What is the difference between a Payment Notice and a Pay Less Notice?
A Payment Notice sets the sum due for the cycle; a Pay Less Notice says your main contractor plans to pay less than that sum.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
If you have been paid less than the notified sum, see when a Pay Less Notice is needed.
The answer
They do different jobs at different times. The Payment Notice comes first, soon after the due date, and values the work at the payment due date. The Pay Less Notice is different. Under section 111 of the Housing Grants, Construction and Regeneration Act 1996, it states what your main contractor considers due on the date it is sent. It has its own deadline, usually counted back from the final date for payment. Each must state a sum and how it was worked out. A Payment Notice lower than your application does not need a Pay Less Notice as well. A Pay Less Notice is only needed if your main contractor wants to pay less than the notified sum. Keep your application, the notified sum and the amount paid as separate figures in your records.
The difference at a glance
| Point | Payment Notice | Pay Less Notice |
|---|---|---|
| Purpose | Sets the notified sum for the cycle. | Says your main contractor will pay less than the notified sum. |
| Valued at | The payment due date. | The date the notice is sent. |
| Sent by | Your main contractor or the person your subcontract names. Some subcontracts make you send it. | Your main contractor or a person it authorises under your subcontract. |
| Deadline | The Payment Notice window, after the due date. | Its own window, often counted back from the final date for payment. |
| Must show | The sum and how it was worked out. | The lower sum, how it was worked out and each deduction. |
Example
Illustrative example. The scenario and figures are invented.
The facts
You apply for £80,000. Your main contractor's valid Payment Notice states £68,000 at the payment due date.
What happens
- If it pays the £68,000, no Pay Less Notice is needed, even though the notice is lower than your application.
- If it wants to pay £64,000 instead, it needs a valid Pay Less Notice in time, and you check that it sent one.
- The Payment Notice does not cover the further £4,000 cut on its own.
The sums in question
| Item | Amount |
|---|---|
| Application | £80,000 |
| Payment Notice | £68,000 |
| Lower sum your main contractor might want to pay | £64,000 |
The outcome
The £68,000 Payment Notice stands on its own. Only a plan to pay less than that, such as £64,000, needs a Pay Less Notice and its deadline.
The figures show the difference, not a verdict on a live notice.
To have every notice that comes back checked against its window the day it lands, see our Underpayment Prevention service.