On December 12, Jean-Yves Duclos, minister of public services and procurement, implemented a federal prompt payment legislation, which came into effect on December 9. The legislation—the Federal Prompt Payment for Construction Work Act—seeks to tackle issues related to payment delays along the contracting chain.

Developed in collaboration with key construction industry stakeholders and other government departments, the new law is designed to ensure payments are made promptly and efficiently throughout the construction process, protecting vital construction jobs and making it easier to do business with the Government of Canada.

Under this legislation, the federal government is required to make payments within 28 calendar days of receiving a proper invoice from a contractor. Subsequently, the contractor has seven days to pay subcontractors, who then have seven days to pay their sub-subcontractors, and so forth down the payment chain.

The primary objective of the legislation is to ensure all parties involved in construction projects receive timely payments. This flow of funds is essential for the successful completion of federal infrastructure projects.

Existing construction contracts have been given a one-year period, starting from December 9, 2023, to comply with the Federal Prompt Payment for Construction Work Act. This initiative aims to have a positive impact on the construction industry, by enhancing financial predictability and supporting the timely completion of crucial infrastructure projects across Canada.