Human Resources Legislative Update
Federal Prompt Payment for Construction Work Act Now in Force
Date: December 14, 2023
On December 9, 2023, the Federal Prompt Payment for Construction Work Act (Act) was proclaimed into force. The Act was originally introduced in 2019 as part of the omnibus Budget Implementation Act, 2019, No. 1.
As stated in the government’s news release, the Act is designed to address the construction industry’s long-standing concerns around doing business with the federal government, specifically with respect to the timeliness of payments.
The Act applies to “any service provider and to any contractor or subcontractor that is to perform construction work for the purposes of a construction project located in Canada in respect of any federal real property or federal immovable.” Among other things, it establishes the following:
- timelines for payment:
- the federal government will have 28 calendar days to pay after a contractor submits a proper invoice, which is to be submitted on a monthly basis or as specified in the contract
- the contractor will then have seven days to pay its subcontractors; this seven-day requirement applies to each payment made down the subcontracting chain, if applicable
- a dispute resolution and adjudication process
- provisions for non-payment and holdbacks
- regulation-making authority to prescribe support for the provisions of the Act
Existing construction contracts will have one year as of December 9, 2023 to comply with the Act.
Editor’s Note: On December 8, 2023, the following order/regulations under this Act were registered:
Federal Prompt Payment for Construction Work Regulations (Dispute Resolution)
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
