If you’ve ever had a payment delayed because of a “Pay Less Notice” you didn’t fully understand, you’re not alone. This is one of the most common — and most costly — areas of confusion for subcontractors working under JCT contracts. Here’s what the notice actually means, when it is valid, and what you can do if you think it’s been used unfairly.
What Is a Pay Less Notice?
A Pay Less Notice is a formal notification a paying party (usually the contractor or client) must issue if they intend to pay you less than the amount stated in a payment notice or your application for payment. Under JCT contracts, this notice must follow strict rules around timing and content – miss those rules, and the notice may not be valid at all.
The Timing Rules
JCT contracts set a clear deadline for issuing a Pay Less Notice – typically no later than a set number of days before the final date for payment (the exact number varies by contract type, so always check your specific JCT form). If the notice arrives late, it is very likely invalid, and the paying party may be required to pay the full notified sum.
What Makes a Pay Less Notice Invalid
A Pay Less Notice must clearly state both the amount the payer considers due and the basis on which that amount has been calculated. A vague notice – one that simply says “we are paying less” without explaining why and how much – is unlikely to meet the legal requirements and could be successfully challenged.
What to Do If You Receive One
Check the date it was issued against your contract’s deadline. Check whether it properly explains the calculation. If either is missing, you may have grounds to dispute it — and in many cases, you are entitled to be paid the full sum originally applied for, regardless of the payer’s objections.
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