Pay less notice template: deadlines, wording and JCT examples featured image
Templates & Resources

Pay less notice template: deadlines, wording and JCT examples

TrainAR Team 1 month ago 7 min read

Pay less notice template: deadlines, wording and JCT examples

Category: Templates & Resources • Niche: Contracts, payments, JCT, Construction Act

Site manager reviewing a payment application with a Pay Less Notice and calendar on the desk

Contents

Quick answer

A Pay Less Notice is how you formally tell the other party you will pay less than they applied for on this payment cycle. It is a creature of the Construction Act. Your notice must be served before the deadline in your contract or, if the contract is silent, no later than 7 days before the final date for payment. It must state the sum you consider due at the date of the notice and explain how you calculated it. If you miss the deadline or fail to include the basics, you can be forced to pay the full applied amount and face a smash and grab adjudication.

Not legal advice. Use these templates at your own risk and check your contract wording or speak to a construction solicitor if in doubt.

Who this is for

  • Main contractors and subcontractors working under JCT minor works, intermediate or design and build
  • Trade business owners on measured works, dayworks or lump sum contracts
  • QS, contracts managers and project managers who issue or challenge payment applications

How the timeline works

At a high level, every payment cycle has a few anchors. Your dates depend on your contract but the Scheme for Construction Contracts fills gaps if the contract is silent.

Payment cycle timeline showing application, payment notice, final date for payment and pay less notice deadline

Typical sequence:

  • Application date: payee submits an interim application
  • Payment notice: payer issues a payment notice stating the notified sum
  • Final date for payment: when the notified sum must be paid
  • Pay Less Notice deadline: the last day the payer can serve a valid pay less notice if they intend to pay less than the notified sum

If your contract does not set a pay less window, the Act sets it at 7 days before the final date for payment.

Pay Less Notice templates you can copy

Use one of these depending on your situation. Replace the bracketed fields with your details.

Short email version

Subject: Pay Less Notice – Interim Application [No. ___] – [Project name]

Dear [Contractor/Subcontractor name],

This is a Pay Less Notice served under section 111 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) and the [JCT contract name and year] for [Project name].

Payment cycle: Application dated [dd/mm/yyyy]
Final date for payment: [dd/mm/yyyy]

Sum we consider due at the date of this notice: £[amount]
Amount to be paid on the final date for payment: £[amount]

Basis of calculation:
- Gross valuation to date: £[x]
- Less previous payments: £[y]
- Less adjustments (with reasons): £[z] (e.g. defects, contra-charges, unpriced variations, retention at [x] percent)
- Net due: £[amount]

Please contact [name, role] on [phone/email] if you wish to discuss.

Served on: [dd/mm/yyyy] by [email/hand delivery/recorded post] to the address stated in the contract.

Regards,
[Name]
[Company]

Formal letter version

[Your company letterhead]

PAY LESS NOTICE

To: [Payee legal name]
Project: [Project name and address]
Contract: [JCT Minor Works 2016 / JCT Intermediate 2016 / JCT Design and Build 2016, etc.]
Our ref: [reference]  Your ref: [reference]

1. This is a Pay Less Notice under section 111 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) and the above contract.
2. Relevant payment: Interim Application [No. ___], dated [dd/mm/yyyy].
3. Final date for payment: [dd/mm/yyyy].
4. Sum considered due at the date of this notice: £[amount].
5. Amount to be paid on the final date for payment: £[amount].
6. Basis of calculation and reasons:
   - Valuation of completed work to date: £[ ]
   - Variations added or omitted: £[ ]
   - Materials on site/off site: £[ ]
   - Retention at [x] percent: £[ ]
   - Contra-charges and set-offs: £[ ] (details attached)
   - Previous payments certified: £[ ]
   - Net due this cycle: £[ ]
7. Attachments: schedule of measurement, photographs, defect notices, contra-charge breakdown.

Served by: [name, role] on [dd/mm/yyyy] by [method] to [service address/email].

Signed: ______________________

Examples by JCT scenario

  • If you issued a payment notice already: your pay less notice reduces the notified sum before the final date for payment. Make sure your reasons align with the contract, for example retention percentage or agreed contra-charges.
  • If you did not issue a payment notice: the application may become the notified sum. You can still serve a pay less notice before the deadline but it must clearly show the sum you consider due and why.
  • Negative amounts: case law discusses whether a notice can state a zero or negative sum. Check your contract and speak to a solicitor if you plan to certify zero or seek recovery by set off.

Checklist for a valid notice

  • Serve on time for this payment cycle and to the correct service address or email in the contract
  • Reference the payment you are responding to and state the final date for payment
  • State the precise sum considered due at the date of the notice
  • Show the basis of calculation and reasons for each deduction
  • Keep proof of service, ideally with a delivery receipt

Common mistakes and how to avoid smash and grab

  • Missing the deadline. If your contract is silent, the last day is 7 days before the final date for payment. Calendar these dates at the start of the job.
  • Vague wording. Saying we will pay less without stating the sum and the basis is usually invalid.
  • Wrong recipient or address. Serve it to the address stated for notices, not just a site manager.
  • Rolling deductions. Explain each deduction and attach evidence rather than lumping items together.

Helpful overviews:

Automate your reminders

If you run jobs through a field service or project tool, set automatic reminders so you never miss a pay less deadline.

  • Create a payment dates tracker for each job with the application date, payment notice date, final date for payment and pay less deadline.
  • Add calendar events with alerts for the pay less deadline and final date for payment.
  • Store your last cycle’s template in your DMS so it is one click to reuse.

Tip: If you use Outlook alongside ServiceM8, Jobber or Tradify, read our calendar troubleshooting guide to avoid duplicate or shifted events and keep deadlines accurate: Outlook ↔ ServiceM8/Jobber/Tradify: stop duplicate calendar entries and fix BST/GMT shifts.

You might also find this short explainer useful:

  • Construction interim payments overview by Metroun Quantity Surveying: Watch on YouTube
  • The Scheme for Construction Contracts overview and commentary from law firms above can help where your contract is silent on dates
  • For payment application best practice and record keeping, keep an audit trail of applications, notices and evidence every cycle

FAQ

What is a Pay Less Notice in construction

It is a formal notice by the payer that they intend to pay less than the notified sum for that payment cycle. It must state the sum considered due and the basis of calculation and be served before the contractual deadline or 7 days before the final date for payment if the contract is silent.

How long do I have to issue a Pay Less Notice

Follow your contract timetable. If it is silent on pay less timing, serve it not later than 7 days before the final date for payment. Late notices are usually invalid.

Can a payment notice double as a Pay Less Notice

Sometimes the same document can serve both roles if it clearly states the notified sum and the sum considered due at the date of the notice with the basis of calculation, and if it is served within the correct window. Check your contract and seek advice.

Does this apply to domestic customers

Residential occupier contracts are commonly outside the Act. Many domestic building contracts still include similar payment mechanisms, so read your contract and use clear notices regardless.

What must I include for it to be valid

At minimum: payment reference and cycle, the sum considered due, the amount you will pay on the final date, and the basis of calculation. Serve it correctly and on time.

What happens if I miss it

You may lose the right to pay less on that cycle. The applied a…