> Prompt Payment Legislation
Prompt Payment Legislation
One of the biggest challenges facing contractors in the construction industry is the unnecessary delay in payment that happens on many jobs. Most projects are, by nature, very hierarchical. There is an owner, who will have an agreement with a primary contractor or construction manager. That organization will in turn hire sub-contractors (plumbing, electrical, carpentry, etc) for specific aspects of the build. Those sub-contractors could sub out additional work to specialty contractors, as well.
The structure for getting paid for work that has been complete and invoiced is similar. The sub-contractor will submit an invoice, and then in turn often has to wait for the primary contractor/project manager to get paid from the owner. A recent poll of our members found that electrical contractors are paid within 30 days of submitting an invoice less than half the time.
This has an enormous effect on contractors, especially smaller companies, who must make payroll every two weeks and cover their own expenses at the end of every month. The uncertainty of when contractors will be paid for work that has been completed has several cascading, negative impacts. First, it forces contractors to increase their bid prices to build in the element of risk – and will discourage some contractors from bidding altogether if the proposed payment terms in the contract are problematic. Delayed payment also limits contractors’ ability to grow their business, or hire new apprentices or journey persons.
We believe British Columbia needs to catch up to other Canadian provinces like Ontario and jurisdictions like Australia, the UK and most states in the U.S., which already have similar legislation in place. The Ontario provincial government passed legislation in 2018 that includes prompt payment requirement, providing a template for B.C. to quickly move forward to resolve this ongoing issue in the construction industry.
> Progress and Updates
Progress and Updates
Summer 2023: The BC provincial government announces plans for a construction sector wide consultation on prompt payment legislation.
January 24, 2022: The provincial government established an industry working group as the next step toward prompt payment legislation. Read our media release here.
- Read more on this update in the following articles:
- Electrical Business Magazine, Prompt payment legislation takes important step forward in BC; working group established
- Journal of Commerce, Working group formed to spur B.C. prompt payment
- Construction Business, Industry group formed to push prompt payment
December 15, 2021: Journal of Commerce published a Q&A with ECABC President, Deborah Cahill, Q&A: B.C. electrical contractors look to ‘keep up the pressure’ on prompt payment
December 3, 2021: Electrical Business Magazine published an article featuring an interview with ECABC President, Deborah Cahill, Will BC’s prompt payment struggle see any movement?
November 17, 2021: The Select Standing Committee on Finance included the prioritization of prompt payment legislation in their list of recommendations to the Executive Council in their Report on the Budget 2022 Consultation.
- Read ECABC’s November 18, 2021 update to members
October 28 and November 1, 2021: In coordination with the BC Construction Association and the Mechanical Contractors Association of BC, ECABC held five town halls on prompt payment legislation to bring the voices of electrical contractors and other sub-contractors to the Government of British Columbia. Sub-contractors and ECABC members in attendance shared their support for prompt payment with a representative from the BC Attorney General’s office.
- View the PowerPoint slides from the October 28th town hall
- Read more in the Journal of Commerce article, B.C. prompt payment laws could be closer than you think
March 2020: ECABC met with a group of BC NDP Members of the Legislative Assembly to discuss the urgent need for prompt payment legislation.
November 19, 2019: ECABC met with the BC Liberal caucus to brief them on the need for prompt payment legislation.
August 7, 2019: The B.C. government’s Select Standing Committee on Finance and Government Services recommended the creation of prompt payment legislation. The report stated, as recommendation 36: “Work with stakeholders to implement prompt payment legislation for the construction industry, including ensuring harmonization with prompt payment initiatives nationally.”
- Read more in the Journal of Commerce article, Committee recommends B.C. pass prompt payment laws
June 21, 2019: Canada’s first federal prompt payment law, The Prompt Payment for Construction Work Act, became law.
July 2018: The Government of Ontario passed amendments to the Construction Act. The new prompt payment and adjudication processes came into effect on October 1, 2019.
May 2018: ECABC met with Attorney General David Eby to formally request the provincial government to move forward with legislation in British Columbia.