Scheme for Construction Contracts (UK) Explained
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The Scheme for Construction Contracts is the UK statutory fallback that fills the gaps in any construction contract that does not comply with the payment and adjudication rules of the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act). It exists as the Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended in 2011), with equivalents in Scotland and Northern Ireland (the Regulations on legislation.gov.uk). Part I implies a right to adjudicate, with a decision due within 28 days of referral; Part II implies a default payment timetable, with the final date for payment 17 days after the due date. Both are set out in full below. The parties cannot contract out of the Act's requirements: the only way to avoid the Scheme is a contract that complies with them.
General information, not legal advice.
What this page covers
This page covers
Scheme for Construction Contracts UK: when it applies, default payment dates, payment and pay less notices, the right to adjudicate, devolved equivalents, interaction with construction finance
Not covered here
Specific contract drafting and legal advice (consult a construction solicitor), individual provider reviews (see /providers/), the wider construction finance hub (see /construction-finance/)
What the Scheme is and why it exists
The Construction Act 1996 requires every UK construction contract to contain an adequate mechanism for deciding what becomes payable and when, to give the right to suspend performance for non-payment, and to give the right to refer disputes to adjudication. Many contracts, especially short-form subcontracts, oral agreements and purchase orders, do not.
The Scheme for Construction Contracts is the statute that supplies the missing terms so the Act's protections still apply. It is not optional and it is not a model form you choose: it is implied by law the moment a contract falls short.
The Scheme can apply in full or in part. If a subcontract has no written payment mechanism at all, almost the whole of Part II is implied. If a contract has a payment mechanism but, for example, no provision for pay less notices, then only that missing piece is filled. This is why disputes often turn on exactly which words the contract did and did not contain.
The Scheme's default payment timetable
| Step | Scheme default (where contract is silent) |
|---|---|
| Due date | The later of 7 days after the end of the relevant period, or the date the payee makes a claim |
| Payment notice (by payer) | Not later than 5 days after the due date, stating the sum considered due and the basis for it |
| Pay less notice | Not later than 7 days before the final date for payment |
| Final date for payment | 17 days after the due date |
| If no valid pay less notice | The notified sum (or the payee's claimed sum) becomes payable in full |
That last line is the one that decides most cash-flow disputes. A late or invalid pay less notice means the payer owes the full amount the subcontractor claimed, regardless of the underlying valuation argument, at least until a later assessment or adjudication. See our pages on pay less notice handling and Application for Payment finance.
The Scheme's right to adjudicate
Part I of the Scheme implies the full adjudication procedure: a party may serve a notice of adjudication at any time, an adjudicator is appointed within 7 days, the dispute is referred, and the adjudicator must decide within 28 days of referral (the referring party can extend by 14 days; both parties can agree a longer period). The decision binds the parties until the dispute is finally settled by court, arbitration or agreement, and the courts enforce adjudicators' decisions robustly. For the step-by-step process on an unpaid Application for Payment, see construction adjudication for unpaid AfPs.
Where the Scheme stops and finance starts
The Scheme decides what you are owed and gives you a fast route to enforce it. It does not put money in your account: even a clean win on a pay less notice point still leaves you waiting for the 17-day final date for payment, or for an adjudicator's decision plus enforcement. Construction-aware invoice finance advances a percentage of the certified or notified sum now and lets the recovery play out behind it. Used together, the Scheme protects the entitlement and finance protects the cash flow. See adjudication vs invoice finance: when each makes sense.
More construction finance pages
- Construction finance hub
- Adjudication for unpaid AfPs
- Adjudication vs invoice finance
- Pay less notice handling
- Subcontractor finance
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
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