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Insight · Getting paid

Stopping work for non-payment,
without breaching your contract.

A statutory right with narrow conditions and real leverage. What has to be true before you can use it, what the notice must say, and what walking off without one costs.

Published ·Updated ·5 min read·Written by

A row of tracked excavators

Section 112 of the Construction Act gives a statutory right to suspend performance of any or all of your obligations where the notified sum has not been paid in full by the final date for payment, after giving at least seven days' written notice stating the ground. You are entitled to a reasonable amount for costs and expenses reasonably incurred, and to time for the delay.

Start with the risk, not the right

The failure here is almost never a firm neglecting to use section 112. It is a firm walking off site because it has had enough, without serving anything, and turning a strong position into a weak one overnight.

Leaving site without the statutory notice is not exercising a right. It is potentially a repudiatory breach of your own contract, and the other side's response is to bring in a replacement, charge you the difference, and set the whole thing against what it owes you. Firms have lost more this way than the debt they were angry about.

The notice is the entire difference between those two outcomes, and it costs one email.

Serving the notice turns walking off site from a breach into a remedy. It takes ten minutes and it is the only thing standing between the two.

What has to be true first

Three conditions, and the first is narrower than people assume.

  1. The notified sum has not been paid in full by the final date for payment. Not that you are owed money generally, not that an application is being disputed, and not that a payment is a few days late against your own expectations. There has to be a notified sum, and the final date has to have passed. If you are unsure what those are, the payment timetable calculator works them out.
  2. You have given at least seven days' written notice of your intention to suspend, stating the ground on which it is being given.
  3. The seven days have run and the sum is still unpaid. Suspending on day five is not exercising the right.

What the notice says

Short and specific. Five things: the contract, the application and the notified sum, the final date for payment and that it has passed, the fact that no valid pay less notice was served if that is the case, your intention to suspend performance under section 112 if payment is not received, and the date on which suspension will begin.

Send it by a method the contract recognises for notices, and keep proof of sending. Diarise the seventh day. A notice that is obviously correct is frequently the last step required, because the other side's advisers read it and tell them the position.

You can suspend part of it

The provision allows suspension of performance of any or all obligations, and the partial option is the one most summaries skip and most firms should consider first.

Full suspension is a blunt instrument that damages the programme, the client relationship and often your own labour planning. Suspending a specific obligation can be more proportionate and just as effective: stopping a particular work package while continuing elsewhere, or withdrawing from an obligation that is costing you money to keep performing.

Whatever you choose, describe it precisely in the notice. A vague suspension invites an argument about whether what you did was what you said.

What you get back

Two entitlements that firms routinely fail to claim, both of which are in the section rather than being favours.

A reasonable amount for costs and expenses reasonably incurred as a result of exercising the right. That covers the real consequences: demobilising and remobilising, plant standing or being returned and re-hired, and labour you could not redeploy. Record these as they happen rather than reconstructing them, because reasonable has to be evidenced.

Time. The period of suspension and the time reasonably needed to resume are not held against you on programme, which matters because the alternative is being charged delay damages for a delay the other side caused by not paying.

Before you get here

Suspension sits at the third rung of the escalation ladder, and it works best when the rungs below it have been used properly: a default payment notice where the payer served none, then a dated written demand setting out the contractual position. Both are free, and a meaningful proportion of disputes settle at the second. The full sequence is in when the contractor above you will not pay.

Also worth knowing what it is not. Suspension is not termination, and threatening termination when you mean suspension is a serious escalation with different consequences. And none of this applies where the Act does not, principally contracts with a residential occupier, covered in what the Construction Act actually gives you.

Holding the payment position in software

Two things decide whether this right is usable, and both are records. Whether the conditions are met turns on what was applied for, on what date, what notice came back and whether the final date has passed. Unibuild's applications for payment module holds exactly that position against each project, with its dates and receipts. And what you recover afterwards turns on evidencing costs reasonably incurred, which is why plant movements with signed notes, labour recorded against the job, and a dated site diary matter after a suspension as much as during a claim. The final date for each application can be worked out in the payment timetable calculator, and the decision to serve notice stays with a named person. Unibuild is bespoke business software for trades, in daily production since 2016, and each firm's system is shaped to the way that contractor already works.

Applications for payment Project and site Assets and inventory Timesheets and workforce

Where to start, on Monday

Do not draft a notice. Establish the facts first: for the oldest unpaid application, is there a notified sum, has the final date passed, and was a valid pay less notice served. If all three point the right way, you have the right and it is worth taking advice on the notice before serving it.

If they do not, you are on a lower rung than you thought, and the useful step is the free one: the default payment notice or the dated written demand. This is a statutory remedy with real consequences either way, so treat the above as the shape of it rather than advice on your contract.

Sources

Checked against the source rather than against commentary. Where a schedule, a rate or a threshold is definitive on a government site, read it there.

Asked most often

The follow-up questions.

The rungs below this one are in when the contractor above you will not pay.

Can I stop work if I have not been paid?
Yes, where the notified sum has not been paid in full by the final date for payment. Section 112 of the Construction Act gives a right to suspend performance of any or all of your obligations after giving at least seven days' written notice stating the ground. Suspending without that notice is not exercising the right and may be a repudiatory breach of your own contract.
Does suspending work for non-payment put me in breach of contract?
Not where the statutory right is exercised properly. Section 112 gives a right to suspend performance where the notified sum has not been paid by the final date. Suspension on the correct notice is lawful, not a repudiation. Get the notice or the timing wrong and the position reverses completely. This is one of the few things worth taking advice on beforehand.
How much notice do I have to give before suspending?
At least seven days in writing, stating the ground on which the notice is given. The seven days must actually run and the sum must still be unpaid at the end of them. Send it by a method the contract recognises for notices, keep proof of sending, and diarise the seventh day.
Can I suspend only part of the work?
Yes. The right extends to performance of any or all obligations, so a partial suspension is available and is often more proportionate than stopping everything. Describe precisely in the notice what is being suspended, because a vague suspension invites an argument about whether what you did matched what you said.
Can I recover costs after suspending for non-payment?
Yes. Section 112 entitles you to a reasonable amount for costs and expenses reasonably incurred as a result of exercising the right, which covers demobilising and remobilising, plant standing or being returned and re-hired, and labour you could not redeploy. You are also entitled to time, so the suspension and reasonable resumption are not held against you on programme.
Can I claim an extension of time for the period of suspension?
Yes. The Act entitles you to a reasonable extension of time for the period lost, together with the reasonable costs and expenses of suspending and resuming. That includes demobilising and remobilising, which is frequently the larger figure. Record what those costs actually were at the time, because reconstructing them three months later produces a claim that looks invented even when it is not.
Does suspending affect my retention or a performance bond?
A lawful suspension should not trigger a bond call or forfeit retention, because you are not in default. A call made on that basis would itself be wrongful. The commercial risk is different from the legal one: a bond call is disruptive even when it fails, and the prospect of one is used to discourage suspension. Knowing the position beforehand is what lets you hold the line when it is raised.
What if the contract says I may not suspend?
The clause is ineffective. The right to suspend comes from the Act and cannot be excluded by agreement. A term purporting to remove it is overridden, in the same way as a pay when paid clause. It still causes trouble in practice, because the other side will rely on it and you will be the one explaining the law. Raise it in the notice itself rather than leaving it to be discovered.
What happens if I walk off site without serving notice?
You lose the statutory protection and risk being treated as in repudiatory breach of your own contract. The other side can bring in a replacement, charge you the difference and set it against what it owes you. You also forfeit the entitlement to costs and to time. The notice is the whole difference between a remedy and a breach.
When is suspension better than adjudication?
Suspension is fast, cheap and immediate, and it works when the other side needs you on site. Adjudication decides the money but takes weeks and costs fees. On a live job where you are on the critical path, suspension usually gets a response within days. On a finished job it achieves nothing, because there is no performance left to withhold. Match the remedy to whether you still hold something they need.
Next step

Know the position before you act on it.

Suspension is a statutory right with a seven-day notice and a precise trigger. Get the dates wrong and a lawful step becomes a breach.

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