A PJE payment survey of subcontractors shows that in nearly half of all cases where a main contractor withholds payment, the vast majority of subcontractors received no valid pay less notice.
Of the 75% of subcontractors affected, almost 14% had never received a pay less notice when they should have. What is more, 36% had only received them in less than 10% of cases where a payment was withheld.
Under The Construction Act, main contractors are required by law to issue subcontractors with a pay less notice if they do not want to pay the subcontractor in full. What’s more, in order to be valid, this notice must be issued within a specified time frame, set out detailed reasons as to why the amounts are being withheld and clearly show the basis of all calculations used. If the main contractor doesn’t comply with this, or if they fail to send out a pay less notice at all, the subcontractor is put in a very strong position to recover whatever amount is disputed.”
However, the survey also found that even when subcontractors do receive a pay less notice, many are still confused about how to challenge them. Whilst some subcontractors had a rough idea of when they could dispute the notice, 30% said they were ‘not sure’ of their rights at all.
Other respondents clearly felt they had no real power in these situations, with one subcontractor stating that main contractors just threaten longer delays in payment unless they accept reduced amounts. They went on to say “they’ll tie you up in lies and allegations if you do not play their game.”
This shows that we really need to raise awareness of subcontractors’ rights in these situations, because there are clearly a lot of firms out there that don’t realise they have a strong case for recovering unfairly withheld payments. Not only is this bad news for their individual businesses, it also impacts the growth and success of the UK construction sector as a whole.
“The key message is that you can win in these situations, so if you are interested in specific advice on delayed or withheld payments, contact our construction law specialists on 0116 241 5599.