The Construction Act explained for subcontractors

The Housing Grants, Construction and Regeneration Act 1996 is the law behind how subcontractors are paid. 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 subcontract 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 subcontracts 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.

For the detail, see Does the Construction Act apply to my contract? Whether it applies to an unusual contract is a question for your solicitor.

Under section 109, you can be paid in instalments unless the work is to last less than 45 days. Section 110 requires the subcontract to set out what is due and when, including a due date and a final date for payment.

Your main contractor must state what it considers due and how it worked that out within 5 days of the due date, under section 110A. If its notice is missing, section 110B allows your application to stand as the notice or lets you send your own. 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 main contractor 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 time lost and your reasonable costs are recoverable.

Many subcontracts give you these rights in their own words and dates. Where yours does not, the Scheme for Construction Contracts fills the gap. For all of them in one place, see What payment terms does the Construction Act give a subcontractor?

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

Section 115 lets a notice be served by any effective means, unless your subcontract 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 brought in the Payment Notice and the Pay Less Notice, covered oral contracts, and stopped payment being tied to what happens under another contract. Contracts made before then follow the older rules.

The Act does not decide what you are owed; your subcontract and records do that. Nor does it prevent your main contractor from paying less where it sends a valid Pay Less Notice in time.

Interest on late payment comes from your subcontract 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.

None of this is law yet. The Government says it will legislate when Parliament has time, and the 60-day limit will start no earlier than 2027. Until then, your subcontract and the current law apply.

I've been underpaid. We value the shortfall and challenge unsupported reductions. See Underpayment Claim.

I haven't been paid. We check what is due and pursue overdue payments. See Late Payment Claim.

I don't know what my subcontract commits me to. We explain contract risks before signing and turn signed terms into clear actions. See Pre-Signing Contract Review and Post-Signing Contract Review.