Blog

Canada's construction industry, a vital force in our economy, employs an estimated 1.5 million people. However, for years, industry stakeholders have grappled with the persistent issue of payment delays along the contracting chain. In response to these concerns, the Honourable Jean-Yves Duclos, Minister of Public Services and Procurement, announced a significant development – the federal prompt payment legislation, which came into force on December 9, 2023.

Government of Canada -  News Release 

Federal Prompt Payment for Construction Work Act

BCCA /WeirFoulds - The Time to act promptly is Now. Document on Prompt Payment

Canadian Construction Association (CCA)

The implementation of the Federal Prompt Payment for Construction Work Act marks a significant milestone in addressing the payment delays that have plagued Canada's construction industry for years. As the legislation takes effect, it brings with it the promise of enhanced efficiency, transparency, and fairness throughout the contracting chain. This webinar recording by the Canadian Construction Association (CCA) serves as a valuable resource for industry professionals, providing insights into the nuances of the legislation and its potential impact on the future of construction in Canada.

• Part 1
• Part 2

Addressing Long-Standing Concerns:

The newly implemented Federal Prompt Payment for Construction Work Act is a proactive step towards rectifying the timeliness of payments within the construction industry. Collaboratively developed by Public Services and Procurement Canada, key construction industry stakeholders, and other government departments, this legislation aims to protect vital construction jobs and streamline business processes with the Government of Canada.

Key Provisions of the Legislation:

Under the terms of the legislation, the federal government is obligated to make payments within 28 calendar days after receiving a proper invoice from the contractor. This sets a precedent for prompt and efficient financial transactions throughout the contracting payment chain. Following the federal payment, contractors have 7 days to pay their subcontractors, who, in turn, have another 7 days to pay their sub-subcontractors, creating a cascading effect of timely payments.

Ensuring Timely Payments Across the Chain:

The primary goal of the federal prompt payment legislation is to ensure that every party involved in the construction chain receives timely payment for their contributions to a project. By facilitating the predictable and timely payment of contractors, subcontractors, and sub-subcontractors, the legislation provides a framework for the completion of crucial federal infrastructure projects, including the construction of buildings and bridges.

Implementation Timeline:

All existing construction contracts are given a one-year grace period, starting from December 9, 2023, to comply with the Federal Prompt Payment for Construction Work Act. This transitional period allows the industry to adapt to the new regulations and align its practices with the legislative requirements.