Stop work only by notice, never by walking off
Pulling the gangs off site over unpaid money, without proper notice, can itself be the default that gets your subcontract terminated. If you must stop, use the notice of intention to suspend or your subcontract's own route, and keep working until its period has run.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Walking off feels like the only lever left. It hands your main contractor the easiest default there is to prove: suspending the works without reasonable cause. Your unpaid money then has to be argued inside a termination account, after someone else has finished your work. Section 112 of the Housing Grants, Construction and Regeneration Act 1996 gives you a lawful way to stop instead. If a sum due is not paid in full by the final date for payment, the deadline for paying you, you can suspend work. First give written notice of your intention to suspend, stating the grounds, at least 7 days before you stop. Used properly, it puts the pressure on your main contractor without giving it a ground to terminate.
How to do it
- Check what is actually due. Look at your application, the final date for payment, and any Payment Notice or Pay Less Notice saying what your main contractor will pay.
- If a sum due is unpaid, give written notice of your intention to suspend, stating the grounds, by the route your subcontract names for notices.
- Keep working until the notice period has run, and record when the notice was served and the date suspension may start.
- Take the legal questions, including any right to terminate for non-payment, to your solicitor before you act on them.
Example
Illustrative example. The scenario and figures are invented.
The facts
A steel erection subcontractor is owed £48,000 on an application whose final date for payment passed a week ago. No Payment Notice or Pay Less Notice was given. The directors want the crane crew off site the next morning.
What happens
- The commercial manager checks the dates and the notices, and the solicitor confirms the £48,000 is due.
- That afternoon, a notice of intention to suspend goes out by recorded delivery and email, as the subcontract requires. It states the ground and the sum, and the crew stays on site.
- The first day suspension may start goes in the diary, 7 days on.
The outcome
The main contractor pays on day 6. Had the crew left the next morning, the main contractor would have had a default notice to serve, and the £48,000 to argue about inside it.
To have this set up for you, see our Termination Prevention service.