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Punctual payments prevail: federal legislation will help ensure construction sector gets what it’s owed on time

January 3, 2024 | By Anthony Capkun

January 3, 2024 – Federal prompt payment legislation came into force on December 9, 2023, to address “long-standing construction industry concerns”, including the timeliness of payments and and making it easier to do business with the Government of Canada.

“We reached a major milestone in ensuring that subcontractors who work on federal government contracts get paid on time,” said Hon. Jean-Yves Duclos, Minister of Public Services and Procurement. “The coming into force of this legislation will alleviate payment delays and enhance financial stability for small- and medium-sized construction companies […]”

Public Services and Procurement Canada says it collaborated with key construction industry stakeholders, as well as other government departments, to develop federal prompt payment legislation, which led to the Federal Prompt Payment for Construction Work Act.

Under the terms of the legislation, the federal government will have 28 calendar days to pay after the contractor submits a proper invoice. The contractor will then have 7 days to pay its subcontractors; subcontractors will have another 7 days to pay their sub-subcontractors; and so on, down the payment chain.

All existing construction contracts will have one (1) year, as of December 9, 2023, to comply with the Federal Prompt Payment for Construction Work Act.

The act allows for the designation of provinces and territories that have enacted a reasonably similar prompt payment and adjudication regime. Meaning, any federal construction work in those designated jurisdictions will, by default, fall under the prompt payment regime of that jurisdiction.

Currently, only Ontario, Saskatchewan, and Alberta have fully implemented prompt payment regimes, and have been designated on the in-force date.

The Electrical Contractors Association of British Columbia says it strongly supports the newly enacted federal legislation, but is still waiting for British Columbia to enact its own prompt payment legislation.

“British Columbia needs prompt payment legislation now. Our contractors and skilled tradespeople deserve the same protections widely available across Canada and the United States,” said Matt MacInnis, ECABC president. “ECABC encourages the Province to leverage the proven successful legislation from other provinces—notably Ontario—and pass prompt payment legislation during the upcoming Spring 2024 session.”

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