A pay less notice is how a payer tells the payee it intends to pay less than the notified sum. Without a valid pay less notice, section 111 of the Housing Grants, Construction and Regeneration Act 1996 requires the payer to pay the notified sum on or before the final date for payment. This guide sets out the statutory rules. JCT contracts have their own provisions and periods, so check your own contract.
What the notified sum is
The notified sum is the amount in the payment notice given under section 110A, or in the payee's notice or default payment notice under section 110B. It is the starting point. The payer must pay it unless a pay less notice is given in time.
When a pay less notice must be given
Section 111 requires the pay less notice to be given not later than the prescribed period before the final date for payment. The contract sets that period. If the contract does not set one, the Scheme for Construction Contracts (England and Wales) Regulations 1998 sets it at seven days before the final date for payment.
The deadline is counted back from the final date for payment, not forward from the payment notice. A payment notice and a pay less notice are separate notices with separate deadlines, so check both dates in your contract at the start of each payment cycle.
What it must contain
- The sum the payer considers to be due on the date the notice is given.
- The basis on which that sum is calculated.
The sum may be zero. A practical way to show the basis is to start from the notified sum and list each deduction with its reason and value, so the payee can see how the figure was reached.
Who can give it
The payer, or a specified person if the contract provides for one, gives the notice. Check your contract for who that is.
What happens if it is late or missing
If no valid pay less notice is given, the payer must pay the notified sum by the final date for payment. If the notified sum is not paid in full by the final date, section 112 gives the payee the right to suspend performance after giving at least seven days' notice of intention to suspend, stating the ground or grounds. The payee is also entitled to a reasonable amount for costs and expenses caused by the suspension, and the period of suspension is added to the time for completion.
Disputes about the amount
Section 108 of the Act gives a party to a construction contract the right to refer a dispute to adjudication at any time. Disputes about a notified sum or the content and timing of a pay less notice are commonly referred to adjudication. The adjudicator's decision is binding until the dispute is finally decided by legal proceedings, arbitration or agreement.
Common reasons a pay less notice is challenged
- It was given after the prescribed period.
- It does not state a sum, or does not show the basis of calculation.
- It was given by someone the contract does not name.
- It was sent by a method the contract does not allow, or there is no proof of when it was given.
Timeline example (Scheme periods, for illustration)
| Event | Day |
|---|---|
| Payment due date | Day 0 |
| Latest date for the payment notice (s.110A) | Day 5 |
| Latest date for a pay less notice (Scheme: 7 days before final date) | Day 10 |
| Final date for payment (Scheme: 17 days after the due date) | Day 17 |
The Scheme sets the final date for payment at 17 days after the date payment becomes due. Your contract will usually set its own periods; use those.
Checklist before issuing
- Correct contract, payment cycle and notified sum referred to.
- Sum considered due stated, with each deduction and reason.
- Given within the contract period, by the correct person, by a method the contract allows.
- Proof of service kept.
Sources
- Housing Grants, Construction and Regeneration Act 1996, Part II, ss.110A, 110B, 111, 112
- Scheme for Construction Contracts (England and Wales) Regulations 1998, Schedule, Part II
- Construction contracts: payment (GOV.UK)
Templates for this task
- Pay Less Notice – £3.50
- Payment Notice – £3.50
- Payee's Default Payment Notice (s.110B) + Notice of Intention to Suspend (s.112) – £3.50
- Getting Paid under the Construction Act: plain-English guide and timeline – £2.50
Check before use – not legal advice. This guide states the law and official guidance as facts, in our own words, as checked on 2 November 2026. It does not replace professional advice on a specific matter. Contains public sector information licensed under the Open Government Licence v3.0.