Getting paid on public sector contracts

Winning the work is half the job. Public sector contracts come with some of the strongest payment protections in the UK — if you know how to use them. Here's what applies, whether you work for a council directly or as a subcontractor.

30-day payment terms

Public bodies must pay valid, undisputed invoices within 30 days. This was in the Public Contracts Regulations 2015 and continues under the Procurement Act 2023. Main contractors on public contracts generally have to pass the same 30-day terms down to their subcontractors, so if you're working for a contractor on council work, ask to see the payment terms in your subcontract.

Public bodies also publish reports on how quickly they pay. TendersNearMe shows these on each buyer's profile, so you can check before you bid.

Make your invoice easy to pay

• Quote the purchase order (PO) number. Many councils can't pay an invoice without one — ask for it before you start.
• Send it to the right place. Councils often have a central accounts payable address or portal, not the person who ordered the work.
• Include everything that's needed — see what to include on an invoice, and if you're in construction, how to show CIS.

If you're paid late

1. Chase early and politely, the day after the due date. How to chase an unpaid invoice.
2. Escalate inside the organisation — the council's accounts payable team, then the contract manager.
3. Claim late payment interest. Under the Late Payment of Commercial Debts (Interest) Act 1998 you can claim interest at 8% above the Bank of England base rate, plus fixed compensation of £40, £70 or £100 depending on the size of the debt. Work out what you're owed.
4. Report poor payment practice on public contracts to the government's Public Procurement Review Service.
5. Send a letter before action as a last step before court. How to write one.

Subcontracting on construction work

• The Construction Act gives you the right to regular payments, payment notices and pay less notices, and to suspend work if you're not paid. "Pay when paid" clauses are generally not allowed. Payment and pay less notices explained.
• Retentions — often 3–5% held back until the work is finished. Get the release dates in writing and diarise them. Retentions explained.
• CIS — contractors deduct 20% from payments to registered subcontractors (30% if you're not registered), unless you have gross payment status.

General information, not legal or financial advice. Your contract, and the law that applies to it, is the final word.

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