Commercial & Contract · Mandatory · Pre-Construction

Short-Form Subcontract Agreement

A simplified subcontract agreement suitable for lower-value or straightforward work packages.

Last reviewed: 29 March 2026 — This guide reflects UK law as of this date. Construction Act 1996 remains current with no amendments enacted as of 29 March 2026. Next scheduled review: 29 March 2027.

Legal basis	Housing Grants, Construction and Regeneration Act 1996 (the Construction Act)
Written subcontract	Every subcontractor carrying out construction operations must have a written subcontract agreement that complies with the Construction Act payment and adjudication provisions
Short-form options	JCT ShortSub 2024, JCT DBSub 2024, NEC4 Engineering and Construction Short Subcontract (ECSS)
Back-to-back	Back-to-back means the subcontract terms mirror the relevant provisions of the main contract, so that the contractor's obligations to the employer flow down to the subcontractor
Pay when certified	Pay when certified clauses (where the subcontractor is only paid when the employer pays the contractor) are prohibited by s.113 of the Construction Act and are void and unenforceable

1. Short-Form Subcontract

Every subcontractor carrying out construction operations on a project needs a written subcontract agreement. This is not simply good practice — it is a practical necessity driven by the requirements of the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act). The Act applies to all construction contracts and provides statutory rights to interim payment, a compliant payment mechanism with payment and pay less notices, and the right to refer any dispute to adjudication.

Short-form subcontracts are designed for subcontract packages of lower value or simpler scope, where the full complexity of a standard subcontract agreement is not required. The most commonly used short-form options are the JCT Short Form of Sub-Contract (ShortSub 2024), the JCT Design and Build Sub-Contract (DBSub 2024) for design and build procurement, and the NEC4 Engineering and Construction Short Subcontract (ECSS). These forms provide a proportionate level of contractual detail while still complying with the Construction Act requirements.

The principle of back-to-back subcontracting means that the key terms of the subcontract mirror the relevant provisions of the main contract. This ensures that the contractor's obligations to the employer flow down to the subcontractor, so that the contractor is not exposed to liabilities under the main contract that are not covered by the subcontract. Achieving a genuinely back-to-back position requires careful drafting and a thorough understanding of both the main contract and the subcontract terms.

Pay when certified clauses are void

Section 113 of the Construction Act prohibits pay when certified clauses in construction contracts. A pay when certified clause makes the subcontractor's right to payment conditional on the contractor receiving payment from the employer. Such clauses are void and unenforceable. The subcontractor has a statutory right to interim payment on defined due dates, regardless of whether the contractor has been paid by the employer. Any subcontract that includes a pay when certified clause will have that clause struck out and replaced by the Scheme for Construction Contracts payment provisions.

2. Key Content

The following elements are the core content of a short-form subcontract agreement. Each element must be clearly defined and consistent with the corresponding provisions of the main contract.

Element	Detail
Parties	The contractor (as employer under the subcontract) and the subcontractor, identified by full legal name, registered address, and company registration number.
Scope	A clear and specific description of the subcontract works, referencing the relevant drawings, specifications, and schedules. The scope must align with the work package allocated to the subcontractor in the main contract programme and contract sum analysis.
Subcontract sum	The agreed price for the subcontract works, exclusive of VAT. This may be a lump sum, a schedule of rates, or a combination. The subcontract sum should reconcile to the corresponding allowance in the main contract sum analysis.
Programme	The subcontractor's programme for carrying out the subcontract works, showing the start date, completion date, key milestones, and the sequence of activities. The subcontract programme must be coordinated with and fit within the master programme for the project.
Payment mechanism	The payment cycle, due dates, final date for payment, payment notice requirements, and pay less notice requirements. The payment mechanism must comply with the Construction Act — including defined due dates, a payment notice issued within 5 days of the due date, and a pay less notice issued not later than the prescribed period before the final date for payment.
Retention	The retention percentage (typically matching the main contract retention rate), the mechanism for deduction, and the release dates (half at practical completion of the subcontract works, remainder at the end of the subcontract defects period).
Variations	The mechanism for instructing and valuing variations to the subcontract works. Variations should be instructed in writing and valued using the subcontract rates where applicable, or by agreement or fair valuation where the rates do not apply.
Insurance	The insurance requirements for the subcontractor, including public liability insurance, employer's liability insurance, and professional indemnity insurance where the subcontractor carries design responsibility. Minimum cover levels should be specified and evidence of cover required before work commences.
Compliance	Requirements for compliance with all relevant legislation, regulations, and standards — including health and safety legislation, the CDM Regulations 2015, the Building Safety Act 2022 (where applicable), and all site rules and procedures.
Dispute resolution	The right to adjudication (a statutory requirement under the Construction Act), and the agreed mechanism for final dispute resolution (typically litigation or arbitration, consistent with the main contract dispute resolution provisions).
Signature	The subcontract must be signed by authorised representatives of both the contractor and the subcontractor. As with the main contract, execution may be under hand (6-year limitation period) or as a deed (12-year limitation period).

3. Common Mistakes

Using purchase orders instead of subcontract agreements

One of the most common failures in subcontract procurement is relying on purchase orders instead of proper subcontract agreements. A purchase order is a commercial instruction to supply goods or services at a stated price. It is not a construction contract and does not contain the provisions required by the Construction Act — including a compliant payment mechanism, payment and pay less notice requirements, and the right to adjudication. Where a subcontractor carries out construction operations under a purchase order rather than a subcontract agreement, the Scheme for Construction Contracts will be implied into the arrangement, often producing unexpected results for both parties. Every subcontractor must have a written subcontract agreement, not a purchase order.

Inconsistent terms with the main contract

The subcontract terms must be consistent with the corresponding provisions of the main contract. If the main contract provides for liquidated damages at a specified rate, the subcontract should include a proportionate liability for delay. If the main contract requires specific insurance cover, the subcontract should require the subcontractor to maintain equivalent cover. Inconsistencies between the main contract and the subcontract create gaps in the contractor's risk transfer — the contractor may be liable to the employer under the main contract for obligations that are not covered by the subcontract. Achieving a genuinely back-to-back position requires a line-by-line comparison of the main contract and subcontract terms.

4. Frequently Asked Questions

What is back-to-back and how complete is it?▾

Back-to-back subcontracting means that the key terms of the subcontract mirror the relevant provisions of the main contract, so that the contractor's obligations to the employer flow down to the subcontractor. In practice, a perfectly back-to-back position is difficult to achieve. The main contract and the subcontract are different agreements between different parties, and some provisions do not translate directly. For example, the main contract may contain employer obligations (such as providing access or information) that the contractor must manage as intermediary but cannot simply pass through to the subcontractor. Liquidated damages under the main contract apply to the whole project, whereas the subcontractor is only responsible for their package. Professional indemnity insurance requirements may differ. Despite these limitations, the objective should always be to achieve the closest possible back-to-back alignment, so that the contractor is not left with gaps between what they owe the employer and what they can recover from the subcontractor.

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