What is the Construction Act?

The Housing Grants, Construction and Regeneration Act 1996 sets payment and adjudication requirements for construction contracts within its scope. Its part on construction contracts is usually called the Construction Act.

It gives you a payment timetable, payment notices and the right to be paid the notified sum. It also lets you suspend work for non-payment and refer any dispute to adjudication. If your contract does not give you these, default rules fill the gaps.

It applies in England, Wales and Scotland. Northern Ireland has its own, very similar law.

The Act covers construction contracts, which section 104 defines. That includes most contracts to carry out construction work, to supply labour for it, or to design or survey it.

Section 105 lists what counts as construction operations. It leaves some work out, such as some plant and process work on power, water, oil, gas and chemical sites.

Section 106 leaves out a contract with a homeowner for work on their own home. Since 1 October 2011 in England and Wales, the Act also covers oral and part-written contracts.

Whether it applies to an unusual contract is a question for your solicitor.

Section 109 provides a right to instalments, subject to its short-duration exception. Check whether the contract specifies, or the parties agree an estimate of, a duration below 45 days. Section 110 requires the contract to set out what is due and when, including a due date and a final date for payment.

Your contract must identify who gives the payment notice under section 110A. The mechanism may involve the payer, a specified person or you as payee. The notice states the sum considered due and its basis, within 5 days after the due date. If a required payer notice is missing, section 110B provides default-notice rules. Your earlier application only stands as the notice if it meets the relevant requirements. Under section 111, the sum in the notice must be paid unless a valid pay less notice is sent in time.

Section 113 prevents your payment depending on the other party being paid, unless someone up the chain is insolvent. If the notified sum remains unpaid after the final date, section 112 allows suspension after 7 days’ written notice. The section provides for a reasonable amount for costs and expenses reasonably incurred through exercising that right, and adjustment of affected contractual time limits. Check the qualifying sum, grounds and service before suspending.

Many contracts give you these rights in their own words and dates. Where yours does not, the Scheme for Construction Contracts fills the gap. For a practical payment record, see your payment cycle and notices.

For routine administration, our Main-contract and subcontract administration support service records the applicable duties and payment dates. For an outstanding payment, Overdue payment recovery checks the agreement, notices and amount owed.

Section 108 gives you the right to refer a dispute to adjudication at any time. The decision comes within 28 days of the referral, unless that is extended. It binds both sides until the dispute is finally settled.

Your contract cannot take that right away. We explain the steps, and the other ways to settle a dispute, in Construction disputes: your options.

Section 115 lets a notice be served by any effective means, unless your contract sets the method. If it does, follow it exactly.

Section 116 sets how periods are counted. A period starts the day after the event that triggers it. Christmas Day, Good Friday and bank holidays are left out of the count.

Part 8 of the Local Democracy, Economic Development and Construction Act 2009 changed the Construction Act. The changes apply to contracts made from 1 October 2011 in England and Wales, and 1 November 2011 in Scotland.

They revised the payment-notice regime, introduced pay less notices, extended coverage to oral contracts and restricted specified payment conditions linked to other contracts. Contracts made before then follow the older rules.

The Act does not decide what you are owed; your contract and records do that. Nor does it prevent the other party from paying less where it sends a valid pay less notice in time.

Interest on late payment comes from your contract or the separate late payment law, rather than the Act. Our Late payment interest calculator explains the calculation. The Act does not currently ban cash retention.

On 24 March 2026 the Government published Late payment consultation: time to pay up, government response. The response sets out three proposals.

The proposals include a ban on cash retentions in construction contracts following further consultation. They also include a 60-day limit on business payment terms, with some exceptions. A further proposal would prevent contracts from removing the right to statutory late-payment interest.

The Commercial Payments Bill now takes these reforms forward. Its current version was published on 15 September 2026. Proposed changes do not replace current contractual rights before the relevant legislation takes effect. Check commencement and transitional rules before relying on any reform.