Canada's Federal Prompt Payment Legislation Now In Force

On December 9, 2023, the Federal Prompt Payment for Construction Work Act, SC 2019, c 29, s 387 (the "Act") came into force. The Act requires the Government of Canada ("Canada") to pay all construction contractors within 28 calendar days of the contractor submitting a proper invoice. The contractor then has 7 days to pay subcontractors, who will then have another 7 days to pay sub-subcontractors, and this cascade continues down until all parties have been paid. The exception is when a notice of non-payment is issued along the chain – after which the Act mandates the parties to go through an adjudication procedure.

WHERE, WHEN AND TO WHICH CONTRACTS DOES THE ACT APPLY?

The Act applies to contracts made between contractors, and their associated subcontractors, and Canada, or one of Canada's service providers, for construction work for the purposes of a construction project located in Canada in respect of any federal real property or federal immovable as defined in