Free template
Pay Less Notice template
A Pay Less Notice is how a payer pays less than the notified sum, and section 111(4) of the Housing Grants, Construction and Regeneration Act 1996 requires it to say two things: the sum the payer considers due on the date of the notice, and the basis on which that sum is calculated. A reason is not a basis. Served after the deadline it is ineffective, and the notified sum becomes payable in full. This template carries both required parts and the dates that decide whether it bites.
Last reviewed by Estimark. This page states periods and rates set by statute or by standard contract terms. Those move, and this date is when somebody last read the page against its source rather than the day the site was built.
Pay Less Notice
The parties and the contract
What this notice relates to
A Pay Less Notice answers a specific payment. Identify which one, or the payee cannot tell what has been reduced.
The sum considered due
Section 111(4)(a): the notice must specify the sum the payer considers due on the date it is served.
The basis on which that sum is calculated
Section 111(4)(b), and the half that gets notices thrown out. A reason is not a basis. Show the arithmetic: what has been deducted, how much each item is, and how each figure was arrived at.
| Item withheld | Basis of calculation | Amount (£) |
|---|---|---|
Served
Serve by the method the contract requires, and keep proof of when it went. A notice that arrives after the deadline is ineffective whatever it says.
Notice under section 111 of the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009).
What must a Pay Less Notice contain?
Two things, both required by section 111(4): the sum the payer considers due on the date of the notice, and the basis on which that sum is calculated. Miss either and the notice does not do its job.
- A reason is not a basis. “Defective works” is a reason; “sixty hours of remedial labour, at the rate in the contract, itemised” is a basis.
- It has to relate to an identified payment, so the application number and the payment dates belong on it.
- Nothing in the Act requires a particular form or a heading. What it requires is the content, and the content is what gets challenged.
Some contracts add their own requirements about form and service. This template covers the statutory minimum, not your contract’s extras.
When must it be served?
Not later than the prescribed period before the final date for payment. That period is a contract term, commonly five days under JCT forms, and the Act sets the maximum rather than the actual one.
- A notice served on the deadline is in time. Later than it is not, and lateness cannot be cured.
- A late or absent Pay Less Notice means the notified sum becomes payable in full, whatever the payer thinks the work is worth.
- Serve it by the method the contract specifies and keep proof of the date. Disputes about these notices are usually disputes about when it arrived.
Who serves one, and against what?
The payer, against the notified sum, which is either the sum in their own payment notice or the payee’s application where no payment notice was served in time.
- Where the payer served no payment notice within five days of the due date, the application itself is the notified sum. That is the position commonly called a smash and grab.
- A Pay Less Notice is still available in that situation, and is the payer’s remaining route, but it is being served against the payee’s figure rather than their own.
- A payee can serve notices too under some contracts where they are the paying party on a sub-sub-contract. The roles follow the money, not the job title.
Common questions
- What must a Pay Less Notice say?
- Section 111(4) requires two things: the sum the payer considers due on the date the notice is served, and the basis on which that sum is calculated. A reason for withholding is not a basis. The notice has to show how the figure was arrived at.
- When is the deadline for a Pay Less Notice?
- Not later than the prescribed period before the final date for payment. The period is set by the contract, commonly five days under JCT terms. A notice served after the deadline is ineffective and the notified sum becomes payable in full.
- What happens if no Pay Less Notice is served?
- The notified sum becomes payable in full on the final date for payment. Where the payer also served no payment notice in time, the notified sum is the payee’s own application, so a missed notice can be expensive.
- Does a Pay Less Notice have to be in a particular form?
- The Act prescribes no form or heading, only content. Some contracts add requirements about how a notice is given and to whom, so check the contract as well as the Act.
- Is this template legal advice?
- No. It sets out the content section 111 requires so a notice is not defective for missing it. It cannot read your contract, calculate your figure, or tell you whether withholding is justified.
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