Construction Act Payment Terms: JCT, NEC and Default Timescales

The Construction Act (Housing Grants, Construction and Regeneration Act 1996, as amended in 2009) sets out strict payment timescales that apply to all construction contracts in the UK. Missing these deadlines can cost you money or limit your ability to challenge a payment decision.

This guide explains the payment timescales for the most common contract forms: JCT Standard, JCT Minor Works, NEC4, NEC3, and the Construction Act's own default scheme.

How Payment Timescales Work

Every construction payment cycle involves four key dates:

1. Due date: the date the payment becomes due (usually a set number of days after the application date)
2. Payment notice deadline: the last day the payer can issue a notice stating how much they will pay
3. Pay-less notice deadline: the last day the payer can issue a notice if they intend to pay less than the notified sum
4. Final date for payment: the last day by which payment must be received

If the payer misses the payment notice deadline, the subcontractor's applied amount becomes the default sum due. If they miss the pay-less notice deadline, they must pay the full notified sum.

JCT Standard (SBC / DB / ICD 2016)

The JCT Standard Building Contract is the most widely used contract form in UK construction.

• Due date: 7 calendar days after the application date
• Payment notice: within 5 calendar days of the due date
• Final date for payment: 14 calendar days after the due date
• Pay-less notice: at least 5 calendar days before the final date

In practice, this means: you submit your application, the due date is 7 days later, the client has 5 days to tell you what they will pay, and the money must arrive within 14 days of the due date.

JCT Minor Works (MW / MWD 2016)

JCT Minor Works uses the same timescales as JCT Standard:

• Due date: 7 calendar days
• Payment notice: 5 calendar days
• Final date: 14 calendar days
• Pay-less notice: 5 calendar days before final date

The main difference between Minor Works and Standard is the project complexity they are designed for, not the payment timescales.

NEC4 (Engineering and Construction Contract)

NEC4 is common on infrastructure and engineering projects. Its payment timescales differ from JCT:

• Due date: 7 calendar days after the assessment date
• Payment notice: within 7 calendar days of the due date
• Final date for payment: 21 calendar days after the due date
• Pay-less notice: at least 7 calendar days before the final date

NEC4 gives slightly longer periods than JCT: 7 days for notices (vs 5) and 21 days for the final payment date (vs 14). This reflects the typically larger and more complex projects that use NEC contracts.

NEC3 (Engineering and Construction Contract)

NEC3 uses the same timescales as NEC4:

• Due date: 7 calendar days
• Payment notice: 7 calendar days
• Final date: 21 calendar days
• Pay-less notice: 7 calendar days before final date

NEC3 is still in use on many existing projects, though NEC4 is the current standard for new contracts.

Construction Act Default (Scheme for Construction Contracts)

If your contract does not specify payment terms, or if the contract's terms do not comply with the Construction Act, the Scheme for Construction Contracts provides a default set of timescales:

• Due date: 7 calendar days after the application date
• Payment notice: within 5 calendar days of the due date
• Final date for payment: 17 calendar days after the due date
• Pay-less notice: at least 7 calendar days before the final date

The Act default sits between JCT and NEC in terms of the final date (17 days vs 14 or 21). It applies automatically to any construction contract that does not adequately address payment provisions.

Comparison Table

Here is a side-by-side comparison of all five contract forms:

JCT Standard / Minor Works: Due 7d, Notice 5d, Final 14d, Pay-less 5d (calendar days)

NEC4 / NEC3: Due 7d, Notice 7d, Final 21d, Pay-less 7d (calendar days)

Construction Act Default: Due 7d, Notice 5d, Final 17d, Pay-less 7d (calendar days)

Setting a Company Default Contract Form

If your company typically works under the same contract form, you can set it as the default in Settings > Company Preferences. When you create a new project, the payment terms will be pre-populated based on your chosen contract form. You can always change it on individual projects.

When you select a contract form, BuildQS automatically calculates all the payment notice deadlines for each application. This means you always know:

• When your payment notice is due
• The deadline for pay-less notices
• When you should receive payment
• Whether the payer has missed any deadlines

What Happens When Deadlines Are Missed?

Payer Misses the Payment Notice

If the paying party fails to issue a payment notice by the deadline, your applied amount becomes the notified sum by default. They must pay you the full amount you applied for, unless they issue a valid pay-less notice.

Payer Misses the Pay-Less Notice

If the payer wants to pay less than the notified sum but fails to issue a pay-less notice by the deadline, they must pay the full notified sum on the final date for payment. This is a powerful protection for subcontractors.

Payer Misses the Final Date for Payment

If payment is not received by the final date, you are entitled to statutory interest under the Late Payment of Commercial Debts Act. You also have the right to suspend work after giving 7 days written notice, and you can refer the dispute to adjudication.

Frequently Asked Questions

Do these timescales apply to all construction contracts?

Yes. The Construction Act applies to virtually all construction contracts in the UK, whether written or oral. The only major exceptions are contracts with residential occupiers (homeowners commissioning work on their own home).

Can the contract specify different timescales?

Yes, as long as they comply with the Construction Act's minimum requirements. The Act requires adequate mechanisms for determining payment, payment notices, and the right to suspend. The specific number of days can be varied by agreement.

What is the difference between calendar days and working days?

All the standard contract forms listed above use calendar days, including weekends and bank holidays. Some bespoke contracts use working days, which excludes weekends and public holidays. Always check your specific contract.

Where can I read the Construction Act?

The full text is available on legislation.gov.uk. The 2009 amendments that strengthened subcontractor protections are in the Local Democracy, Economic Development and Construction Act 2009, Part 8.