What is a Pay Less Notice?

A Pay Less Notice is the payer's second and final chance to reduce the sum it has to pay for a round. Once a Notified Sum exists, the amount that legally must be paid, whether fixed by the payer's Payment Notice or by the payee's application when the payer served nothing, the payer can serve a Pay Less Notice stating the lower sum it now thinks is due and its workings. It must arrive no later than the prescribed period before the Final Date For Payment, the last day the money can lawfully arrive; where the contract is silent, the Scheme for Construction Contracts sets that at 7 days. Served in good time and proper form, the reduced sum is what must be paid; served late, it counts for nothing and the full Notified Sum falls due. It only ever works downwards, so a payer happy to pay in full needs none.

An employer on an office refurbishment has a Notified Sum of £120,000 standing for the month. A leak from new pipework damages a finished floor, about £9,000 to put right, and the employer withholds it. With the Final Date For Payment on Friday the 20th and a 7 day rule, it serves a Pay Less Notice by Friday the 13th stating £111,000 with the £9,000 deduction. Served in time, £111,000 is what must be paid. Left until the 15th it would have counted for nothing and the full £120,000 would have been due, which shows why the date matters as much as the figure.