Loose ends still plague otherwise welcome prompt payment legislation

By JoshNV Creative Commons licence

The federal government’s prompt payment legislation, which came into law by royal assent with the budget bill in June, is getting good response from the construction industry, but many issues remain unsolved in regards to its implementation.

The law is entitled The Federal Prompt Payment for Construction Work Act, and formed part of the Liberal government’s C-97 budget bill. It requires the government to pay out contractors’ invoices within 28 days of their receipt, and further requires those contractors to pay subcontractors within 35 days after that. 

Challenges to invoices must be made within 21 days under the new rules.

One of the main sticking points to putting the legislation into practice is a method for adjudication in case of disputes about payment. The government is working on creating an “adjudicator authority” who will administer the process through regulations, which also need to be worked out. It may take a couple of years to iron out the wrinkles. 

In the meantime, the construction industry welcomes the changes. The Canadian Construction Association’s Raymond Bassett responded the announcement on prompt payment legislation at a roundtable event hosted by parliamentary secretary Steve MacKinnon.

“The timely flow of payment within all tiers on construction projects is necessary to allow material and equipment suppliers, subcontractors and trades, labour, and general contractors to succeed in their businesses – to continue providing construction capacity to build Canada’s infrastructure and to create jobs and economic opportunities in an industry that represents a very significant part of the economic activity in Canada,” Bassett was quoted as saying in a CCA press release. Bassett a member of the CCA executive committee and chair of the CCA Manufacturers, Services & Suppliers Council.

According to comments CCA president Mary Van Buren made to iPolitics, consistent and predictable payments will enable the in-demand construction industry to take on more projects. She also said that Public Services and Procurement Canada (PSPC) has been a great partner for the CCA in championing the legislation.

PSPC is a department of the federal government that is responsible for providing and managing services to the Government of Canada and its residents. CCA and PSPC have been working together to establish rules on prompt payment since 2016.

Several provinces, including Ontario, are working to make their own prompt payment laws.  Last week Ontario’s government announced that ADR Chambers was selected as the successful candidate to serve as the province’s Authorized Nominating Authority, responsible for overseeing the adjudication process for construction disputes, including the training and qualification of adjudicators.


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