The Prompt Payment in Construction Legislation
Timely payment of accounts involving builders and subtrades in the construction industry is an all too common problem. No one single issue explains this recurrent headache. Fault may lie with the contractors for issues such as poor or delayed work, or unclear invoicing. On the other hand owners are often to blame for unreasonable expectations, deliberate delaying tactics, inadvertence, or unexpected financial shortfalls. When problems arise the solutions are often slow and costly. To address this recurring problem, the Government of British Columbia introduced the Construction Prompt Payment Act (Bill 20, 2025), designed to ensure contractors and subcontractors are paid without unreasonable delay and to create a faster, fairer process for resolving payment disputes.
On April 10, 2025 the government announced that it would be introducing so called “prompt payment” legislation with the goal of ensuring that contractors are paid without unreasonable delay. The legislation would also include processes to ensure simple dispute resolution mechanisms. The government stated that there was extensive industry consultations in the summer and fall of 2024.
The Bill was formally introduced in the Legislature on October 7, 2025, and—if passed—will introduce strict payment timelines, mandatory “proper invoice” requirements, and a new adjudication framework for disputed payments. The proposed bill can be found here. It is important to note that the proposed legislation is not yet law. We do not know if it will be passed, when, or what amend might come out of the legislative process.
This article summarizes key provisions of BC’s Prompt Payment Act, including what qualifies as a proper invoice, when payments must be made to contractors and subtrades, and how the new adjudication system will function in practice.
What Is a “Proper Invoice” Under BC’s Prompt Payment Law?
The legislation recognizes that construction often involves not just an owner and a contractor but also subcontractors. For some projects there will be series of subcontracts. Each subcontractor is assigned a position based on how far removed they are from the owner.
Under S. 5 of the Act, a contractor must give an owner a “proper invoice” monthly unless there is a contractual agreement to a different frequency or on some other basis.
A “proper invoice” is defined in S.7 and includes:
- Name and address of contractor;
- Date;
- The time or milestone to which the invoice applies;
- Identification of the contract or purchase order, that identifies the basis for the work performed or material supplied;
- A description of the work or material provided;
- The amount payable and payment terms;
- How payment is to be made.
Payment Deadlines and Obligations for Owners and Contractors
S. 9 sets out the obligation for prompt payment. An owner must pay a contractor within 28 days of the date of the invoice. For subcontractors, things get a bit tricky. They are to be paid the earlier of 7 days after the contractor receives payment from the owner or the contractor’s “calculated payment date”. The calculated payment date is the sum of 28 and the persons contract position times 7. So for a head contractor, payment to a subcontractor is due 28 plus 1×7 = 35 days. The first subcontractor to a contractor would need to be paid 28 plus 2×7 = 42 days post invoice.
When Can Payment Be Withheld?
The right to NOT pay an invoice is governed by s11. A person can decline to give prompt payment by specifying the amount and reasons for non-payment. Where the non-payment is due to some non-payment higher in the chain, notice of that non payment must be given. As well there must be an undertaking to refer the non payment to adjudication within 21 days. An owner must give notice of non payment within 14 days of the date of an invoice. Contractors must give notice of non payment within the earlier of 7 days of receiving a notice of non payment or the persons calculated payment date.
Holdbacks required under the Builder’s Lien Act continue to apply.
Interest begins to accrue on amounts not paid when due. The interest rate is the higher of a prescribed rate (to be set by Regulation) or the amount specified on the applicable contract.
Adjudication: Resolving Payment Disputes Quickly
Should a dispute arise, a party may refer the matter to adjudication for matters set out in S. 16 including but not limited to failing to give a proper invoice, non-payment, and valuation of services or material. There are also residual grounds that allow adjudication over any dispute if agreed by the parties or if prescribed by regulation.
Notices of adjudication must be given within 90 days of the occurrence of various events which are specified in S. 19. An adjudication may proceed even if there is a parallel legal proceeding or arbitration. Within five days of appointment of an adjudicator the applicant party must produce the contract and all records to be relied on.
Adjudicators can be appointed by mutual consent or by the Adjudication authority. Adjudicators cannot be named under the contract in advance. Fees are split between the parties equally.
The adjudicator is given broad powers and discretion to control how the adjudication is to proceed. The adjudicator must give written reasons within 30 days of receipt of records. The determination is binding on the parties unless “displaced” by a Court or arbitration. Costs, including arbitrators fees, may be ordered but only if if a party acted in a manner that is frivolous, vexatious, an abuse of process, or other than in good faith. This is narrower than Court proceedings where costs are normally ordered to the successful party.
An award must be paid within 15 days. If not paid the contractor may suspend further work until paid, together with interest and costs incurred as a result of the suspension of work. The successful party may file the adjudication in court where is will be given the force and effect of a judgment of the Supreme Court.
Practical Implications and Concerns
A summary process that encourages speedy resolution of disputes is to be encouraged, particularly if the parties are in an ongoing relationship. Whether the proposed legislation actually meets that goal is a bigger question.
Even a brief review of the legislation is enough to see that that the procedure to enforce an unpaid invoice is not straightforward. Delays are built into the process. An adjudicator has broad powers to make orders that will further complicate and slow the process proposed. Adjudicator’s fees mean that for smaller amounts the process is probably not worthwhile. For larger amounts legal representation will be crucial. For example, if the right supporting documents are not provided to the adjudicator the claim will likely fail. Determining issues like what is a proper invoice or what the calculated payment date is will be difficult in some cases and impossible in others. A subtrade may not even know how far removed they are from the head contract making the calculation of the payment date impossible.
There seems to be little in the way of timely enforcement of an adjudicator’s ruling. The legislation gives the contractor the right to stop working if not paid as ordered by the adjudicator. I suggest that is likely to have happened regardless of any adjudication. Worse, given that the legislation provides that the contractor may stop working after giving an invoice, not being paid and finally getting an adjudication award, that would seem to imply that until then the contractor is not entitled to suspend work, thereby possibly throwing good money after bad. Ultimately a ruling can be filed in Court and the enforcement processes to enforce a judgment can be used. However doing so will take even more time, money, and in most cases require legal assistance.
Conclusion
Whenever quick and easy processes are created to replace the role of the Court there is always the risk that the truth seeking process will be subverted for the need for simplicity and speed. It remains to be seen if this legislation is helpful in many situations. The steps required make using this process unattractive for modest claims of a few thousand dollars. For very large claims, I suspect that parties will still prefer to litigate or arbitrate. Certainly there is nothing here that suggests a contractor should forego the right to file a lien where that is an option. Regulations still to be issued will likely be important determinants of the effectiveness of the legislation, assuming it is passed.
The proposed legislation is something that all owners, contractors, and subcontractors will need to be aware of if passed. In some situations it could be helpful to anyone involved in a building contract. Good record keeping will be essential given the tight timelines involved. At least until the procedure becomes streamlined, lawyers will likely be involved in many of these claims.
If you have any questions regarding Construction Law, feel free to contact Ron Nairne.