EU Late Payment Directive
The Directive on combating late payment in commercial transactions (2011/7/EU), adopted in February 2011, is the EU’s baseline payment-timing law. It requires public authorities to pay within 30 days (60 in healthcare), allows B2B payment terms up to 60 days unless otherwise agreed and not grossly unfair, entitles creditors to automatic interest at the ECB reference rate plus 8 percentage points, and grants a flat €40 recovery-cost compensation. It is a general commercial law applying to all sectors — there is no EU-wide construction-specific Construction Adjudication regime — so its effect on construction subcontractors depends on national implementation and enforcement.
EU Late Payment Directive [regulates] European Union EU Late Payment Directive [opposes] Global Subcontractor Payment Delays
The Directive’s impact has been limited. The construction trade body FIEC notes that it triggered some reduction in delays but more than 60% of EU businesses are still not paid on time, with SMEs worst affected. The EU Payment Observatory confirms public authorities average close to 70 days against a 30-day legal limit. Enforcement does have teeth but is rarely used — in late 2023 the Commission referred Belgium, Greece and Italy to the Court of Justice for non-compliance.
EU Payment Observatory [provides_evidence_for] EU Late Payment Directive
In September 2023 the European Commission proposed, as part of its SME Relief Package, to repeal the Directive and replace it with a directly-applicable Regulation: a uniform 30-day cap on all commercial payment terms (public and private), automatic non-waivable interest and compensation, and mandatory enforcement authorities. The European Parliament adopted a position in 2024, but the Council blocked it — national parliaments raised subsidiarity concerns and industry associations (construction prominent among them) argued a rigid 30-day cap ignored legitimate sector payment cycles. By 2025 the Danish Council Presidency confirmed no further action; the Regulation is effectively dead, leaving the 2011 Directive as the unchanged baseline.
EU Late Payment Directive [contradicts] UK Late Payment Reform 2026
Connections
- European Union — jurisdiction the Directive governs, source: 2026
- EU Payment Observatory — monitors compliance with the Directive, source: 2026
- Global Subcontractor Payment Delays — problem the Directive targets, source: 2026
- UK Late Payment Reform 2026 — contrasting case where reform succeeded, source: 2026