The new law ensures timely payments for construction work
The Minister of Public Services and Procurement Jean-Yves Duclos has announced that the federal prompt payment legislation officially came into force on December 9, addressing long-standing construction industry concerns over timely payments.
The government said that Canada's construction industry is an essential driver of the economy as it employs an estimated 1.5 million people. In 2016, industry stakeholders raised the long-standing issue of payment delays along the contracting chain. The new legislation aims to tackle payment delays along the contracting chain, ensuring timely payments for construction work and supporting the industry's vitality.
The federal prompt payment legislation ensures that each party in the construction chain receives timely payment for the construction work provided for a project. The predictable and timely payment of contractors and subcontractors allows important federal infrastructure projects, such as work on buildings and bridges, to be completed.
The collaborative effort between Public Services and Procurement Canada, construction industry stakeholders, and other government departments led to the development of the Federal Prompt Payment for Construction Work Act. Under the terms of the legislation, the federal government must make payments within 28 calendar days after a contractor submits a proper invoice. The contractor will then have seven days to pay its subcontractors; subcontractors will have another seven days to pay their subcontractors, and so on down the contracting payment chain.
In August, the government awarded a contract to ADR Chambers Inc. to provide adjudication services and oversee the adjudication process.
Minister Duclos emphasized the importance of the construction industry in the Canadian economy, stating, "We reached a major milestone in ensuring that subcontractors who work on federal government contracts get paid on time.”
“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 industry workers during these difficult times for all Canadians,” Minister Duclos added.
The legislation grants existing construction contracts one year from December 9 to comply with the Federal Prompt Payment for Construction Work Act.
