You have four rights, and the first applies automatically. Late payment under NEC carries interest (clause 51.2), and where the Construction Act applies you can also suspend performance, refer the debt to adjudication and, after a long period, terminate.
Which one to use depends on how late the money is and whether a certificate exists. This page follows the NEC4 Engineering and Construction Contract (ECC) with Option Y(UK)2. The core numbers are the same in NEC3, apart from suspension. See also NEC questions answered.
Work out the dates first
- Assessment date: everything counts from this, not from your invoice or the certificate.
- Certificate: due within one week of that date (51.1).
- Payment: within three weeks of the assessment date, unless the Contract Data gives another period (51.2).
- Y(UK)2 due date and final date: these come from Y2.2 and the Contract Data. In NEC3 ECC the due date is seven days after the assessment date, with the final date 14 days after that. The payment timeline sets them out. They differ by form and amendment, so plot your actual dates on it.
- Pay less notice: did one arrive at least seven days before the final date (Y2.3)? If so, the sum you can press for is the lower one in the notice.
Your rights, from mildest to most serious
| Right | When it opens | What you have to do |
|---|---|---|
| Interest | The day after payment was due, including where lateness comes from a missing certificate (51.2) | Nothing formal. It is daily at the Contract Data rate and compounded annually (51.4), and is added to the next assessment once the late payment has been made. Check it appears |
| Adjudication | Under Option W2, at any time | Give notice. See adjudication under NEC |
| Suspension | Under the Construction Act, once the sum isn't paid in full by the final date and no effective pay less notice has been given | Give at least seven days' written notice of your intention, stating the grounds. Take advice before you stop |
| Termination | The amount due is still unpaid after the stated period (91.4): 13 weeks in the NEC4 ECC and NEC4 ECS, 11 in the NEC3 ECC. Amended contracts may differ | Notify, following clause 90. See when a contractor can terminate |
A proper suspension is a compensation event under Option Y(UK)2: Y2.5 in NEC4 and Y2.4 in NEC3. The event covers your time and cost, so notify it within eight weeks under clause 61.3. A suspension without proper grounds or notice could put you in breach, which is why advice comes first.
A fictional example of the interest
A certified £180,000 is paid 28 days late, with an illustrative interest rate of 6% a year. The interest is £180,000 × 6% × 28 ÷ 365, or about £828. It is small, but it adds up across a long job. Add a line to your application so that it can't be missed, and keep a register of due dates against bank dates.
What to send
A short reminder is enough for a first slip. For anything more, send a dated letter to the Client (the debtor is the Client, not the Project Manager), copying in the Project Manager. In our own words:
"Certificate [number] of [date] states a notified sum of [£]. The final date for payment was [date]. We have received no pay less notice and no payment. Please pay by [date]. Interest is accruing under clause 51.2. If we are not paid, we will consider our rights under the Construction Act and the contract, including suspension and adjudication."
What the Client may say back
| Their reason | Position |
|---|---|
| "The certificate was wrong" | A correction belongs in a later certificate (50.6). Without a notice, it doesn't justify withholding now. See a missed pay less notice |
| "We haven't had your invoice" | The core clause doesn't make payment depend on an invoice. Z clauses often do, so look for one. Send it, and argue later |
| "Our funder hasn't released the money" | Not a reason the contract provides. The Act also restricts pay-when-paid terms |
| "You're in delay, so we're holding it" | Delay damages have their own route. Holding back without a notice isn't one |
| "The Project Manager hasn't certified" | Interest still runs. The Act may also let you give your own payment notice. Take advice before relying on that |
In practice
Most late payments are an accounts-payable problem, and a call to the right person is quicker than a letter. Keep the formal route ready and the record clean. If you are a Subcontractor being paid late because the Client is late, look at payment for NEC subcontractors as well, as your own dates are different. Also remember that if there's a question over the Client's solvency, speed matters more than usual, so get legal advice early.
Related guides
- NEC Questions Answered: Real Situations on Site
- The PM Certified Far Less Than We Applied For
- The Contractor Did Not Submit an Application: Do They Still Get Paid?
- The Client Missed the Pay Less Notice: What Happens?
- Delay Damages Have Been Deducted: Can We Challenge Them?
- Can Delay Damages Apply While Compensation Events Are Unresolved?
How this looks in Contract Status
Applied and certified figures together on one record. See the worked example.
See how this works in practice
Click through Contract Status with sample contracts: raise the notice, reply to it, and watch both sides of one record.
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This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.