On December 9, 2023, the Federal Prompt Payment for Construction Work Act, SC 2019, c 29, s 387 ("Act") came into force. Pursuant to the Act, the Government of Canada must pay all construction contractors within 28 days of invoicing. Contractors, in turn, must pay sub-contractors within 7 days thereafter.
All construction contracts of Canada existing prior to December 9, 2023 will not be subject to the Act until December 9, 2024.
The Act will apply in all provinces and territories where reasonably similar legislation does not already exist. Ontario, Saskatchewan and Alberta have enacted reasonably similar legislation. Therefore, the Act will not apply in those provinces.
The Act is the culmination of the effort of Canada's construction industry and Members of the House of Commons and the Senate that formally began in 2016.
Miller Thomson Partner, Gerald Chipeur, KC, testified before the Senate Standing Committee on Banking, Trade and Commerce on February 15, 2017 and addressed the constitutionality of federal prompt payment legislation. At the time, the Senate was considering Bill S-224, An act respecting payments made under construction contracts. Bill S-224 was read a first time in the Senate on April 13, 2016. Mr. Chipeur testified that prompt payment legislation enacted by Parliament and applicable to the Government of Canada was authorized under section 91 of the Constitution Act, 1867.
Seven years and eight months have come and gone since a prompt payment bill was first introduced by Senator Donald Plett. Better late than never!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
