December 12, 2023 – Gatineau, Quebec – Public Services and Procurement Canada
Canada’s construction industry employs an estimated 1.5 million people, making it an important driver of our economy. In 2016, industry stakeholders raised the long-standing issue of payment delays along the contracting chain, and we listened.
Today, the Honourable Jean-Yves Duclos, Minister of Public Services and Procurement, announced that federal prompt payment legislation came into force on December 9, 2023, to address long-standing construction industry concerns, including the timeliness of payments, protecting vital construction jobs and making it easier to do business with the Government of Canada.
Public Services and Procurement Canada 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 contracting payment chain.
The federal prompt payment legislation aims to ensure that each party in the construction chain receives timely payment for the construction work provided for a project. It is the predictable and timely payment of contractors and subcontractors (and sub-subcontractors) that allows important federal infrastructure projects, such as work on buildings and bridges, to be completed.
All existing construction contracts will have 1 year, as of December 9, 2023, to comply with the Federal Prompt Payment for Construction Work Act.
“The construction industry is a critical part of the Canadian economy. 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 workers of the industry during these difficult times for all Canadians.”
The Honourable Jean-Yves Duclos
Minister of Public Services and Procurement
- The Government of Canada has a strong record of promptly paying its contractors. The government pays 90% of its invoices in accordance with the previous mandatory 30-day payment period, however delays have been reported down the payment chain.
- The Federal Prompt Payment for Construction Work Act and supporting regulations have been informed by national consultation with industry representatives.
- The Act allows for the designation of provinces and territories that have enacted a reasonably similar prompt payment and adjudication regime.
- Any federal construction work in those designated provinces will, by default, be under the prompt payment regime of the province. At this time, Ontario, Saskatchewan and Alberta are the only provinces with fully implemented prompt payment regimes, and have been designated on the in-force date.
- In August 2023, the Government of Canada awarded a contract to ADR Chambers Inc. to provide adjudication services and oversee the adjudication process.
- Federal Prompt Payment for Construction Work Act
- Canada Gazette, Part II: Volume 157 – Final publication of Act