Payless notices are incredibly important and failing to issue one regularly results in adjudication being awarded in favour of the contractor rather than the employer. If the contract falls under the Construction Act it is vital to have processes in place whereby notices for payment and payless are issued at the correct times, in the right format, for the whole duration of the project.
The idea behind the payless notices is they set out the justification for not paying the amount that has been claimed by the contractor. There are a variety of reasons why this may be the case, including that the work does not meet the required value or because additional payments have already been made. It is essential from a legal standpoint to have the justification.
For right or wrong, if a payless notice is not submitted the employer will likely have to pay the amount that has been billed for. This is true regardless of how over-inflated the number may be.
If employers do encounter an issue with having to overpay due to failure to issue a payless notice they do have options for the future. The best is to factor the overpayment into additional payment cycles, reducing the amount that is paid out accordingly. When doing this it is vital to ensure the proper notices are delivered early of course.
A second option is to scrutinise the application for payment itself. If it does not comply with the provisions of the contract or has been submitted at the wrong time there may be good reason to ignore it. After-all a payless notice would not be expected to be needed if a suitable request for payment has not been received.
The situation with payment and payless notices can be tricky to understand and give rise to all kinds of disputes. To prevent these and the impact they can have on the relationship between employer and contractors, not to mention the delays to the project, it is best to be clear on your obligations and put procedures in place.
At Amison Dispute Resolutions we can assist clients in building their understanding and deliver invaluable services to reduce the risk of disputes. If you have any questions please contact us.