Both payment notices and pay less notices are important components related to the payment process. These terms are specifically associated with the requirements outlined in the Housing Grants, Construction and Regeneration Act 1996 (Construction Act). Here is a brief explanation of each:

1. Payment Notice:

• A payment notice is a document provided by the party making a payment (payer) to the party receiving the payment (payee).
• The purpose of a payment notice is to notify the payee of the sum that the payer intends to pay.
• The payment notice must be issued within the timeframe specified in the contract. Section 110A of the Construction Act stipulates that a payment notice should be given not later than five days after the due date.

2. Pay Less Notice:

• A pay less notice is a response from the payer to the payment notice, indicating that they intend to pay less than the amount specified in the payment notice.
• If the payer disagrees with the amount stated in the payment notice, they must issue a pay less notice before the final date for payment. The pay less notice must specify the amount considered due and the reasons for paying less.
• Section 111 of the Construction Act requires that a pay less notice be issued not later than the prescribed period before the final date for payment. The prescribed period is usually set out in the contract and is typically 1-3 days.

Both the payment notice and the pay less notice are crucial for maintaining transparency and resolving payment disputes promptly. Failure to issue these notices within the prescribed timeframes may result in serious consequences, such as the payee's right to receive the amount stated in the payment notice or, in the case of a pay less notice, the obligation to pay the amount stated in the payment notice.

It is important for parties involved in construction contracts to understand and adhere to these notice requirements to ensure compliance with the Construction Act and to facilitate a smoother payment process.