Senate approves prompt payment legislation

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Prompt payment legislation passed third and final reading on May 4 in the Canadian Senate. The Canada Prompt Payment Act (Bill S-224), sponsored by Manitoba Senator Don Plett, is designed to address the systemic problem of delays in the construction industry and ensure that contractors and sub-contractors on federal government construction work are paid in a timely manner.

“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 Plett. “Delay in payment is the number one reason small and medium sized businesses in the construction industry are going out of business in Canada.”

The bill was widely supported by industry associations, including the Mechanical Contractors Association of Canada (MCAC) and the Contractors Division of the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI), both of which are members of the National Trade Contractors Coalition of Canada (NTCCC), a group of associations that has been advocating prompt payment legislation.

The Canadian Institute of Plumbing & Heating (CIPH) has also expressed support.

Among other things, Bill S-224 ensures that government institutions 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.

“It’s all about doing the right thing, said MCAC president Del Pawliuk.

The bill is somewhat unusual in that it was introduced in the Senate prior to being approved by the House of Commons, which is the next step.

“This is not a partisan issue. The NDP supports this. The Conservatives support this. And several Liberal MPs have indicated their strong support for this bill. I have every reason to believe that Bill S-224 will pass the House of Commons and quickly. They owe it to Canadian workers,” said Plett. Liberal MP Judy Sgro is expected to sponsor the bill in the Commons.

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