If you commission construction work, whether you are a council, a charity, a healthcare provider or a private business, payment follows a timetable set by law. Getting that timetable right protects your budget, keeps your project moving and helps everyone in the supply chain plan with confidence.
This guide explains the four key dates in plain English, what can go wrong when one is missed, and how we approach fair payment at Roundtable Projects.
General guidance, not legal advice. This article summarises the payment rules in the Housing Grants, Construction and Regeneration Act 1996 (as amended) and the Scheme for Construction Contracts as they apply in England, Wales and Scotland, with the Scheme defaults described for England. It is not legal advice. Your contract may set different periods, Scotland and Wales have their own versions of the Scheme, and Northern Ireland has its own Order with similar rules. If you are dealing with a live payment issue or dispute, please take advice from a qualified construction lawyer or adviser.
Why the Construction Act matters to clients
The Housing Grants, Construction and Regeneration Act 1996, usually called the Construction Act, applies to most construction contracts in England, Wales and Scotland. Northern Ireland has its own legislation, the Construction Contracts (Northern Ireland) Order 1997, with similar rules. The payment rules were strengthened by amendments that took effect in late 2011. There are some exceptions, most notably contracts with a residential occupier for work on their own home.
The Act requires every construction contract to set out clearly what is due and when. Where a contract is silent or does not comply, the Scheme for Construction Contracts fills the gaps with default terms. Those defaults only apply when your contract does not say otherwise. Always check your contract first.
The four key dates
1. Payment due date
The due date is the date a payment becomes due. Your contract should state how it is worked out, often by reference to a valuation date or the date an application for payment is received.
Where the Scheme applies to interim payments, the due date is generally the later of seven days after the end of the relevant payment period or the date the contractor makes its claim.
2. Payment notice
The payer, or a person named in the contract such as a contract administrator, must give a payment notice not later than five days after the payment due date. It must state the sum the payer considers due and how that sum has been calculated.
Some contracts instead treat the contractor’s application as the payment notice. Either way, the sum in the valid notice becomes the “notified sum”, the amount the payer is expected to pay unless a valid Pay Less notice follows.
3. Pay Less notice
If you intend to pay less than the notified sum, you must give a Pay Less notice. It must state the sum you consider due and the basis of the calculation, and it must arrive within the period your contract sets before the final date for payment.
Where the contract is silent, the Scheme sets that period at not later than seven days before the final date for payment. Reasons can include defective work, incomplete work or a disagreement over valuation, but the notice must be clear and on time to count.
4. Final date for payment
The final date is the last day by which the notified sum, less any amount set out in a valid Pay Less notice, must be paid. Your contract should set this. Where it does not, the Scheme sets the final date at 17 days after the payment due date.
A simple example using Scheme defaults
This example assumes the contract is silent and the Scheme defaults apply.
Day 0
Payment due date (for example, the 1st of the month)
Day 5
Last day for the payment notice (the 6th)
Day 10
Last day for a Pay Less notice, seven days before the final date (the 11th)
Day 17
Final date for payment (the 18th)
When counting periods under the Act, Christmas Day, Good Friday and bank holidays are disregarded, so check the calendar around holidays.
What goes wrong when a client misses a date
The notified sum may become payable in full. If no valid payment notice is given, the contractor’s application, or a default payment notice from the contractor, can become the notified sum. If no valid Pay Less notice follows in time, that full amount is generally payable by the final date, even if you believe the work is overvalued. The Court of Appeal confirmed in Grove Developments Ltd v S&T (UK) Ltd [2018] EWCA Civ 2448 that the payer must pay the notified sum first and can only then seek to challenge the true value, for example through a separate adjudication.
Adjudication becomes more likely. Either party to a construction contract can refer a dispute to adjudication at any time. It is fast, typically reaching a decision within 28 days of referral, and the decision is binding unless and until the dispute is finally resolved by agreement, litigation or arbitration. It also brings costs and management time that most clients would rather spend on the project.
The contractor may suspend work. If the notified sum is not paid by the final date, the contractor has a statutory right to suspend performance after giving at least seven days’ written notice. Under section 112 of the Act, the contractor can then recover reasonable costs and expenses arising from the suspension and is entitled to an extension of time for the period of suspension. Interest on late payment may also apply.
Cash flow stress spreads through the supply chain. Main contractors rely on being paid on time so they can pay subcontractors and suppliers. A missed date at the top can delay payments to smaller firms further down, putting pressure on relationships, programme and quality.
Common pitfalls to avoid
- Assuming internal approvals stop the clock. Committee cycles, finance sign off or funder drawdowns do not change contractual dates. Build them into your timetable from the start.
- Notices without a basis of calculation. A notice that states a figure without explaining how it was reached may not be valid.
- The wrong person or method. Check who is authorised to give notices and how they must be served, for example by email, post or a project platform.
- Relying on “pay when paid”. Clauses that make payment conditional on the payer receiving funds from someone else are generally ineffective under the Act, except in specific insolvency situations.
- Relying on “pay when certified”. Making payment conditional on a certificate under another contract, such as a main contract certificate, is also generally ineffective following the 2011 amendments.
- Using Scheme defaults when the contract says otherwise. Many standard forms set their own periods. The contract is your first reference point.
Public sector clients should also note that under the Procurement Act 2023, 30-day payment terms are implied into most public contracts and cascaded into public sub-contracts down the supply chain (broadly, sections 68 and 73), with limited exceptions.
How Roundtable approaches fair payment
Fair payment is part of how we build trust. Nobody should be out of pocket because a date was missed, and that applies to clients and subcontractors alike.
In practice, that means agreeing the payment timetable at the outset, sharing a clear calendar of key dates, submitting applications with the supporting detail you need to assess them, and talking early if a question arises rather than waiting for a deadline. We can help clients set up a payment process that works for their governance and the Act at the same time.
Talk to us
If you are planning a project and would like a clearer view of cost, programme and payment from the start, explore our main contracting, quantity surveying and project management services or start a conversation.
Call 01536 210258 or email info@roundtableprojects.co.uk.
Reform update (October 2026). In March 2026 the Government responded to its July to October 2025 consultation on late payments, and in May 2026 the Commercial Payments Bill was introduced, proposing among other things a ban on cash retentions in construction contracts. As of this review in October 2026, the Bill has not completed its passage through Parliament, so the retentions ban and the related late payment reforms are not yet in force. We will update this guide when they are.
Roundtable Projects Ltd, 37 The Point, Rockingham Road, Market Harborough, Leicestershire LE16 7QU. This article is general guidance only and does not constitute legal advice. It reflects the position in England, Wales and Scotland, and Northern Ireland has its own Order with similar rules. Last reviewed October 2026.