What should a Pay Less Notice look like? An example and template
It can be any written notice, whatever its heading, that states the sum your main contractor thinks is due and how it got there, sent in time.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
If a notice has already been served and you need to test it, see what makes a Pay Less Notice valid.
The answer
There is no set form. Section 111 of the Housing Grants, Construction and Regeneration Act 1996 requires the sum due on the date of the notice and the basis of the calculation. The notice must reach you before the last day your subcontract allows. A good one names the contract and says what the document is. It identifies the cycle or application it answers and the gross value accepted. It lists each deduction with a figure and a one-line reason. It gives the resulting sum, the date, the name of the person authorised to send it and the route it was sent by. It should tie the value to date, previous payments and the balance together, with each deduction linked to evidence. The usual reasons one fails are a bare figure with no basis, or a notice sent a day late. Keep the notice exactly as it reached you, with who sent it, to whom, how and when. Its effect turns on those facts as much as on what it says. It can state a sum of nil, but only if the calculation supports that. Use the template below to check a notice you receive, line by line. It works the same way for a notice you send to your own suppliers.
A Pay Less Notice template, line by line
| Line | What it should say |
|---|---|
| Heading | What the document is, and the subcontract it is given under |
| From and to | The person authorised to send it, and who it is sent to |
| Payment it answers | The cycle or application, and the notified sum it reduces |
| Gross value accepted | The value of the work to date that your main contractor accepts |
| Each deduction | A figure and a one-line reason, linked to its evidence |
| Previous payments | What has already been paid for the job |
| Sum considered due | The sum due on the date of the notice, which can be nil if the figures support it |
| Date and route | The date it is sent and how, as your subcontract requires |
Example
Illustrative example. The scenario and figures are invented.
The facts
You apply for £180,000 and your main contractor thinks £164,000 is due. It could reply with a notice that states a sum and a basis, or with a letter that just rejects your application. You need to know which one you have.
What happens
- The notice says £164,000 is due at the stated date. It works from the £180,000 applied for, less £11,000 for measured work not complete at item 3.4 and £5,000 for a contra-charge notified earlier.
- That notice gives a sum and a basis.
- A letter that only says your application is not accepted gives neither.
The notice in figures
| Item | Amount |
|---|---|
| Applied | £180,000 |
| Less measured work not yet complete at item 3.4 | £11,000 |
| Less the contra-charge notified | £5,000 |
| Sum considered due | £164,000 |
The outcome
The notice with a sum and a basis can work as a Pay Less Notice. The letter that gives neither is unlikely to.
To have every Pay Less Notice checked for a sum and a basis the day it arrives, see our Underpayment Prevention service.