What does the Construction Act 1996 require on payment and adjudication?
Part II of the Housing Grants, Construction and Regeneration Act 1996 is the construction payment law in England. The payer gives a payment notice within 5 days after each due date and pays the notified sum unless a pay less notice arrives in time. Either party can refer any dispute to adjudication. Where the contract falls short, the Scheme applies.
The payment cycle, in order
- The payer gives a payment notice within 5 days after the payment due date. Where the contract does not comply, the Scheme imposes the same 5 day notice on the payer (Scheme Pt II para 9).
- If no payment notice arrives, the payee can give its own, and the final date moves back a day for every day it waits. The final date for payment of the sum in the notice is postponed by as many days as the notice comes after that date (s 110B(3)).
- The notified sum is paid on or before the final date, less only what a pay less notice states. Where the contract sets no final date, the Scheme sets it at 17 days after the due date; where the parties agreed no pay less period, the Scheme sets not later than 7 days before the final date.
- If the notified sum is not paid, the payee may suspend on at least 7 days written notice, or refer the dispute to adjudication.
Days exclude Christmas Day, Good Friday and bank holidays (s 116).
What the Act requires
Every row the library holds from the Housing Grants, Construction and Regeneration Act 1996, Part II (Construction Contracts), in its order. These bind every construction contract the Act covers.
| Duty | Window and section | If missed |
|---|---|---|
| Determine whether the contract is a construction contract the Construction Act governs | none sets 104, 105, 106, 106A, 117 | no penalty statedDisputes |
| Be paid by instalments, stage or periodic payments for work expected to last 45 days or more | none setThe Act sets no interval of its own, so no window is recorded, and states no consequence for the entitlement itself.s 109(1)-(4) | no penalty statedDisputes |
| Do not rely on a term that makes payment conditional on payment from a third party, or on performance or certification under another contract | none sets 110(1), 110(1A)-(1D), 113(1)-(6) | no penalty statedDisputes |
| Receive a payment notice within 5 days after each payment due date, stating the sum considered due and how it is calculated | 5 dayss 110A(1)-(6) | no penalty statedDisputes |
| Where no payment notice arrives in time, give the payer your own notice of the sum due and its basis, because the final date for payment moves back one day for every day you wait | none setAvailable at any time after the payer's notice was due (s 110B(2)), so no window is recorded.s 110B(1)-(4), 111(2)(c) | no penalty statedDisputes |
| Receive any notice of intention to pay less than the notified sum no later than the prescribed period before the final date for payment, or the notified sum is payable in full | none setThe Act sets no number, so no window is recorded here.s 111(1)-(7), 111(10), 111(11) | you are liable for the full amountDisputes |
| Be paid the notified sum, less only what a valid pay less notice states, on or before the final date for payment | none setThe Act sets no number, so no window is recorded here.s 110(1)(b), 111(1), 111(2), 111(6) | you are liable for the full amountDisputes |
| Give at least 7 days written notice, stating the grounds, before suspending any or all work for non-payment of the notified sum | 7 dayss 112(1)-(4) | no penalty statedDisputes |
| Give notice of intention to refer a dispute under the contract to adjudication, at any time | none setThe contract must let a party give notice at any time (s 108(2)(a)), so no window is recorded.s 108(1), 108(2)(a), 108(5) | no penalty statedDisputes |
| Refer the dispute to the adjudicator within 7 days of the notice of adjudication | 7 dayss 108(2)(b) | no penalty statedDisputes |
| Receive the adjudicator's decision within 28 days of referral, or up to 14 days later with the referring party's consent, or later if both parties agree | 28 dayss 108(2)(c)-(f), 108(3), 108(3A), 108(4) | a breach of contractDisputes |
| Be paid any amount an adjudicator decides above the notified sum within 7 days of the decision, or by the original final date for payment if later | 7 dayss 111(8), 111(9) | you are liable for the full amountDisputes |
What the Scheme sets where the contract does not comply
Every row the library holds from The Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended for England. They apply only where the contract leaves out what the Act requires. The Scheme fills the gap (ss 110(3), 113(6)).
| Duty | Window and section | If missed |
|---|---|---|
| Where the contract sets no payment mechanism, be due each interim payment on the later of 7 days after the end of each 28 day period or the making of your claim | 7 daysreg 3; Sch Pt II para 1, 2, 3, 4, 12 | no penalty statedDisputes |
| Where the contract sets no payment mechanism, be due the final payment on the later of 30 days after completion of the work or the making of your claim | 30 daysreg 3; Sch Pt II para 3, 5, 6, 7 | no penalty statedDisputes |
| Where the contract sets no final date for payment, be paid within 17 days of the date each payment becomes due | 17 daysreg 3(b); Sch Pt II para 8 | no penalty statedDisputes |
| Where the parties agreed no period, receive any pay less notice not later than 7 days before the final date for payment | 7 daysreg 3(a); Sch Pt II para 10 | you are liable for the full amountDisputes |
| Give the notice of adjudication in writing to every other party, setting out the dispute, where and when it arose, the redress sought, and the parties' names and addresses | none setreg 2; Sch Pt I para 1(1)-(3) | no penalty statedDisputes |
| Ask the named adjudicator or a nominating body to act after the notice of adjudication; a nominating body must select an adjudicator within 5 days of the request | 5 daysreg 2; Sch Pt I para 2, 3, 4, 5, 6 | no penalty statedDisputes |
| Comply with an adjudicator's decision immediately on its delivery, unless the adjudicator directs a time, and until the dispute is finally determined | none set'Immediately', with no day count, so no window is recorded.reg 2; Sch Pt I para 20(b), 21, 23(2) | a breach of contractDisputes |
In this guide
- Payment and pay less noticesThe payment notice within 5 days, the payee's notice, the pay less notice, and the Scheme's defaults: final date in 17 days, pay less 7 days before it.
- AdjudicationAdjudication under the Construction Act 1996: notice at any time, referral within 7 days, a decision within 28 days, nominating the adjudicator, and complying.
- Which contractsWhich contracts the Construction Act 1996 governs: construction operations in England, Wales or Scotland, what is left out, and why pay when paid fails.
What this page is, and is not
It is the section text this library holds for England, from The Construction (Design and Management) Regulations 2015 (Great Britain), Housing Grants, Construction and Regeneration Act 1996, Part II (Construction Contracts) and The Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended for England, with the window and the consequence. It is not legal advice, and it is not a substitute for reading the Regulations, the Act, the Scheme and the contract you signed.
Demiton does not yet track English projects. These pages set out the duties; the product does not run these checks on an English job today.
No library of law is complete, and Demiton never says this one is. An obligation the library does not hold, and you did not add, is not protected. You can add your own to any job.