Saskatchewan’s move to improve prompt payment is drawing accolades from the head of the provincial construction association.
The province introduced The Builders’ Lien (Prompt Payment) Amendment Act, 2018 recently to establish prompt payment in the province’s construction industry.
The legislation will create a payment process to establish “reasonable timelines for providing payment for construction projects,” states a release from the province.
The legislation will also establish an interim adjudication process that can be used in addition to arbitration and litigation.
“While the Builder’s Lien Act was meant to balance the needs of contractors and their customers, over time it has become apparent there is some room for improvement,” said Saskatchewan Justice Minister and Attorney General Don Morgan in the statement.
“This legislation provides a robust set of timelines to ensure payments are made by owners and developers to contractors, and by contractors to subcontractors, in a timely manner.”
For Saskatchewan Construction Association (SCA) president Mark Cooper, the new legislation is the culmination of years of work pushing the government to adopt new rules.
“The government was receptive right from the start, but we needed to educate them on how widespread the problem was, as well as the impact it had across the industry,” Cooper said.
“We also had to align the interests of the industry on the same page. The process took about two to two-and-a-half years.”
A potential stumbling block, Cooper said, was a leadership change as Premier Scott Moe replaced Brad Wall in early 2018 as head of the ruling Saskatchewan Party, but “we believe we had strong support, both in caucus and leadership.”
The bill, he said, is similar to legislation recently introduced in Ontario and puts owners and developers on a payment cycle where they are required to provide payment within 28 days of receiving an invoice for construction services. Contractors are required to provide payment to subcontractors within seven days of receiving payment from the owner or developer.
Cooper said there may be misconceptions on the nature of payment under the new rules.
“Some people, when they first look at prompt payment assume, ‘I have to pay everyone every 30 days,’ and that’s not what this is. It’s what’s in the contract,” Cooper said.
“If you negotiated a contract that you get paid every 90 days and you submit an invoice on day 90, you get paid 30 days later.
“There’s a legitimate argument that a mandatory 30-day period is excessively restrictive, and that’s why the legislation has built-in selectability,” Cooper added.
If there is a dispute, the legislation also creates a fast-moving adjudication process.
“Within 30 days of filing you have an answer from an adjudicator, which has the effect of a court order. It puts the onus on moving forward, which evens out the scales,” Cooper said.
While the Province of Ontario had a two-year waiting period before implementation, Cooper said Saskatchewan will likely not need as much time to adapt.
“I doubt our waiting period will be that long, but there is some education that has to come into place first,” he said.
The only pushback in the industry to the legislation came from a “handful of developers in the residential sector who waved red flags, but others who raised concerns agreed with us once we educated them on the flexibility of it,” he added.
The legislation requires three readings in the legislature. The third reading will take place during the spring session, after which, if it passes, it will become law.
Cooper was quick to praise other members of the Prompt Payment Saskatchewan coalition of employer groups that pushed for new legislation.
The group is comprised of the SCA, the Mechanical Contractors Association of Saskatchewan, the Saskatchewan Masonry Institute, the Saskatchewan Roofing Contractors Association, the Saskatchewan Association of Architects, the General Contractors Association of Saskatchewan, the Electrical Contractors Association of Saskatchewan and the Alberta and Saskatchewan chapters of the Canadian Institute of Steel Construction.
“Everyone deserves credit for their part in making this possible,” Cooper said.
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