The customer has not paid. When can you stop work?

The money should have landed a fortnight ago. You have chased twice, you are still paying your groundworker, and the next stage starts Monday. Somebody on site tells you to just walk off until he pays.

There is a right to do that. It is section 112 of the Housing Grants, Construction and Regeneration Act 1996, and no clause in your contract can take it away. But it comes with a step you cannot skip, and on a lot of the jobs this is written for it does not apply at all. Take the second one first, because it decides whether the rest of this page is about you.

First: does the Act even cover your job?

The Act does not apply to a construction contract with a residential occupier, meaning someone who occupies, or intends to occupy, the dwelling as their home. That is section 106.

So if you are doing a rear extension for the family who live in the house, you have no statutory right to suspend, no matter how late they are. What you have instead is whatever your own contract says, and if it says nothing, stopping work is a breach on your side rather than a remedy.

Worth knowing the edges. It turns on occupation, not on the building being a house: a developer building houses to sell is not a residential occupier. And a contract with a residential occupier can still adopt the payment machinery voluntarily, so read yours before assuming.

If the Act does cover you: what the right actually is

You can suspend performance of any or all of your obligations when the notified sum has not been paid in full by the final date for payment. Two terms doing real work there.

The notified sum is the figure that became payable under section 111: your application, or the payer’s payment notice, or whatever a valid pay less notice reduced it to. It is not the figure you feel you are owed. It is the figure the paperwork settled on.

The final date for payment is the deadline in your contract, counted from the due date. Not the date you invoiced, and not the date you chased.

The step nobody can skip

You must give at least seven days notice in writing, saying that you intend to suspend and on what ground. Then you wait the seven days. If the money arrives inside that window, the right falls away and you carry on.

Two things go wrong here, and both are avoidable:

• Downing tools first and writing afterwards. That is not suspension under the Act, it is you leaving site, and it hands the argument to the other side.
• A notice that does not say why. The ground has to be in it. “We will stop work next week” is not the same document as “the notified sum of X, due on Y, remains unpaid, and we intend to suspend performance from Z”.

What you get back if you do it properly

Suspension under the Act is not a free hit for either side, and the two things that follow it are the reason it is worth doing correctly rather than informally.

• Time. The period of suspension, and the time taken to get going again, is added to your completion date. You are not late because they did not pay.
• Money. You are entitled to a reasonable amount for the costs and expenses reasonably incurred as a result of suspending and resuming. Standing plant, remobilising, the labour you could not redeploy.

Both depend on records. Keep the dates, keep what it cost you, and keep the notice.

What to do this week, in order

1. Check who your client is. If they live in the house, stop reading here and go to your contract.

2. Find the final date for payment for the unpaid valuation. Not the invoice date. If you cannot say what it is without opening a file, that is the first thing to fix, because every step below counts from it.

3. Confirm the notified sum. If they served no payment notice and no pay less notice, the sum you applied for is very likely the notified sum, and the whole of it is due.

4. Send the notice, in writing, and diarise seven days. State the sum, the date it fell due, that it is unpaid, and that you intend to suspend performance from a stated date.

5. Carry on working for those seven days. The notice is what protects you, not the walking off.

Where the information stops

This is how the mechanism works, not advice on your job. Suspension is a strong step and it changes the relationship on site for the rest of the contract. If the sum is large, if there is a dispute about the value of the work rather than about payment, or if anyone has mentioned termination, that is the point to spend an hour with a construction solicitor rather than an afternoon reading. Getting the seven days wrong turns a remedy into a breach.