The new Federal Prompt Payment for Construction Work Act came into force on December 9, 2023.
The Act is similar to Alberta's Prompt Payment and Construction Lien Act, in that it establishes a payment regime for construction projects and an adjudication process for disputes.
The Act applies to His Majesty, any service provider, and any contractor or subcontractor that is to perform construction work for the purposes of a construction project located in Canada with respect to federal real property or federal immovables.
Interestingly, the Act allows for the Governor in Council to designate any province that has already enacted similar prompt payment and adjudication legislation.
Alberta has been designated under the regulations. This means that the legislation does not apply to subcontractors and service providers, and certain sections of the Act which do not apply to contractors. However, His Majesty is generally still bound by the Act in Alberta, and the Governor in Council may adapt any provision of the Act to address inconsistency or conflict of laws.
The Act could significantly impact federal construction projects. Any contractors planning to work on federal projects should seek legal advice to ensure they understand the implications of this legislation and their obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.