Prompt Payment Under Ontario’s Construction Act - What You Need to Know

Ontario’s prompt payment rules were designed to keep money moving on construction projects and reduce payment delays. Under the Construction Act, once a contractor gives an owner a proper invoice, the owner must either pay within 28 days or deliver a notice of non‑payment within 14 days explaining what is being disputed and why.

If you regularly work on construction projects in Ontario, understanding these deadlines is key to protecting your cash flow and avoiding disputes that could later require a lien or litigation.

What is a “proper invoice”?

A proper invoice is the starting point for the prompt payment clock. If the invoice does not meet the legal requirements, the payment deadlines may not start running at all

A proper invoice must clearly set out:

• The amount claimed.

• The work or materials invoiced.

• The period to which the invoice relates.

• Any amounts being withheld or disputed.

  
  

For contractors and subcontractors unsure how to draft an enforceable invoice, it may help to see our guide: Common Construction Lien Filing Mistakes, since many of those issues start with unclear or incomplete invoices.

Payment deadlines under the Construction Act

Under the Construction Act, once an owner receives a proper invoice:

• The owner must either pay within 28 days, or

• Serve a notice of non‑payment within 14 days stating what is being disputed and why.

If the owner fails to pay and does not deliver a valid notice of non‑payment on time, the owner is generally required to pay the invoice amount. In many cases, interest will also accrue on amounts that remain unpaid when due, which can add up quickly on larger projects.

Owners and contractors who want to track these countdowns more easily can use our: Lien Deadline Calculator, which, while built for lien deadlines, can also help you keep track of key payment milestones.

How payment flows down the chain

Prompt payment does not stop at the owner–contractor level. The Construction Act creates a cascading payment model:

• Contractors must generally pay subcontractors within 7 days of receiving payment from the owner.

• Sub‑subcontractors and suppliers are subject to similar obligations down the chain.

  
  

This means payment delays at the top of the pyramid can quickly ripple down to trade contractors and suppliers. If you are a subcontractor or supplier wondering how to protect your right to payment, our post on Getting Paid as a Contractor or Subcontractor explains how liens and payment‑protection tools work at each tier.

Disputes and adjudication

If there is a payment dispute, Ontario’s adjudication system gives parties a faster way to resolve issues during the life of the project. Adjudication is designed to avoid the long delays and high costs of waiting for a full court process.

Adjudication is closely tied to the prompt payment regime; if a party believes an invoice has not been paid on time or a notice of non‑payment is invalid, they can often refer the issue to an adjudicator for a quicker, binding decision.

Practical tips for contractors and subcontractors

For contractors and subcontractors, the key lessons are:

• Issue a proper invoice in writing.

• Track the 28‑day and 14‑day deadlines carefully.

• Take prompt action if you receive a notice of non‑payment and believe it is invalid or incorrect.

If you are unsure whether an invoice or notice of non‑payment is properly drafted, or whether your payment rights are at risk, consider speaking with a construction‑law specialist.

Ready to protect your payment rights?

Prompt payment is one of the most important safeguards in Ontario construction law, but only if you understand the deadlines and documents that trigger them. If you want help reviewing your contracts, invoices, or payment history, or if you are already facing a late payment situation, contact Lien Master to discuss how prompt payment, liens, and adjudication can work together to protect your bottom line on your next project.