Pay less notices: what they must say and when

What is a pay less notice?

A pay less notice is a written notice from the payer, or from a person the contract names to act for it, saying that it intends to pay less than the notified sum. It is governed by section 111 of the Construction Act, as amended from 1 October 2011. Without a valid pay less notice, the payer must pay the notified sum in full by the final date for payment, whatever it thinks the work is worth.

The notified sum is the sum in the payer’s payment notice or, if there was none, the sum in the payee’s application or default notice. A pay less notice is how the payer reduces it: for example to deduct contra charges, delay damages or the value of defective work.

When must a pay less notice be given?

• No later than the period before the final date for payment that the contract sets.
• If the contract sets no period, the Scheme for Construction Contracts applies: no later than 7 days before the final date for payment.
• Where the notified sum comes from the payee’s application or default notice, the pay less notice cannot be given before that application or notice.

Our payment dates calculator works out the last day for a pay less notice from your due date or payment period.

What must a pay less notice say?

Section 111(4) requires two things:

• the sum the payer considers to be due on the date the notice is given; and
• the basis on which that sum is calculated.

The sum can be zero. The basis must be enough for the payee to understand how the figure was reached. A notice can rely on other documents, such as a detailed valuation sent earlier, if it identifies them clearly; attaching them is safer.

Note the difference from a payment notice. A payment notice states the sum due at the payment due date. A pay less notice states the sum due on the date the notice itself is given, so it can take account of matters that have arisen since.

Why are pay less notices found invalid?

• Late: given after the contract deadline, or less than 7 days before the final date under the Scheme. One day late is too late.
• Too early: given before the payee’s application, where the notified sum comes from that application.
• No sum: a list of deductions without the sum the payer considers due.
• No basis: a figure with no explanation of how it was calculated.
• Wrong payment: referring to the wrong application, period or payment cycle.
• Wrong sender or address: not given by the person the contract names, or not sent as the notices clause requires.
• Placeholders: a nominal figure “pending valuation” is unlikely to count.

Can a payment notice and a pay less notice be combined?

One document can work as both, but only if it meets the timing and content rules for each. A combined notice sent within 5 days of the due date will usually be early enough to count as a pay less notice too, but it must still state the sum due on the date it is given and how that sum is calculated. Separate notices are clearer and safer.

What should I do if I receive a pay less notice?

1. Check four things the day it arrives: time, sum, basis and payment.
2. If it is not valid, write straight away saying why, and that the notified sum must be paid in full by the final date for payment. The payer cannot avoid that by starting a dispute about the true value: it must pay first.
3. If it is valid but the deductions are wrong, dispute each one in writing, ask for the clause and the evidence relied on, and keep the dispute alive in your next application.
4. Diarise the final date for payment. If the sum due is not paid, you can give notice of suspension or refer the dispute to adjudication.

If you are the payer

• Diarise the deadline for every payment cycle. Most invalid notices are simply late.
• State the sum you consider due on the date of the notice, and show how it is calculated, item by item.
• For each deduction, give the reason and the clause, and check any conditions the contract attaches to it, such as a notice that must come first before delay damages can be deducted.
• Then pay the sum stated in your notice by the final date for payment.

General guidance on the law of England and Wales, not legal advice. Last reviewed 2 November 2026.