Note
Back-Charges From the Main Contractor
A back-charge is not a conversation. It is a line on the next payment certificate, reducing the net amount you receive without any prior discussion. Most subcontractors absorb it because they are not sure what the contract says about their right to object, or because they never checked. By the time the shortfall shows up in the accounts, the window to dispute has usually closed.
Understanding how back-charges work, and what you are entitled to ask for, does not require a lawyer. It requires reading the clause before you need it.
What is a back-charge in a subcontract?
A back-charge is a cost that the main contractor incurred on your behalf and then recovered by deducting it from a payment owed to you. The most common reasons in fit-out and installation work are remedial work carried out by another trade after your team left a zone defective or incomplete, cleaning or site protection that your contract required and your crew did not do, and damage to adjacent work attributed to your team.
The deduction arrives on the same payment certificate that carries your billing stage, which means a stage you planned against your cashflow can arrive net short, sometimes by more than the variation work you submitted alongside it.
Thailand has no construction-specific adjudication statute. Subcontracts run on the hire-of-works provisions in the Civil and Commercial Code and on whatever the subcontract itself says. The back-charge clause in your specific contract is everything. General assumptions about what a main contractor is or is not entitled to do are not enough.
When is a back-charge legitimate, and when can it be challenged?
A defensible back-charge has three things: a contract clause that authorises it, written notice issued before the remedial work started, and a cost breakdown supported by actual receipts or daywork sheets.
If the notice was not issued before the work began, most subcontracts weaken the main contractor’s position considerably. The notice requirement exists so you can inspect the alleged defect and elect to carry out the remedial work yourself, at your own rate. Skipping it is commonly the strongest ground for disputing a deduction.
If the clause does not cover the type of work being charged, or if the amount cannot be reconciled to receipts, those are separate grounds. A lump-sum estimate labelled “cleaning and rectification” is not a cost breakdown.
What documentation gives you standing to push back?
When a back-charge notice or deduction appears on a payment certificate, three things need to happen before you respond.
First, locate the specific clause the main contractor is relying on. Read it for whether prior notice is required, what the cure period is, and how the cost is to be calculated.
Second, check your own records. Was the zone inspected and accepted before the alleged defect was found? Is there a site inspection record, a signed check sheet, or a LINE message confirming acceptance? If yes, that narrows the main contractor’s claim to whatever changed after acceptance.
Third, request the cost breakdown in writing: labour hours and rates, materials used, and daywork sheets or invoices. A main contractor who cannot produce those within a short period is in a weak documentary position.
A worked example: aluminium partition installation
A subcontractor completing aluminium partition work across eight zones in a commercial fit-out received a payment certificate for stage three that included a back-charge of 22,000 baht for glass cleaning on two zones. The deduction appeared as a single line with no breakdown attached.
The site manager checked the subcontract. The back-charge clause required written notice before any remedial cleaning commenced, plus an itemised cost sheet. Neither had been issued. The subcontractor wrote a one-paragraph response within five days, citing the clause, noting the absent pre-work notice, and requesting the cost documents by email and LINE, both timestamped.
The main contractor came back with documentation covering one zone only. The deduction was revised to 9,000 baht. The subcontractor accepted that portion and issued the billing stage at the corrected net amount. Two things made it possible: reading the clause before signing, and responding within the notice window.
How do you respond when a back-charge notice arrives?
Speed is the constraint. Most subcontracts set a short objection window, typically seven to fourteen days from the date of the payment certificate, sometimes from the date the remedial work was completed. After that window, silence is typically treated as acceptance.
The response does not need to be aggressive. It needs to cite the clause, identify the missing element, whether that is the pre-work notice, the cost breakdown, or the scope alignment, and request specific documentation. A factual one-paragraph letter carries more weight than a phone call.
If the back-charge is partly legitimate, separating the defensible portion from the contested portion is a cleaner position. Disputing the full amount when part of it is clearly supported gives the main contractor an easy basis for rejecting the whole response.
How does a back-charge affect your billing stage?
A back-charge on the same certificate as a billing stage reduces the net amount released, not the invoice you submitted. The invoice is issued at the full stage value. The payment certificate then applies the back-charge as a set-off.
That distinction matters: if your invoice was issued correctly and on time, the stage counts as billed regardless of what the net payment was. Keep both records, the invoice and the certificate, because they may tell different stories at a later date.
FAQ
Can a main contractor deduct a back-charge without giving any prior notice?
Most subcontracts require written notice before remedial work begins, so you have the opportunity to inspect and remedy yourself. Without that notice, the main contractor’s standing to enforce the deduction is often limited. Some contracts allow a short post-fact notification window, which is why reading the clause before signing, not after a deduction arrives, is the only reliable approach.
How long does the dispute window typically run?
Seven to fourteen days from the payment certificate date is common, though some contracts measure from when the remedial work was completed. The safest assumption is seven days unless your contract says otherwise. After the window closes, most clauses treat silence as acceptance and the deduction becomes very difficult to recover.
What if the claimed amount looks unreasonably large?
Request the itemised cost breakdown: individual labour hours, rates applied, and receipts for materials. A figure that cannot be broken down into those components is an estimate, not a cost. The amount does not need to match the cheapest market rate, but it does need to be supported by actual expenditure. A main contractor who cannot produce backup documentation is asking you to pay for a number, not a cost.
If you are not sure whether the back-charge clauses in your current subcontracts give you real standing to dispute a deduction, a 45-minute call is a practical first step. We read the clause together against your actual contract, check what your notice rights are, and work out whether the documentation you keep on site is enough to support a response.