Can a subcontractor suspend work for non-payment under JCT? Yes. Under Section 112 of the Housing Grants, Construction and Regeneration Act 1996, you have the statutory right to suspend performance if the notified sum is unpaid by the Final Date for Payment, provided you serve at least 7 clear days’ formal written notice.
Few situations on site are more stressful than watching your Final Date for Payment pass with empty promises instead of cleared funds. Under UK construction law, you are never legally required to fund a main contractor’s project for free.
However, downing tools impulsively without following the strict statutory procedure can destroy your business. Below, I break down your statutory right to suspend work under Section 112, the mandatory 7-day notice rules, and how to claim remobilisation expenses.
1. Technical Authority: Your Statutory Right to Suspend Under Section 112
Under Section 112 of the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act) and JCT Subcontract Clause 4.11, you have a statutory right to suspend performance of all or part of your obligations if:
- The main contractor fails to pay the Notified Sum in full by the Final Date for Payment.
- The main contractor has failed to issue an effective, compliant Pay Less Notice on time.
This statutory right cannot be drafted out of your contract. Any bespoke amendment in Schedule 2 attempting to remove or restrict your right to suspend for non-payment is completely void under UK law.
2. The Mandatory 7-Day Written Notice Rule
You cannot simply pack up your tools and leave the site the morning after payment is missed. To safely exercise your statutory right, you must serve a formal Notice of Intention to Suspend Performance that complies with three strict criteria:
- Timing: It must be served in writing strictly after the Final Date for Payment has expired without receipt of cleared funds.
- Notice Period: It must provide at least 7 clear days’ notice before you down tools on site.
- Grounds: It must explicitly state the precise contractual grounds for suspension (the unpaid notified sum and relevant valuation date).
3. Loss Aversion: The “Abandonment” Repudiation Trap
Walking off site without serving a valid 7-day Section 112 notice is considered subcontract abandonment and constitutes a repudiatory breach of contract under UK common law.
If you abandon the site improperly:
- The main contractor can immediately terminate your subcontract for default.
- They can employ another trade package to complete your unfinished works and rectify alleged snags.
- They will backcharge the replacement costs against your account and claim Liquidated and Ascertained Damages (LADs) for project delay, triggering catastrophic revenue loss.
4. Programme Extension & Remobilisation Compensation
When you lawfully suspend works following a valid Section 112 notice, UK statutory law protects your financial position:
- Extension of Time (EOT): The suspension period automatically qualifies as an Extension of Time under JCT Clause 2.26 (Relevant Event), legally shielding your business from Liquidated Damages.
- Remobilisation Expenses: Under Section 112(3A), the paying party is legally obligated to pay your reasonable costs and expenses incurred as a consequence of the suspension, including plant hire standstill and remobilisation.
Frequently Asked Questions About Section 112 Work Suspension
Can a main contractor deduct LADs while work is suspended?
No. Under Section 112 of the Construction Act, any period of lawful suspension for non-payment entitles the subcontractor to an Extension of Time, legally preventing the main contractor from deducting Liquidated Damages for the shutdown period.
What happens if the contractor pays part of the money during the 7 days?
Part-payment does not discharge the obligation to pay the full Notified Sum. Unless a valid Pay Less Notice was issued covering the balance, the right to suspend remains intact once the 7-day notice period expires.
Can a contract remove my statutory right to suspend?
No. Section 112 is a mandatory statutory right under UK construction law. Any clause in a subcontract attempting to exclude or restrict this right is void and legally unenforceable.