In March, the Manitoba government introduced The Prompt Payment for Construction Act (Bill 28), which would establish timelines for paying contractors and subcontractors in the construction industry.
Other provinces have enacted similar legislation to address concerns about delays in construction industry’s payment chain. The legislation aims to ensure timely payment of construction costs and reduce the number of projects that are slowed down due to payment delays.
While Bill 28 has only received its first reading and is not yet in force, the fact that similar prompt payment legislation has already been enacted in other provinces suggests that this third attempt at introducing prompt payment legislation in Manitoba will receive Royal Assent.
Bill Sets Timelines for Payments to Contractors and Subcontractors
Bill 28 specifies a timely payment structure based on the progress of the work, the achievement of certain milestones and the conclusion of a project. It is intended to provide a remedy for late payments while not affecting existing lien and trust statutory remedies.
In its current form, Bill 28 stipulates payment deadlines for contractors and subcontractors. Owners must pay contractors within 20 days of an invoice being approved.. Contractors must pay subcontractors and suppliers within seven days of receiving payment from the owner, or 27 days after the subcontractor’s invoice is approved.
If a payor (owner or general contractor) defaults on a payment by the prescribed deadline, the general contractor or subcontractor who is owed money may suspend or terminate work after giving written notice. If a payor disputes an invoice, they must give written “notice of non-payment” to the payee and pay the undisputed portion. The dispute may then be submitted to an adjudicator for interim adjudication to facilitate an expeditious resolution.
What does Bill 28 mean for my organization?
Bill 28 could introduce a positive change in the construction industry. General contractors would know they must be paid within 20days of invoice approval, and if they are not paid within that time frame, the legislation will introduce new remedies that do not involve litigation or filing a builders’ lien. Similarly, subcontractors would know they will be paid within 27 days (20 days plus seven days) of the general contractor’s invoice approval.
Organizations should review their current processes for invoicing and making payments to determine what impact Bill 28 would have on their day-to-day functioning and ensure they are capable of complying with the legislation if it is enacted.
A complete copy of Bill 28 can be accessed here. The status of Bill 28 can be monitored here. To learn more about how Bill 28 could affect your organization, contact a member of our Construction Projects team.