Pay-When-Paid
A clause making a main contractor’s obligation to pay a subcontractor conditional on first being paid by the employer. It pushes payment risk down the chain — and its enforceability varies dramatically by jurisdiction.
In the UK it is largely outlawed by statute, except on the employer’s insolvency. In the UAE and much of the GCC it is broadly permissible and widely used, which means a subcontractor’s cash flow is hostage to a payment dispute it is not a party to and cannot influence.
The distinction worth knowing is between pay-when-paid (a timing condition) and pay-if-paid (a condition precedent, meaning no payment ever if the main contractor is not paid). The second is far more aggressive, and where it is enforceable it transfers the employer’s credit risk to a subcontractor that never assessed it.