advice is the same whatever tool you use: get the agreement right, capture the evidence on the day, follow the sequence, and keep the tone factual. Do that and a back-charge becomes an admin task, not a fight.
References
Australian Taxation Office. (n.d.). Tax invoices. https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/tax-invoices
Clean Energy Council. (n.d.-a). Advice on documentation. https://assets.cleanenergycouncil.org.au/documents/accreditation/CEC-Advice-on-Documentation-V1.pdf
Clean Energy Council. (n.d.-b). Solar sub-contractor agreement: Terms of use. https://assets.cleanenergycouncil.org.au/documents/accreditation/solar-sub-contractor-agreement-terms-of-use.pdf
Clean Energy Regulator. (n.d.-a). Small-scale technology certificates. https://cer.gov.au/schemes/renewable-energy-target/small-scale-renewable-energy-scheme/small-scale-technology-certificates
Clean Energy Regulator. (n.d.-b). Solar battery photo guide. https://cer.gov.au/document/solar-battery-photo-guide
Queensland Building and Construction Commission. (n.d.-a). Subcontractors’ charges. https://www.qbcc.qld.gov.au/complaints-disputes/payment-contract/commercial-payment-dispute/subcontractors-charges
Queensland Building and Construction Commission. (n.d.-b). Industry guide to security of payment laws. https://www.qbcc.qld.gov.au/sites/default/files/documents/guide-security-payment.pdf
Queensland Building and Construction Commission. (n.d.-c). Lodge a defective work complaint. https://www.qbcc.qld.gov.au/complaints-disputes/building-work-issue/defective-work-dispute/lodge-defective-work-complaint
Queensland Building and Construction Commission. (n.d.-d). Accountability for subcontractor defects procedure. https://www.qbcc.qld.gov.au/sites/default/files/documents/guide-accountability-subcontractor-defects-procedure.pdf
Queensland Building and Construction Commission. (n.d.-e). Trust accounts. https://www.qbcc.qld.gov.au/running-your-business/trust-accounts
Sprintlaw. (n.d.). Solar installer subcontractor agreement guide. https://sprintlaw.com.au/articles/solar-installer-subcontractor-agreements/
FAQ
Can I just withhold a subcontractor’s payment if their work is faulty?
Only if your agreement gives you a right of set-off and you’ve followed its notice and rectification process. Withholding without that right can put you in breach, and in Queensland the subbie has statutory routes to chase unpaid money. This is general information, so get legal advice on your own agreement.
How long should I give a subbie to fix a defect?
Whatever your agreement says, and if it says nothing, a period that’s reasonable for the defect. Safety or water-damage issues justify a short window, such as 24 to 48 hours. Non-urgent issues usually get one to two weeks.
What costs can I include in a back-charge?
The actual, reasonable, documented cost of rectification: replacement crew labour, call-out, materials and any extra compliance work such as recapturing missing photos. Admin time and consequential losses are only recoverable if the agreement allows them. Never add a penalty.
What if the fault is the inverter, not the installation?
Then it’s probably a warranty claim with the manufacturer or supplier, not a back-charge. Check the evidence before you blame the subbie, because back-charging a good installer for faulty hardware is the quickest way to lose them.
Does the QBCC handle disputes about solar installs?
It depends on whether the work falls within the QBCC’s jurisdiction. Electrical work is generally regulated by the state’s electrical safety regulator. The QBCC’s subcontractors’ charges and defective work processes are Queensland-specific, and other states have their own regulators.