Provincial Prompt-Payment Laws Designated

Summary#

This order (SOR/2023-270) says the federal government will treat the prompt-payment laws of Ontario, Saskatchewan and Alberta as equivalent to the Federal Prompt Payment for Construction Work Act for federal construction projects in those provinces. It was registered on December 8, 2023 and published in the Canada Gazette on December 20, 2023; it comes into force when section 387 of the Budget Implementation Act, 2019 comes into force (or on the day the order is registered if that is later).

What it does#

• Names Ontario, Saskatchewan and Alberta as “designated provinces” whose own prompt-payment laws can apply instead of the federal law for federal construction work in those provinces.
• Allows provincial prompt-payment regimes to be used where they are judged “reasonably similar” to the federal rules. The federal rules include a requirement that payment be due within 28 days of a proper invoice and that contractors pay their subcontractors within 7 days, plus a faster dispute process (adjudication).
• Does not create new payment rules itself. It simply says which provincial laws will be treated as the applicable rules for federal projects in those provinces.
• Sets the coming-into-force condition (see Summary).

Who's affected#

• Contractors and subcontractors working on construction projects owned by the federal government on federal lands in Ontario, Saskatchewan and Alberta.
• Small construction firms and their subcontracting chains in those provinces, who will use one provincial regime rather than switching between provincial and federal rules.
• Provincial governments and procurement offices that administer those provincial prompt-payment regimes.
• Other provinces and territories are not designated now; it’s unclear from this order when or if additional provinces will be added.

Why it matters#

• It reduces uncertainty for construction companies working on federal projects in the three named provinces. They can follow their provincial prompt-payment law instead of trying to figure out whether federal or provincial rules apply.
• The change aims to make payments faster and disputes quicker to resolve by relying on existing provincial systems that match the federal timelines.
• The move supports smaller businesses: applying one consistent set of rules across contracts should simplify billing and cash-flow management for subcontractors.
• For context, construction is a significant part of the economy (about 7.5% of GDP and roughly 1.4 million workers) and past industry data noted unpaid amounts as large as $46 billion out of about $285 billion in contracts, which is part of why prompt-payment rules were created.