The Scheme for Construction Contracts explained

The Scheme for Construction Contracts (England and Wales) Regulations 1998 is a set of default terms. It applies when a construction contract does not give the payment or adjudication rights that the Housing Grants, Construction and Regeneration Act 1996 requires.

Where that happens, the Scheme's terms apply in place of the missing ones. Part I covers adjudication and Part II covers payment. Scotland has its own Scheme, and Northern Ireland its own rules.

You do not choose the Scheme. It applies by law, gap by gap.

If your subcontract has no adjudication clause, or one that falls short of the Act, the whole of Part I replaces it. If your subcontract leaves out a payment term the Act requires, the matching part of Part II fills that gap. The rest of your subcontract stays as it is.

It often applies in full to oral and part-written contracts, which may set no payment terms at all. See Is a contract legally binding if it is not signed?

Where Part II applies, it sets the valuation rules and payment dates.

Under paragraph 2, the sum due is the value of work done and materials supplied, together with other sums due and less amounts already paid.

An interim payment falls due 7 days after the payment period ends, or when you claim if later, under paragraph 4. The period is 28 days where the subcontract sets none. Final payment falls due 30 days after completion, or when you claim if later.

The final date for payment is 17 days after the due date under paragraph 8. The payer must send its Payment Notice within 5 days of the due date under paragraph 9. Its Pay Less Notice must arrive at least 7 days before the final date for payment under paragraph 10.

So on a Scheme cycle, the Payment Notice is due by day 5 after the due date. Any Pay Less Notice is due by day 10, and payment by day 17.

Your own dates come from your subcontract first. To see how an unamended JCT cycle differs, read What is the JCT payment timeline?

Where Part I applies, it sets how an adjudication runs:

You begin by sending a notice of adjudication to every other party to the contract. The adjudicator is either the person named in the subcontract or someone chosen by a nominating body. Your referral notice, containing the full case, must reach the adjudicator within 7 days of the notice.

The adjudicator decides within 28 days of the referral, or 42 days if you agree, or longer if both sides agree. The adjudicator can also decide who pays the adjudicator’s fees.

Part I of the Scheme sets out each step. For how adjudication fits with the other ways to settle a dispute, see Construction disputes: your options as a subcontractor.

Many subcontracts are amended to push the final date out or shorten your notice periods. The Scheme does not undo those changes if the subcontract still meets the Act. It steps in only where a required term is missing or does not work.

On a job with no signed subcontract, the Scheme is often all there is. That makes its dates the ones to diarise.

Whether the Scheme applies to a term in your subcontract is a question of law on your documents. If a lot of money turns on it, ask your solicitor.

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'm working without a signed contract. We pursue payment for work carried out without a signed subcontract. See Letter of Intent Claim.