New Alberta legislation forces owners to pay contractors on time
Prompt Payment and Construction Lien Act comes into
effect after years of advocacy
After years of advocacy by the construction industry, Alberta now has legislation in effect to help contractors and subcontractors get paid on time.
The province's new Prompt Payment and Construction Lien Act is intended to address ballooning wait times for payment on construction contracts, said Service Alberta Minister Nate Glubish.
Over the years, Glubish said the average time frame for payment on a contract has grown from 40 days to 75 days. At times, contractors and subcontractors have had to wait more than three months to get paid for their work, Glubish said.
"What we've had here in Alberta up until now was the Wild West," Glubish told CBC Calgary. "Now that we have a clear set of rules, everyone's going to play by the same rules, and I'm cautiously optimistic that we will be in a very good position going forward."
The new legislation, which was formerly known as the Builders' Lien Act, requires owners to pay contractors within 28 days of receiving an invoice.
Once paid, contractors in turn have seven days to pay their subcontractors.
If things go sideways, the act also outlines an adjudication process for those in the industry as a more accessible and less expensive alternative to going to court.
Terry Milot, chair of the Alberta Trade Contractors Council, sees the changes as a good step. His group has been pushing for prompt payment legislation since 2014.
"When contractors know that they're going to get paid on time, then they can truly plan their company, their work," said Milot. "They can hire more individuals, they can start apprenticeships, if they know they've got the stability of when they're going to get paid."
'Don't have cash reserves' to forgo payment
Calgary Construction Association president Bill Black also applauded the new rules. Black said sluggish payments are a major problem for trade contractors who, despite working on large projects, are often quite small businesses themselves.
"They don't have huge cash reserves … they don't necessarily have an in-house department that can go and pursue unpaid bills, and they certainly may not have the resources to resort to legal means if things got really bad," said Black, who is also the association's chief operations officer.
While Black believes the new act will help, he said it isn't a "silver bullet." Both he and Milot pointed out the province's legislation doesn't apply to provincial government projects.
"I think that is a tremendous gap and a bit of a contradiction," said Black.
Glubish said provincial contracts are all already covered under the Public Works Act.
In a statement, a spokesperson for the minister of infrastructure said the province has a proven track record when it comes to paying invoices within 30 days.
"We continue to work to make sure Albertans receive compensation for their work quickly and efficiently," the spokesperson said.
The Prompt Payment and Construction Lien Act applies to all private construction contracts in Alberta that were created on or after Aug. 29, 2022.
Existing projects that will continue for more than two years have until Aug. 29, 2024, to become compliant with the new rules.
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