Subcontractors continue to fall victim to poor payment practices

paymentThe majority of subcontractors are underpaid by main contractors despite delivering a ?perfect job’, according to a new payment survey.

The research – conducted by construction law specialists, PJE International – investigated current payment practices in the UK construction industry and found that three out of five subcontractors do not receive full payment, even when a job has been completed perfectly.

The survey also found that over 40% of subcontractors accepted less than full payment on half of the jobs they carried out.

According to PJE International, the most worrying finding of the survey was that 10% of subcontractors think main contractors can just call and refuse payment, without giving any justification or following any sort of legal procedure.

Peter English, managing director of PJE International, said:

“Whenever a main contractor withholds funds they must, by law, issue you with the appropriate notice in writing. If it is in relation to a construction contract coming into force before October 2011, the main contractor must send the subcontractor a written withholding notice.

“Whilst they do not have to give reasons for withholding the amount specified, you can still challenge the validity of the notice and take the matter to adjudication, if necessary.

“What is more, you can do this at any time as there is no limit on the number of years after a contract is completed before which you have to have started an adjudication.

“For construction contracts entered into after October 2011, the new Construction Act applies, which places stricter requirements on main contractors wanting to withhold funds. Under this Act, main contractors are required by law to issue subcontractors with what is now called a pay less notice. This is similar to the former withholding notice. However, it must be issued within a specified time frame allowed in the contract, set out detailed reasons as to why the amounts are being withheld and clearly show the basis of all calculations used. Furthermore, the value of the work must be ascertained at the date the pay less notice was given.

“If the main contractor doesn’t comply with the correct formalities with withholding or pay less notices, the subcontractor is put in a very strong position to recover whatever amount is disputed.”

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