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Payment Notice vs Pay Less Notice
Which four dates decide what a subcontractor is paid under the Construction Act, and how do I track them and rescue a missed payment notice?
Open a clock in the Payment Clock with the United Kingdom regime, the application date and the amount. On Scheme terms, a £48,600 application gives a due date on day 7, a payment notice deadline on day 12, a pay less notice deadline on day 17 and a final date on day 24: if no notice is sent, the application can stand as the notified sum, payable under Section 111. In the example a pay less notice served by day 17 limits payment to £26,400 of £31,750. The app has no button to record a notice, does not skip bank holidays, and knows only the Scheme's periods, so use the contract's dates on a JCT job.
We follow a construction payment timeline in OpenConstructionERP, from the due date to the final date for payment. The example looks at payment notices, pay less notices and the record of when each notice was served.
You will produce
A Payment Clock for a £48,600 application with the due date (day 7), payment notice (day 12), pay less notice (day 17) and final date (day 24), and a pay less notice of £26,400 on a £31,750 application.
Sources
- Housing Grants, Construction and Regeneration Act 1996
- Scheme for Construction Contracts
- Section 111 (Construction Act)
Transcript
0:00 The rules
This lesson is about the Construction Act payment clock: the four dates that decide what a subcontractor is paid, and when. You'll learn the rule, count the dates in the app, and rescue a missed notice. A payment notice was missed on an application for £31,750. Miss the pay less notice too, and all of it may be payable. By the end, you'll know the four dates that decide it. Last time, Tandlewick's application went up to the client's QS. Now the money flows down. Two subcontractors have applied: Haughmoor Groundworks today, and Brindlecote two weeks ago. The QS must answer both, on time. Start with Haughmoor's application: £48,600, made today. Its order sets no payment dates, so the Scheme for Construction Contracts sets them. Payment falls due 7 days after the period ends, or when the application arrives, if later. Both are today, so it's due on day 7. Then the QS has 5 days to send a payment notice: by day 12. It states the sum the QS considers due, and how that was worked out. It can even say nothing is due. The final date for payment comes 17 days after the due date: day 24. To pay less than the notified sum, the QS needs a pay less notice. It must go no later than 7 days before that: day 17. The Scheme only fills gaps. Most standard forms set their own periods. The JCT main contract from last time is different. Its final date is 14 days after the due date, and its Pay Less Notice goes 5 days before that. Read your contract first. These are calendar days, so weekends count. Christmas Day, Good Friday and bank holidays in England and Wales don't. Take Easter 2027. 14 days from Monday 22 March end on Wednesday 7 April, not Monday 5 April. Here's why the notices matter. Say the QS sends neither. If the rules let Brindlecote's application stand as its notice, that sum becomes the notified sum. Under Section 111, it must be paid by the final date. The true value can be argued later, but payment comes first.
2:37 Start the clock
In OpenConstructionERP, Payment Clock sits in the sidebar under Commercial. A clock belongs to one project, so check that Tallowgate Works is picked at the top. Click Open a clock, and pick the statutory regime. Scroll to United Kingdom, the Housing Grants, Construction and Regeneration Act. The currency fills in as pounds. Type a reference, then the application date. There's no field for the period end, so the clock counts from this date. Here the period ended today, so that's right. Then the amount, £48,600, and click Open the clock. The clock has worked out the four dates. Due date: day 7. Payment notice deadline: day 12. Pay less notice deadline: day 17. Final date for payment: day 24. Open How these dates were derived to see each step.
3:37 A missed notice
Now open the older clock: Brindlecote's application, made two weeks ago, on the day its period ended. Nobody sent a payment notice by day 12. So the clock shows all £31,750 as the sum payable, and the rules line turns red. If Brindlecote's application stands as its notice, it's not too late: the pay less deadline is three days away. The site manager measured the work, and the QS values it at £26,400. The pay less notice states that sum and how it was worked out. Served by day 17, that's the sum to pay by the final date. The other £5,350 stays in dispute. The clock leaves three things to you. There's no button to record a notice, so keep each notice and proof it was sent. It doesn't skip bank holidays, so count them out yourself. And it only knows the Scheme's periods: on a JCT job, use the dates in the contract. At the bottom sits the breach register. Opening a clock files nothing on it. Click Bring up to today, and every deadline missed so far is filed. Do it before each payment run.
4:57 Get it right
Here are three mistakes we see. One: holding the payment notice until the measure is done. Day 12 doesn't wait: send it with your best basis. Two: a pay less notice with a figure but no working. Show how you got there. Three: JCT's 5 days on a Scheme order. That's 2 days late. Pro tip. The day an application lands, diary all four dates, with a reminder two days before each. Serve each notice the way the contract says. If it says nothing, any effective means will do, but keep the proof. Pause the video. Another order on Scheme terms: an application lands on Friday 13 November, the day its period ends. No bank holidays. What's the last day for the pay less notice? The answer is Monday 30 November. Due Friday 20 November, final date Monday 7 December, then 7 days back. Here's your checklist, also in the description. OpenConstructionERP is free and open source, and runs on your own server. No subscription, no per-seat licence. Next time: what actually leaves the bank when the QS pays Haughmoor. CIS, and the VAT reverse charge.
