New federal prompt payment legislation to protect construction workers

Dec. 12, 2023 – Canada’s federal prompt payment legislation has come into effect, as announced by  Jean-Yves Duclos, Minister of Public Services and Procurement. The legislation aims 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 seven days to pay its subcontractors, subcontractors will have another seven 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.

All existing construction contracts will have one year, as of December 9, 2023, to comply with the Federal Prompt Payment for Construction Work Act.