No pay less notice means they owe the whole application

You applied for £46,200 on the 6th. Nothing came back: no valuation, no certificate, no email querying a single line. Then on the day the money was supposed to land, £18,000 arrived with a spreadsheet you had not seen before.

Most subcontractors treat that as the start of an argument about whose valuation is right. In England, Wales and Scotland it is usually the end of one. Under the Housing Grants, Construction and Regeneration Act 1996, as rewritten by the Local Democracy, Economic Development and Construction Act 2009, a payer who serves neither a payment notice nor a pay less notice by the days the Act fixes must pay the notified sum in full on the final date for payment, whatever the work turns out to have been worth. The industry calls that a smash and grab. The Act calls it section 111.

This page is the two deadlines, what starts them, what a notice has to say before it counts as one, and how to count the whole thing from your own application date.

Whose contracts this covers

The payment provisions are in Part II of the 1996 Act and they are implied into your contract whether or not anybody read them.

Section 105(1) defines construction operations, and the list is broad: construction, alteration, repair, maintenance, extension, demolition or dismantling of buildings or structures forming part of the land; walls, roadworks, power lines, railways, pipelines and sewers; installation of heating, lighting, air conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems; site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection and dismantling of scaffolding, site restoration and landscaping; painting or decorating internal or external surfaces. Section 105(2) takes a handful of things back out, including drilling for oil and gas, mineral extraction, plant and machinery on process sites such as nuclear, power generation, water treatment, chemicals and pharmaceuticals, manufacture or delivery to site of components where the contract does not also provide for their installation, and works that are wholly artistic in nature.

Three points decide whether the machinery below is yours to use.

Your contract does not have to be in writing. The old section 107, which limited Part II to contracts in writing, was repealed when the 2009 amendments came into force. An oral subcontract agreed on site, or a part-oral one papered by email, sits inside the Act.

Your customer cannot be a residential occupier. Section 106(1) switches Part II off for a construction contract with a residential occupier, which section 106(2) defines as a contract principally relating to operations on a dwelling which one of the parties occupies, or intends to occupy, as his residence. A kitchen for the couple who live in the house is outside the Act, so there is no notified sum to grab and no statutory right to adjudicate. That work needs its protections written into the contract instead, which is getting paid by a homeowner.

The job has to be long enough for stage payments. Section 109 gives a right to payment by instalments unless the contract specifies, or the parties agree, that the duration of the work is to be less than 45 days. A two-week fit-out with a single invoice at the end still gets the notice regime around that one payment; what it does not get is a right to interim applications.

The 2009 amendments apply to construction contracts entered into on or after 1 October 2011 in England and Wales, and 1 November 2011 in Scotland. Northern Ireland runs the same scheme under its own statute, the Construction Contracts (Northern Ireland) Order 1997, where Article 9A carries the payment notices and Article 10 carries the requirement to pay the notified sum in wording that tracks section 111 almost word for word.

The two notices, and the day each one closes

There are two doors the payer has to walk through if they want to pay you less than you asked for. Each has its own deadline, and each deadline is counted from a different end of the same period.

Section 111(1) is the operative sentence and it is short: "Subject as follows, where a payment is provided for by a construction contract, the payer must pay the notified sum (to the extent not already paid) on or before the final date for payment."

Section 111(6) is what a pay less notice buys the payer: "Where a notice is given under subsection (3), subsection (1) applies only in respect of the sum specified pursuant to subsection (4)(a)." In other words, the pay less notice replaces the notified sum with their figure. Miss it, and there is nothing to replace it with.

How your application becomes the notified sum

Section 111(2) defines the notified sum, and it names three sources. It is the amount in the payer's section 110A(2) payment notice; or the amount in a payee's section 110A(3) notice given because the contract requires the payee to notify; or the amount in a payee's section 110A(3) notice given under section 110B(2) because the payer did not serve theirs.

That last route is the one a subcontractor lives on, and it has a shortcut most people miss.

Section 110B(4) says that where the contract permits or requires you, before the day the payer's notice was due, to notify the payer of the sum you consider will become due on the payment due date and the basis on which that sum is calculated, and you do so in accordance with the contract, "that notification is to be regarded as a notice complying with section 110A(3) given pursuant to subsection (2)".

Read that against your own paperwork. A monthly application for payment, submitted on time under a contract that provides for applications, stating a figure and showing how you got to it, is already the thing section 110B(4) describes. When the payer serves no payment notice, your application is promoted by operation of the Act into the default payment notice, and the figure on it becomes the notified sum. You do not have to serve anything extra, and because you were early rather than late, the final date for payment does not move.

Where your application does not qualify, either because it went in after the payer's notice was due or because it did not show the basis of calculation, section 110B(2) still lets you serve a fresh default payment notice at any time afterwards. There is a price for using it. Section 110B(3) postpones the final date for payment by the same number of days as the notice was late. Serve a default payment notice eight days after the payer's notice was due, and the final date for payment moves eight days out, taking the pay less deadline with it, because that deadline is counted backwards from the final date.

So the order of preference is simple. An application that already meets section 110A(3) is worth more than a default notice served afterwards, because it fixes the notified sum without giving the payer another week to think.

The payment due date and the final date for payment

The Act does not tell you when you get paid. It tells your contract to.

Section 110(1) requires every construction contract to provide an adequate mechanism for determining what payments become due under the contract and when, and to provide for a final date for payment in relation to any sum which becomes due. The parties are free to agree the length of the gap between the two.

Two dates, and they do different jobs. The payment due date is the anchor: the payment notice runs forward five days from it, and under most contracts the final date is measured from it. The final date for payment is the day the money has to be in your account, and the pay less deadline runs backwards from it.

Three subsections stop the payer manufacturing the dates in their own favour.

Section 110(1A) says there is no adequate mechanism where the contract makes payment conditional on the performance of obligations under another contract, or on a decision by any person as to whether obligations under another contract have been performed. That is the end of pay-when-certified in a subcontract, and it is why a main contractor cannot make your money wait on somebody else's certificate.

Section 110(1D) says a contract does not provide an adequate mechanism where it makes the date on which a payment becomes due depend on the giving to the person to whom the payment is due of a notice which relates to what payments are due under the contract. In other words your due date cannot be triggered by the payer's own paperwork: a certificate or notice issued to you. It can still be triggered by your own application, which is exactly what the Scheme does at Part II paragraph 4(b).

Section 113 makes a conditional payment provision ineffective where it makes payment conditional on the payer receiving payment from a third person, unless that third person is insolvent. "I have not been paid by the client" is a fact about their week, not a defence.

Where any of this is missing or non-compliant, section 110(3) sends the contract to the Scheme for Construction Contracts, which fills the gap with dates of its own.

When the contract is silent, the Scheme supplies the dates

The Scheme for Construction Contracts (England and Wales) Regulations 1998, SI 1998/649, amended for England by SI 2011/2333 and for Wales by SI 2011/1715, imply terms into a contract that does not comply. Scotland has its own instrument, the Scheme for Construction Contracts (Scotland) Regulations 1998, SI 1998/687, amended by SSI 2011/371, carrying the same periods. The English amendment came into force on 1 October 2011 and applies to construction contracts entered into after that date.

Part II of the Schedule is the payment part, and these are its numbers.

Paragraph 12 also defines what your application has to be to start any of this: a "claim by the payee" is "a written notice given by the party carrying out work under a construction contract to the other party specifying the amount of any payment or payments which he considers to be due and the basis on which it is, or they are calculated". Amount, and basis. The same two ingredients the Act asks of every notice on either side.

Seventeen days and seven days are the Scheme's numbers, not the market's. A JCT or NEC contract sets its own due date, its own final date for payment and its own prescribed period, and those are the numbers that bind you. The Scheme steps in only where the contract has left a hole. Read the payment clause of the form you actually signed and write its three periods on the front of the file, which is part of choosing the contract before you sign it.

One application, counted end to end

Take a groundworks subcontract with no compliant payment terms, so the Scheme applies. The relevant period is 28 days and it ends on 31 March 2026. You submit an application for £46,200 on 6 April 2026, setting out the measured quantities, the rates and the sum you say is due.

Now run the silence through it. Nothing arrives on 12 April, so no payment notice exists and section 111(2)(a) has nothing to point at. Your application of 6 April was given before 12 April, it specified the sum and the basis of calculation, and the contract provided for applications, so section 110B(4) treats it as the section 110A(3) notice. Section 111(2)(c) makes £46,200 the notified sum. Nothing arrives on 17 April either, so section 111(6) has no pay less notice to bite on.

On 24 April 2026 the payer owes £46,200. Not the value of the groundworks. The notified sum.

Change one fact and watch the arithmetic move. Suppose your application had gone in on 15 April, after the payer's notice was due, so section 110B(4) does not reach it. You serve a default payment notice under section 110B(2) on 20 April 2026, eight days after 12 April. Section 110B(3) postpones the final date for payment by eight days, from 24 April to 2 May 2026, and the pay less deadline moves with it, from 17 April to 25 April 2026. Same money, eight more days of the payer's oxygen, all of it bought by a late application.

The same application under a contract that sets its own dates

Most subcontracts do set their own periods, and they are usually longer than the Scheme's. Here is the identical £46,200 application under a subcontract where the payment due date is 30 days after the application, the final date for payment is 30 days after the due date, and the prescribed period for a pay less notice is five days.

The mechanism is identical and the dates are six weeks apart. This is why "no pay less notice arrived" is a sentence with no meaning until somebody has counted. Silence on 20 April means the payer has lost their pay less right under the Scheme and still has six weeks of it under the subcontract. The four dates per application are the whole game, and they are worth writing into the diary the day the application goes out rather than the day the money fails to arrive.

What a notice has to say to be a notice

A figure on its own is not a notice, and this is where a lot of pay less notices fall over.

Section 110A(2) requires a payment notice to specify the sum the payer considers to be or to have been due at the payment due date, and the basis on which that sum is calculated. Section 111(4) requires a pay less notice to specify the sum the payer considers to be due on the date the notice is served, and the basis on which that sum is calculated. Both statements are two-part, and both parts are mandatory.

Section 110A(4) and the closing words of section 111(4) add something that catches payers out in the other direction: it is immaterial that the sum may be zero. A payer who considers nothing is due still has to say so, in a notice, by the deadline. Silence is not a nil valuation.

So an email saying "we are paying £18,000 this month" specifies a sum and no basis. A contra-charge schedule with headings and figures but no statement of the sum considered due is the opposite failure. A pay less notice served on 18 April when the deadline was 17 April is a nullity whatever it says, because section 111(5)(a) makes the timing part of the definition.

The Court of Appeal has been generous on one point. In S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448, decided on 7 November 2018, Grove's pay less notice referred to the basis of calculation set out in an earlier spreadsheet rather than repeating it, and the court held the notice valid. A notice may point at a document the other side already has, provided the reference is clear enough that the recipient knows what the calculation is. What it may not do is leave the basis unstated altogether.

They can argue about value. They have to pay first.

The obvious objection to all of this is that the payer will simply adjudicate and prove the work was worth £31,000. They can. The order of operations is the point, and it was settled by the same case.

In S&T v Grove, Sir Rupert Jackson held at paragraph 107 that "both the Act and the contract must be construed as prohibiting the employer from embarking upon an adjudication to obtain a re-valuation of the work before he has complied with his immediate payment obligation". The employer's route to the true value of the work exists. It opens after the notified sum has been paid.

That is what makes section 111 commercially different from a valuation dispute. In a valuation dispute, the money sits with the payer while two quantity surveyors write to each other for four months. Under section 111, the money moves to you first, and then the payer funds an adjudication to try to get some of it back, from a position where they are the claimant and you are holding the cash. Plenty of payers look at that and settle instead.

Two things follow for how you write your application. Put a defensible figure on it, because a notified sum you cannot stand behind in a true value adjudication is a loan rather than a payment. And show the basis properly, because the same working that makes your application a valid section 110A(3) notice is the working you would rely on later. Where the sum at stake is large, a solicitor who does construction adjudication will read your four dates and tell you where you stand inside an hour, and that hour is cheap against £46,200.

What you do on the day after the final date

The final date passes and the notified sum is unpaid. Three routes open, and they are not alternatives so much as a sequence.

Adjudicate. Section 108 gives a right to refer a dispute arising under the contract to adjudication at any time. A smash and grab referral is the narrowest kind of adjudication there is, because the adjudicator is not being asked what the work was worth. They are being asked four questions of fact: what the notified sum was, whether a payment notice was served in time, whether a pay less notice was served in time, and whether the sum has been paid. The adjudicator's decision lands within 28 days of the referral, extendable by 14 days with the referring party's consent. Applying to a nominating body, drafting the notice and serving the referral within seven days is starting an adjudication.

Suspend. Section 112(1) gives the person to whom the sum is due the right to suspend performance of any or all of their obligations under the contract where the section 111(1) requirement is not complied with. Section 112(2) requires at least seven days' notice of intention to suspend, stating the grounds. Section 112(3A) makes the party in default liable for a reasonable amount in respect of costs and expenses reasonably incurred as a result of the suspension, and section 112(4) says the suspension period is disregarded in computing any contractual time limit, so demobilising does not put you in delay. That is suspending work for non-payment.

Charge for the delay. The Late Payment of Commercial Debts (Interest) Act 1998 implies a right to statutory interest into a commercial contract at eight percentage points above the Bank of England base rate, plus a fixed sum under section 5A of £40, £70 or £100 depending on the size of the debt, and reasonable recovery costs above that fixed sum under section 5A(2A). The right applies whether or not the invoice or the contract mentions it, which is charging late payment interest.

In Scotland the mechanism is identical, the instrument is SI 1998/687 as amended by SSI 2011/371, and enforcement runs through the Court of Session or the sheriff court rather than the Technology and Construction Court, with the useful extra that an adjudicator's decision can be registered for execution in the Books of Council and Session and enforced by diligence without a fresh court action. In Northern Ireland the same rights sit in Articles 9A, 10 and 11 of the Construction Contracts (Northern Ireland) Order 1997.

What it costs

Serving an application that qualifies as a section 110A(3) notice costs nothing. It is a document you were already sending, with the basis of calculation written out and the date recorded.

On AEC Stack there is no monthly subscription. The platform fee is 2.5% of each invoice processed through the platform, taken when the invoice is paid, so a month with nothing going out costs nothing. Your applications carry the sum and the basis of calculation the Act asks for, and the payment due date, the payment notice deadline, the pay less deadline and the final date for payment are counted from the day each application goes out, against the periods in your own contract rather than the Scheme's.

Take your last unpaid application, put the date it went in against the periods in your subcontract, and see which of the payer's two deadlines has already gone by: open the payment dates panel.