Pay Less Notices Explained

A pay less notice is a written notice from the payer saying they intend to pay you less than the sum already notified as due. Under section 111 of the Construction Act it has to state the sum the payer considers due and show how that sum was calculated, and it has to arrive before a deadline set by your contract. If the contract says nothing, that deadline is 7 days before the final date for payment. Miss it and the notice is worthless: the full notified sum falls due, whatever the payer thinks of your work.

First, check the Act applies to you

All of this comes from the Construction Act, or the Housing Grants, Construction and Regeneration Act 1996 if you want the full mouthful. Before you read another word: it doesn’t cover every job you do.

Section 106 takes out any contract with a residential occupier. Someone having work done on the house they actually live in.

So if you’re fitting a kitchen for a homeowner, none of this applies to you. No payment notice, no pay less notice, no right to down tools. You’re on your contract and nothing else. Worth knowing before you start quoting sections at someone in their own kitchen.

Where it does apply, which is subcontracting to a main contractor, commercial fit-out, developer work, industrial and public sector sites, the rules below aren’t optional. Nobody can write them out of a contract.

How the payment sequence runs

Pay less notices only make sense inside the sequence they belong to, and that sequence has four fixed points.

It starts with the payment due date, which is whatever date the contract says a payment becomes due. Within 5 days of that, a payment notice has to be served. Section 110A requires it to specify the sum considered due and the basis of the calculation. Depending on how the contract is drafted it comes either from the payer or from you, and the Act is explicit that the sum may be zero.

If the payer was supposed to serve it and doesn’t, section 110B lets you serve your own instead. Do it. The sum in your notice becomes the notified sum, and that is the number everything else hangs off. There’s a trade-off: the final date for payment gets pushed back by however many days late your notice was. So don’t sit on it.

Once a notified sum exists, a pay less notice is the only way the payer can pay less than it. Then comes the final date for payment, when that sum has to be paid, less anything a valid pay less notice covers.

Where the contract doesn’t set these dates, the Scheme for Construction Contracts fills them in. Payment becomes due 7 days after the work is complete or when you claim, whichever is later. The final date is 17 days after that. The payment notice is due within 5 days, and the pay less notice has to land not later than 7 days before the final date for payment.

Those are defaults for a contract that says nothing. Most contracts set their own, so go and read yours.

What makes a pay less notice valid

Three things, and all three have to be right.

It has to specify the sum the payer considers due. Not a complaint, not a list of everything they’re unhappy about. A number.

It has to set out the basis on which that sum is calculated. This is where most of them fall over. “We are withholding £4,000 for defects” is an assertion, not a basis. A basis shows the working: which items, what value against each, how the deduction gets to £4,000. A number with no workings behind it is a soft target.

And it has to arrive in time, before the prescribed period runs out. Late is the same as never sent.

Section 111(4) adds that the sum may be zero. A payer can serve a perfectly valid notice saying nothing is due at all. You can still fight that on the valuation, but you can’t fight it on procedure.

What happens when no valid notice arrives

This is the bit worth knowing properly, because it’s the strongest hand the Act ever deals you.

If a notified sum exists and no valid pay less notice turns up in time, section 111(1) says the payer has to pay that sum in full on or before the final date for payment. What they reckon about your workmanship doesn’t come into it. Not at that stage. Adjudicators enforce this all day long, and the tactic has a nickname: smash and grab.

They’re not stuck with it forever. They can reopen the valuation later through the contract’s own mechanisms. But they pay first and argue afterwards.

Worked example

Your interim application is for £18,400. The payer serves no payment notice, so you serve your own under s110B, notifying £18,400. The final date for payment is 17 days after the due date.

The payer decides your work is worth £14,000. But they put nothing in writing until two days before the final date, which is inside the 7-day window.

Notice is late, so it isn’t valid. The notified sum stands at £18,400 and that’s what falls due. The £4,400 they wanted to knock off has to be chased separately, later, on their time.

Now run it the other way. Same notice, served 8 days out, with a schedule showing which items were reduced and by how much. Payable sum drops to £14,000.

Same job, same work, same argument about the £4,400. The only thing that changed was whether someone got a notice out on time. That’s four grand riding on an admin deadline.

If the notified sum isn’t paid

Where the payer doesn’t pay the notified sum, section 112 gives you a right to suspend performance, either some of your obligations or all of them. You have to give at least seven days’ written notice first, stating the grounds. The right ends when you’re paid in full.

Two things get missed here, and both are in your favour. Section 112(3A) makes the defaulting party liable for a reasonable amount covering costs and expenses you reasonably incur as a result. And section 112(4) means the suspension period is disregarded when calculating contractual time limits, so downing tools shouldn’t cost you on programme.

Suspension is still a serious move, and a botched notice can put you in breach instead of them. Take advice before using it on anything sizeable.

Common mistakes

Assuming it covers domestic work. Section 106 takes residential occupiers out completely. This is the one that catches people.

Waiting for the payer’s payment notice. If they don’t serve one, serve your own under s110B. Sitting quiet just leaves you with no notified sum to enforce, which is exactly where they want you.

Treating a stroppy email as a pay less notice. It isn’t one unless it states a sum, shows the basis and arrives in time.

Accepting pay when paid. Section 113 makes a clause tying your money to the main contractor getting paid by someone else ineffective, unless that third party is actually insolvent. It gets written into subcontracts anyway.

Looking for the old name. Before October 2011 this was a notice of intention to withhold payment. Plenty of templates still say that. Same instrument, current name is pay less notice.

Do this in FieldHive

Enforcing a notified sum comes down to being able to show what you applied for, what was notified and what actually got paid, with dates against the lot. Build a statement of account laying out every application and payment on the job, free, in your browser. If you need to reissue the application underneath it, the invoice generator will do that.

Aid, not advice

This guide explains how the payment notice regime works so you can recognise where you stand. It is not legal advice. Payment disputes turn on the wording of your specific contract, and the sums involved are usually significant. For a contested or high-value payment, get advice from a construction solicitor or a specialist adjudication adviser.

*Legislation and figures checked August 2026: Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009); Scheme for Construction Contracts (England and Wales) Regulations 1998.*