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Changes to the Construction Act - Part 1 - Prompt Payment

The new prompt payment provisions create a payment framework that ensures that contractors, subcontractors and workers are paid on time. 

Prompt payment is mandatory. Under the new framework, contractors are required to submit invoices to the owner on a monthly basis, unless owners and contractors agree on a different deadline by which to submit invoices and it is clearly stated in the contract. Otherwise, all contracts will be deemed to have monthly progress payments.

Owners have 28 days to pay general contractors after they receive an invoice. General contractors and subcontractors must then pay their subcontractors within 7 days after the funds are received. Holdback requirements will continue to apply to the new prompt payment framework.

There are some exceptions to the prompt payment deadlines, including where there is a dispute about the amount that is owed or the quality of work. In these cases, owners can deliver a notice of non-payment to the contractor within 14 days of receiving the invoice from the contractor. Similarly, contractors and subcontractors can deliver a notice of non-payment to their subcontractors within 7 days.

Further information about the prompt payment framework can be found at Part I.1 of the Construction Act