Lesson 1: Understanding Ontario’s Prompt Payment Rules for Contractors
Introduction
Prompt payment laws are crucial in construction projects.
In Ontario, the Construction Act now enforces strict timelines for payments between owners, contractors, and subcontractors.
Understanding these rules protects your business, improves cash flow, and strengthens project relationships.
At EcoClade Construction, we believe in transparency and fairness, and we ensure every client and subcontractor benefits from the prompt payment framework.
What Is Prompt Payment?
Prompt Payment means that once a contractor submits a “proper invoice” to the owner, the owner must pay it within a set number of days.
It guarantees timely cash flow throughout the construction chain:
- Owner → General Contractor → Subcontractors → Suppliers
Ontario’s Construction Act introduced prompt payment rules on October 1, 2019 to solve problems of delayed payments across the industry.
Key Prompt Payment Timelines in Ontario
| Step | Timeline | Details |
|---|---|---|
| Contractor issues proper invoice to Owner | Day 0 | Start of the clock |
| Owner must pay Contractor | Within 28 days | From date of proper invoice |
| Contractor must pay Subcontractors | Within 7 days | After receiving payment from Owner |
| Subcontractor must pay Suppliers/Sub-Subcontractors | Within 7 days | After receiving payment from Contractor |
Important:
If the Owner disputes part of the invoice, they must send a Notice of Non-Payment within 14 days.
What Is a “Proper Invoice”?
A Proper Invoice must include:
- Contractor’s name and address
- Date of the invoice
- Description of work or materials
- Amount payable
- Payment terms
- Any other required project details (as per contract)
Without a proper invoice, payment timelines do not start!
What Is Prompt Payment?
Prompt payment refers to mandatory deadlines for making payments after receiving a proper invoice.
The rules were introduced by amendments to Ontario’s Construction Act effective October 1, 2019.
According to the Construction Act, Section 6.3(1):
“The owner shall make payment of the amount payable under a proper invoice no later than 28 days after receipt of the proper invoice.”
These timelines ensure that contractors and subcontractors get paid faster and avoid cash flow crises during projects.
What Happens If Payment Is Delayed?
- Interest is automatically applied to overdue amounts.
- You can start an adjudication process (a fast, legal method to settle disputes).
- Contractors and subcontractors can file a lien to protect their right to payment.
Prompt payment aims to avoid expensive litigation and keep projects moving.
Example Scenario
EcoClade Construction finishes a major phase of a commercial building project.
- June 1: We send a proper invoice to the project owner.
- June 29: (28 days) Deadline for the owner to pay.
- July 6: (7 days after payment) EcoClade must pay our subcontractors.
If any payment is missed, EcoClade or our subcontractors can trigger adjudication immediately.
Why Prompt Payment Matters
✔️ Keeps contractors and subcontractors financially healthy
✔️ Reduces project delays caused by cash flow issues
✔️ Creates fairer, more transparent business relationships
✔️ Protects smaller subcontractors from financial hardship
✔️ Increases trust between all construction parties
These timelines ensure that contractors and subcontractors get paid faster and avoid cash flow crises during projects.
Conclusion
Understanding Ontario’s prompt payment laws is essential for every construction company, owner, and subcontractor.
At EcoClade Construction, we strictly follow the Construction Act’s payment rules to ensure fairness, reliability, and trust at every level of our projects.
Supporting Legal Sections — Ontario Construction Act
The prompt payment rules in this blog are supported by the following sections of the Ontario Construction Act (R.S.O. 1990, c. C.30):
| Section | Title | Purpose |
|---|---|---|
| Section 6.1 | Proper Invoices | Defines what a proper invoice must include |
| Section 6.3 | Payment of Contractor | Owner must pay the contractor within 28 days |
| Section 6.4 | Notice of Non-Payment | Owner must notify within 14 days if disputing payment |
| Section 6.5 | Payment to Subcontractor | Contractor must pay subcontractors within 7 days of getting paid |
| Section 13.1–13.11 | Adjudication Process | Resolves disputes about payments and work during the project |
You can review the full legislation here: Ontario Construction Act – e-Laws
Need Reliable, Prompt Construction Services?
EcoClade Construction ensures timely payments, full transparency, and project success, every time.
👉 Contact Us Today to start building with confidence.
Email: Info@ecoclade.ca