The Manitoba government is introducing new legislation, the prompt payment for construction act, which would establish payment obligations to contractors and subcontractors in the construction industry to alleviate payment delays.
“The optimal window for major construction is often limited by seasonal challenges, so ensuring greater efficiency in project remuneration is important to the flow of work performed, benefitting contractors and clients,” said Labour, Consumer Protection and Government Services Minister Reg Helwer. “This legislation will specify a timely payment structure based on the progress of the work, the achievement of certain project milestones and project conclusion.”
The minister noted Bill 28 has been developed in response to concerns expressed by construction industry stakeholders, including the Manitoba Prompt Payment Coalition (MBPP) and its member associations, that delayed payments throughout the payment chain are problematic. While existing laws help secure claimants’ rights to payments and ensure payments are kept within the construction pyramid and flow appropriately, there is currently no remedy for a late payment.
“We hope to see Bill 28 move through the legislature quickly to join the growing number of prompt payment regimes enacted across Canada,” said Ramona Coey, co-chair, MBPP. “Delinquent payments hurt the province’s economy and jeopardize employment and financial security for thousands of workers. We look forward to the additional economic stability prompt payment legislation will provide while supporting Manitoba businesses and families.”
The legislation would provide a remedy for late payments while not affecting existing lien and trust statutory remedies, the minister added, noting it would also allow the provincial government to provide a remedy in a timely fashion instead of assuming the onerous task of amending the existing Builders Lien Act.
“The board of the Construction Association of Rural Manitoba (CARM) and its members fully support and appreciate the efforts made by our provincial government for progressing Bill 28, the prompt payment for construction act, to this stage,” said Shawn Wood, executive director, CARM. “This is the stepping stone needed to allow additional protection for our small- and medium-sized construction enterprises to operate, and is critical for cash flow planning. Our province and industry need to protect our business entrepreneurs who take on so much risk for the benefit of our communities. Thank you for making this a priority at a time when there are so many.”
While delayed payments are not unique to the construction industry, the minister noted the construction industry is especially vulnerable to negative impacts of delayed payments due to the sector’s tiered payment structure. At each tier of the construction contract chain, contractors and subcontractors must finance their payrolls, materials and other expenses before they are paid. Delayed payments at multiple tiers can compound severe financial consequences for subcontractors, the minister added.
“Most Manitoba construction contractors are small- and medium-sized companies with limited cash flow and limited access to credit, so delayed payments for construction work they perform limits their ability to invest in their businesses and hire apprentices,” said Helwer. “This legislation will enforce timely payments for construction services rendered.”