COCA Urges Change to Federal Prompt Payment Act

EIN 22 CS COCA bill97 400

May 22, 2019

As reported in the Council of Ontario Construction Associations’ May newsletter, the organization has advised the federal government that a proposed prompt payment amendment to the Construction Act is flawed. The amendment involves “pay when paid” clauses, and appears in Bill C97, the federal government’s budget bill.

In a submission to the Standing Committee on Finance, which is reviewing C97, COCA’s Prompt Payment Task Force Chair, Ted Dreyer wrote that “COCA supports the pay when paid principle. The problem with the contractual pay when paid clauses that are now commonplace is that they tend to delay the resolution of the disputes that disrupt the flow of funds. Since a contractor with a pay when paid clause in its subcontract has no obligation to pay its subcontractors, the contractor is not particularly motivated to resolve its underlying dispute with the owner that is delaying payment. Since the subcontractor does not have privity of contract with the owner, it is powerless to bring the dispute between the contractor and owner that is delaying payment to a head. Contractual pay when paid clauses are one of the main reasons for the industry wide trend of slow payment.

Dreyer’s submission notes that Ontario’s Construction Act takes a different approach, combining the pay when paid principle with a mechanism to ensure that disputes that disrupt the flow of funds are promptly resolved: 

  • Section 6.5(5)(a)(iii) requires a general contractor serving a notice of non-payment upon a subcontractor to give an undertaking to refer its dispute with the owner to adjudication within 21 days
  • Subsection 6.6(6)(a)(iii) imposes the same obligation on subcontractors who deliver notices of non-payment to their sub-subcontractors.

“The flaw in the proposed federal amendment,” says the COCA submission, “is that it adopts the pay when paid principle without making it conditional upon the timely resolution of disputes. There is no equivalent to subsections 6.5(5)(a)(iii) and 6.6(6)(a)(iii) in the proposed Act. A general contractor who serves a notice of non-payment to its subcontractor has no obligation to refer its dispute with the federal government to adjudication… A general contractor served with a notice of adjudication by a subcontractor will simply point to subsection 10(3) and say that it has no obligation to pay the subcontractor because it was not paid by the government.”

The submission agrees that prompt payment legislation is needed to make sure that contractors and subcontractors are paid on time for their work, but “unless the proposed act is amended, it will make the problem that the government is trying to solve even worse.”

Source

Related Articles


Latest Articles

  • Mastering Advanced Bidding Strategies in Electrical Contracting

    Mastering Advanced Bidding Strategies in Electrical Contracting

    December 1, 2025 By Melvin Newman, Patabid CEO & Ian Paterson, Patabid Client Success Manager and journeyman electrician with 30+ years of experience In the competitive world of electrical contracting, knowing how to estimate electrical jobs effectively can make the difference between winning profitable projects and watching opportunities slip away. For electrical contractors, mastering advanced… Read More…

  • Why Choosing the Right USB Charger Matters

    Why Choosing the Right USB Charger Matters

    December 1, 2025 Not all USB Chargers are Created Equal As the number of devices used daily increases, so does the need for a charger that delivers safe speeds and maximum charging potential. A high-quality USB charger delivers efficient charging without risk of damage, but the sea of USB chargers and outlets available on online… Read More…

  • How Homebuilding Incentives Can Pay Off for Cities, Homeowners and Local Economies: New Concordia Study

    December 1, 2025 A new study from Concordia University’s John Molson School of Business finds that improving housing affordability isn’t just a social good — it’s an economic growth opportunity. Build and Benefit: How Homebuilding Incentives Can Pay Off for Cities, Homeowners and Local Economies reframes housing policy reform as a sustainable fiscal growth strategy, demonstrating meaningful… Read More…

  • The Importance of HazLoc LED Lighting for Safe Workplaces

    The Importance of HazLoc LED Lighting for Safe Workplaces

    November 30, 2025 By CSC LED In Canada’s industrial lighting sector, one of the most critical yet often overlooked safety components is lighting designed specifically for hazardous locations, otherwise known as HazLoc (hazardous location) LED lighting. For workplaces dealing with flammable gases, vapours, combustible dust, or ignitable fibres, standard LED fixtures simply don’t cut it…. Read More…


Changing Scene

  • Skills Ontario Celebrates the Expansion of Trades & Tech Truck Program

    Skills Ontario Celebrates the Expansion of Trades & Tech Truck Program

    December 1, 2025 Skills Ontario is expanding its fleet of Trades & Tech mobile unit thanks to support from the Ontario Government. The government announced this morning it’s investment in Skills Ontario to expand experiential opportunities for Ontario’s future workforce.    “Ontario’s future relies on a strong, skilled workforce,” said David Piccini, Minister of Labour, Immigration,… Read More…

  • BC’s Canadian Mutual Recognition Agreement aims to Facilitate Interprovincial Trade

    BC’s Canadian Mutual Recognition Agreement aims to Facilitate Interprovincial Trade

    December 1, 2025 A new agreement signed by all provinces, territories, and the federal government will break down interprovincial trade barriers, making it easier for B.C. businesses to sell products across Canada, and for people to buy Canadian-made goods.   “When threats to Canada’s economic security land at our doorstep, we’re at our best when we work together as… Read More…

  • EB Horsman’s Commitment to Giving Back – A Year in Recap 2024/2025

    EB Horsman’s Commitment to Giving Back – A Year in Recap 2024/2025

    December 1, 2025 EB Horsman Cares is the company’s community engagement program that supports local children’s hospitals, communities, and non-profit initiatives with donations, fundraising, volunteering, and scholarships.  Since 1993, BC Children’s Hospital has been the primary recipient of EB Horsman & Son’s fundraising. However, as EB Horsman has continued to expand its businesses across Western… Read More…

  • Build Canada Homes Introduces Policy Framework to Guide its Investments in Affordable Housing

    Build Canada Homes Introduces Policy Framework to Guide its Investments in Affordable Housing

    December 1, 2025 Central to that work, the Government of Canada is stepping up with the recently launched Build Canada Homes, new federal agency with a mandate to scale up the supply of affordable housing across Canada. Build Canada Homes will also help fight homelessness by building transitional and supportive housing – working with provinces,… Read More…