Suspending Work for Non-Payment Under the Construction Contracts Act — When You Can, and How (NZ)

sp8002
May 31
4 min read

The right to suspend work for non-payment is one of the strongest levers the Construction Contracts Act gives a subcontractor — but the grounds and the notice have to be right. Here is when the right arises and the sequence to follow.

By Steve Parker · Trueworks · NZ construction contract review · 5 min

What you'll learn

When the right to suspend actually arises
The written notice you must give first
What suspension protects — and the risk of getting it wrong

Quick answer: Under the Construction Contracts Act 2002 you can suspend work where an amount that has become due has not been paid — for example where the payer failed to provide a payment schedule and did not pay the claimed amount, or did not pay a scheduled or adjudicated amount. You must give the required written notice first — generally not less than five working days — and the Act then protects you: you are not in breach for suspending, you gain an extension of time, and you can recover the reasonable costs of suspension and remobilisation. The lever is powerful, but the grounds and the notice have to be right.

Suspension is the point where the Construction Contracts Act stops being paperwork and starts having teeth. Used correctly, it stops you pouring more labour and materials into a job that is not paying you, without putting you in breach. Used incorrectly — wrong grounds, or no notice — it can make you the party in breach. The difference is procedure.

When the right to suspend arises

The right is tied to an amount that has properly become due and unpaid. The common triggers:

you served a compliant payment claim, the payer did not provide a valid payment schedule in time, and did not pay the claimed amount;
the payer provided a schedule but did not pay the scheduled amount; or
the payer did not pay an adjudicated amount.

The first step is therefore always to confirm the amount is genuinely due — which usually traces back to whether your payment claim was compliant.

The notice you must give first

You cannot simply walk off. The Act requires written notice of your intention to suspend — generally not less than five working days before you do. The notice has to identify the grounds. Getting the notice period and content right is what makes the suspension lawful.

What suspension protects

When you suspend on valid grounds with proper notice, the Act protects you:

you are not treated as in breach of the contract for suspending,
you are entitled to an extension of time for the period of suspension, and
you can recover the reasonable costs of suspending and remobilising when payment is made.

In other words, the cost of the payer's non-payment is shifted back to the payer, where it belongs.

Send Trueworks your subcontract and the disputed item. You receive a written, code-cited assessment of your entitlement under the Construction Contracts Act — the clean paperwork an adjudicator rewards. NDA available; files NZ-hosted. → Email steve@trueworks.co.nz
or start at trueworks.co.nz

Variation gone unpaid, or a back-charge you dispute?

The risk of getting it wrong

Suspending without a valid ground — or without the required notice — can itself be a breach, and can expose you to the other side's costs. The two failure modes are suspending on an amount that was not actually due (often because the underlying payment claim was defective), and skipping or shortening the notice. Both are avoidable with a quick check before you act.

The sequence

Serve a compliant payment claim.
The payer misses the payment schedule deadline, or does not pay the scheduled or adjudicated amount.
Confirm the amount is now due.
Serve written notice of intention to suspend — at least five working days.

If still unpaid, suspend; keep records; on payment, claim your extension of time and remobilisation costs.

FAQ — Suspending work under the Construction Contracts Act

Can I stop work immediately if I am not paid? No. You must give written notice of intention to suspend first — generally at least five working days — and the amount must have properly become due.

What counts as an amount being "due"? Typically a claimed amount where the payer failed to provide a valid payment schedule in time, an unpaid scheduled amount, or an unpaid adjudicated amount.

Am I in breach if I suspend? Not if you suspend on valid grounds with the required notice. The Act protects you from breach, grants an extension of time, and lets you recover reasonable suspension and remobilisation costs.

What is the risk of suspending wrongly? If the amount was not actually due, or you did not give proper notice, the suspension itself can be a breach exposing you to the other side's costs. Confirm the grounds first.

Does the right to suspend apply if there is no written contract? The Construction Contracts Act applies to construction contracts whether written or oral, but the amount must still have become due under the Act's payment regime.

How Trueworks helps

Trueworks confirms whether an amount has properly become due and whether your grounds and notice for suspension are sound — so you use the lever without becoming the party in breach. You get the position in writing, with the references.

About Trueworks

Trueworks is built by Steve Parker — 20 years on the analytical side of NZ construction: variation reviews, contract advisory, and AI-augmented document analysis. It is the same defensible, code-cited read a quantity surveyor would give a variation, made available to the homeowners and trades on the receiving end of one. I answer every email personally during pilot phase.

steve@trueworks.co.nz · trueworks.co.nz