Can a main contractor pay the sub-contractor only when it is paid?
Not in a construction contract: pay-when-paid clauses are generally ineffective under the Construction Act, except where a third party further up the chain is insolvent.
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Sub-contractor agreement (England and Wales)
A sub-contractor agreement engages a sub-contractor to carry out part of a job that a main contractor has agreed to do for its client. It sets out the work, price, programme and standards, usually passes down the relevant obligations of the main contract, and — for construction work — must meet the payment and adjudication rules of the Construction Act.
When you need one
Use one whenever you bring in another business to do part of a job you are responsible for — trades on a building project, specialist IT work, or any delegated service.
What it should contain
Scope and main contract
The sub-contract work and how it relates to the main contract.
Back-to-back obligations
Passing down the main contract's requirements for that work.
Programme
Start, completion and extensions of time.
Payment
Interim payments, payment notices and pay less notices for construction work.
Adjudication
The statutory right to adjudicate construction disputes.
Defects and insurance
Making good defects and the insurance each party must hold.
Points specific to England and Wales
- The Housing Grants, Construction and Regeneration Act 1996, as amended in 2011, applies to construction contracts in England and Wales: it requires adequate payment mechanisms, payment and pay less notices, and a right to adjudication, and it outlaws most pay-when-paid clauses. If the contract falls short, the Scheme for Construction Contracts fills the gaps.
Different rules can apply elsewhere in the UK: see the Scotland version of this guide.
Common mistakes
- A pay-when-paid clause, which is generally ineffective in construction contracts.
- No payment or pay less notice mechanism.
- Not flowing down the main contract's key obligations.
See a specimen sub-contractor agreement — a short illustration of the structure and key clauses, laid out as the app produces them.
Quick answers
What does back-to-back mean?
It means the sub-contract mirrors the main contract, so the sub-contractor takes on the same obligations for its part of the work as the main contractor owes the client.
Draft your sub-contractor agreement now
Be Contract Wise's powerful, carefully prepared drafting tools turn a short set of plain-English questions into a sub-contractor agreement under the law of England and Wales, laid out to a professional standard, with an explanation of every clause. Simple or complex, export to Word or PDF.
Start drafting — freeBrowse all guidesReviewed 2026-09-24. General legal information about the law of England and Wales, not legal advice.