Continuing our blog series about Ontario’s new construction rules, we’re here to summarize some key concepts that affect when contractors get paid, and how payment problems are sorted out.
Here’s what you need to know, simplified.
What Is Prompt Payment?
Prompt payment means there are now clear deadlines for payment on construction projects. The goal is to make sure everyone on a construction project, from contractors, subcontractors, suppliers, designers to engineers, get paid promptly and fairly. For instance:
- Owners must pay contractors within 28 days after getting a “proper invoice” – more on the “proper invoice” below.
- Contractors must pay their subcontractors within 7 days after they get paid by the owner.
This helps keep money moving during the project and seeks to avoid construction delays caused by payment delays and disputes.
What Is a Proper Invoice?
To issue a “proper invoice” for a construction project under Ontario’s Construction Act, an invoice must be issued including:
- The amount payable;
- A description of the work or materials supplied, including the time in which work or materials were supplied;
- The date of the invoice;
- Information on the authorizing document for the services (i.e. construction contract, prime contract, sub-contract, etc.); and
- The contractor’s name and address, including the person and co-ordinates to direct payment to.
Non Payment of a Proper Invoice – Prompt Payment Adjudication
Prompt payment adjudication is a new and fast way to solve payment problems. If someone isn’t paid on time, they can commence a payment adjudication resolve the dispute. The process is mandatory under the Act, decisions are enforceable, and are made through an alternative to the Courts by a public authority appointed by the Government of Ontario.
The Ontario Dispute Adjudication for Construction Contracts (ODACC) the public authority that is responsible for adjudicating construction disputes.
The ODACC process is much faster than going to court and the built-in deadlines for the dispute adjudication requires matters to resolve in a matter of weeks, instead of years.
When Can You Use Adjudication?
While fast and convenient, parties have to be mindful that they only have a limited time to use this process after a payment problem starts. It’s important to act quickly because access to adjudication expires after the first few months after the construction is completed.
Failing to act quickly enough results in lost access to adjudication and going to Court might be the only option left.
What Issues Can Be Decided by Adjudication?
Adjudication can be used for most payment and contract disputes, including:
- Whether payment is owed
- Disagreements about the value of work or services
- Disputes about changes to the contract
- How much holdback money should be released
- Any issues that the parties agree to be adjudicated
Who Pays for Adjudication?
Usually, both sides split the cost of the adjudicator (the expert who decides the case). In some extraordinary cases, the adjudicator may decide one side should pay more.
Bottom Line
The 2026 changes to Ontario’s Construction Act are meant to keep construction projects moving and ensure everyone gets paid on time. If you’re working on a project, learn these new rules about prompt payment, invoices, and dispute resolution. Knowing the rules will help you protect your rights and avoid payment delays.
More information? We’re here to help – litigation@wardlegal.ca This WARDS LAWYERS PC publication is for general information only. It is not legal advice, nor is it intended to be. Specific or more information may be necessary before advice could be provided for your particular circumstances.