The Federal cabinet implemented long-promised regulations ensuring prompt payment to small subcontractors involved in public works projects.According to Blacklock’s Reporter, these reforms were implemented after six years of review and evidence that unpaid tradespeople often faced blacklisting when they raised complaints.“Without the regime established by the Act and regulations, businesses would be required to engage legal counsel and await a decision by the courts, ultimately resulting in a long and expensive process,” the Department of Public Works wrote in a Regulatory Impact Analysis Statement. “The regulations will produce a greater benefit to small businesses by speeding up payments and providing an effective method of resolving payment disputes.”Of 382,437 contractors nationwide the majority, 61%, have four employees or less, said Analysis. “Regulations are designed to support the construction industry, which is made up predominantly of small businesses,” it said.In 2019, Parliament approved the Federal Prompt Payment for Construction Work Act, which required the prompt settlement of all subcontractors' invoices on public works projects within 35 days.Unpaid subcontractors could stop work without the risk of being removed from bidders lists. They were also granted the authority to charge interest on outstanding debts and seek resolution through an adjudicator, whose decisions could be enforced through a court order.The Act followed a private Bill S-224 An Act Respecting Payments Under Construction Contracts, which was approved by the Senate in 2017 but lapsed in the House of Commons.During Senate Banking committee hearings, witnesses testified it was common for small contractors to endure long waits for payment or risk being blacklisted by federal authorities if they raised complaints.“There are cases,” testified Gerald Chipeur, partner with Miller Thomson LLP of Calgary. “I can assure you it exists. It’s a real fear and in fact, it has happened people have suffered because they challenged a deputy minister.”Chipeur did not specify individual cases, as he cited solicitor-client privilege. However, he mentioned being aware of contractors who had encountered retaliation for attempting to collect overdue payments.“No one has ever said the federal government doesn’t have a right to pass a law with respect to its own property,” said Chipeur.Senator Donald Plett (MB), Opposition Leader in the Senate and a former plumbing contractor, earlier said he knew of contractors “who waited 180 days, 220 days, four years and even up to seven years” to settle accounts for work completed and certified. “The large general contractor is sitting there in front of me as a plumbing contractor and says, ‘You want this job, Don? Sign this contract,’ and that’s what they do,” said Plett.“The big guy manipulates the little guy, it’s that simple. They cannot stare down the big contractor because they don’t want to be struck from the bidders’ list.”In a 2017 debate, Senator Scott Tannas (AB) pointed out that general contractors were against the legislation.“We had men in tears here talking about this problem,” said Tannas. “You have a giant contractor and a bunch of small contractors and the balance of power says, ‘Would you like this contract? I’ll pay you when I feel like it.’”
The Federal cabinet implemented long-promised regulations ensuring prompt payment to small subcontractors involved in public works projects.According to Blacklock’s Reporter, these reforms were implemented after six years of review and evidence that unpaid tradespeople often faced blacklisting when they raised complaints.“Without the regime established by the Act and regulations, businesses would be required to engage legal counsel and await a decision by the courts, ultimately resulting in a long and expensive process,” the Department of Public Works wrote in a Regulatory Impact Analysis Statement. “The regulations will produce a greater benefit to small businesses by speeding up payments and providing an effective method of resolving payment disputes.”Of 382,437 contractors nationwide the majority, 61%, have four employees or less, said Analysis. “Regulations are designed to support the construction industry, which is made up predominantly of small businesses,” it said.In 2019, Parliament approved the Federal Prompt Payment for Construction Work Act, which required the prompt settlement of all subcontractors' invoices on public works projects within 35 days.Unpaid subcontractors could stop work without the risk of being removed from bidders lists. They were also granted the authority to charge interest on outstanding debts and seek resolution through an adjudicator, whose decisions could be enforced through a court order.The Act followed a private Bill S-224 An Act Respecting Payments Under Construction Contracts, which was approved by the Senate in 2017 but lapsed in the House of Commons.During Senate Banking committee hearings, witnesses testified it was common for small contractors to endure long waits for payment or risk being blacklisted by federal authorities if they raised complaints.“There are cases,” testified Gerald Chipeur, partner with Miller Thomson LLP of Calgary. “I can assure you it exists. It’s a real fear and in fact, it has happened people have suffered because they challenged a deputy minister.”Chipeur did not specify individual cases, as he cited solicitor-client privilege. However, he mentioned being aware of contractors who had encountered retaliation for attempting to collect overdue payments.“No one has ever said the federal government doesn’t have a right to pass a law with respect to its own property,” said Chipeur.Senator Donald Plett (MB), Opposition Leader in the Senate and a former plumbing contractor, earlier said he knew of contractors “who waited 180 days, 220 days, four years and even up to seven years” to settle accounts for work completed and certified. “The large general contractor is sitting there in front of me as a plumbing contractor and says, ‘You want this job, Don? Sign this contract,’ and that’s what they do,” said Plett.“The big guy manipulates the little guy, it’s that simple. They cannot stare down the big contractor because they don’t want to be struck from the bidders’ list.”In a 2017 debate, Senator Scott Tannas (AB) pointed out that general contractors were against the legislation.“We had men in tears here talking about this problem,” said Tannas. “You have a giant contractor and a bunch of small contractors and the balance of power says, ‘Would you like this contract? I’ll pay you when I feel like it.’”
