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Federal prompt payment system for construction work comes into effect

OTTAWA – The Federal Prompt Payment for Construction Work Act has come into effect as of December 9, addressing issues around payment timelines across Canada’s construction sectors.

Under the Act, the federal government will have a payment window of 28 calendar days following the submission of a contractor’s invoice. The contractor will then have seven days to pay its subcontractors, with the subcontractors having another seven days to pay their sub-subcontractors; this week-long window continues as needed down the payment chain.

This legislation also recognizes provinces and territories that have enacted their own prompt payment system within reasonable similarity. Federal construction work taking place in those provinces will, by default, be under the provincial prompt payment regime. At this time, Ontario, Saskatchewan and Alberta are the only designated provinces.

The Act was put together by Public Services and Procurement Canada in collaboration with other government departments and key stakeholders from across the construction industry. This legislation aims to ensure that each party in the construction chain receives prompt payment, the government said, with hopes that this will allow important federal infrastructure projects to be completed.

“The coming into force of this legislation will alleviate payment delays and enhance financial stability for small and medium-sized construction companies, helping to support the more than 1.5 million workers of the industry during these difficult times for all Canadians,” said Jean-Yves Duclos, Minister of Public Services and Procurement.

A one-year compliance window for this legislation has been given to all existing construction contractors.