The Canada Prompt Payment Act has reached a second reading in the Senate of Canada. Bill S-244 will ensure contractors and sub-contractors on federal construction projects are paid promptly.
“As a former trade contractor, I know that in the construction industry, it is a tolerated practice that there are no strict timelines for payment, even when all parties are satisfied with the work completed,” said Manitoba Senator Don Plett, who introduced the bill. “Delay in payment is the number one reason small and medium sized businesses in the construction industry are going out of business in Canada”.
Bill S-224 ensures that the government institution must make progress payments to a contractor on a monthly basis, or at shorter intervals provided for in the respective contract. This payment requirement is consistent down the contractual chain.
The bill also accounts for milestone payments, when applicable, and permits contractors the right to suspend work, terminate a contract and collect interest on late payment.
The legislation only covers contracts (and the sub-contracts of those contracts) with the federal government, as all other construction projects would fall under the purview of the respective provinces and territories.
The progress of the bill is being applauded by the National Trade Contractors Coalition of Canada (NTCCC).
“Senator Plett has been a champion on this issue for our industry on Parliament Hill over the last several years. He is from our industry and he gets it,” said John Galt, chairman of the National Trade Contractors Coalition of Canada. “This is a tremendous opportunity for Canada to join virtually every other country in the Western world that has some form of prompt payment legislation in place to address this worldwide problem.”
At a prompt payment summit held prior to this announcement, stakeholders and parliamentarians discussed ways to move forward on prompt payment legislation at the provincial and territorial level. Senators and members of parliament, including cabinet ministers, were in attendance, offering their support.
“After years of working with industry stakeholders on a solution to this problem, I am thrilled that we have a great piece of legislation before us,” stated Senator Plett. “I look forward to the swift passage of this bill and I am hoping the Canada Prompt Payment Act will give the provinces the momentum they need to move forward on this at the provincial level.”
