What is a Pay Less Notice?
A Pay Less Notice is the notice your main contractor must send if it plans to pay you less than the notified sum.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
You will also see it written as one word, a payless notice; it is the same notice. It must state the sum your main contractor thinks is due on the date of the notice, and how that sum was worked out. It must arrive by the deadline your subcontract sets. If your subcontract sets no deadline, Part II of the Scheme for Construction Contracts (England and Wales) Regulations 1998 fills the gap. Our guide to the Scheme explains when it applies. Its deadline is 7 days before the final date for payment. Do not assume the Scheme's period applies to your job; check your subcontract first. A missed Payment Notice does not always stop your main contractor sending a valid Pay Less Notice, so check that deadline too. The notice should tie the lower sum back to the payment record, with each deduction explained. A valid Pay Less Notice lowers what must be paid this cycle. It does not cancel your evidence or decide what the work is finally worth.
Example
Illustrative example. The scenario and figures are invented.
The facts
The notified sum for the cycle is £120,000. Your main contractor's Pay Less Notice takes off £9,000 for an item it disputes. You check the notice before you accept the lower figure.
What happens
- You work out the deadline for the notice from the final date for payment and your subcontract.
- You check who sent it and how it was sent against what your subcontract requires.
- The notice states £111,000, and you check it shows how that was worked out, with the documents behind it.
The notice in figures
| Item | Amount |
|---|---|
| Notified sum | £120,000 |
| Disputed item | £9,000 |
| Sum stated in the Pay Less Notice | £111,000 |
The outcome
The notice states £111,000: the £120,000 less the £9,000 disputed. That is the arithmetic only. Whether the notice works depends on your subcontract and the law that applies.
If one has cut your payment and the final date is close, Underpayment Claim checks it the same day.