New Saskatchewan Payment Legislation: What Builders Need to Know
Recent legislative developments in Saskatchewan have sparked important discussions within the construction industry regarding prompt payment practices. While the new amendment to the Builders Lien Act seeks to ensure timely payment for contractors and subcontractors, it has raised concerns about its exclusion of the residential sector—a sector crucial to many tradespeople. Here’s why this story matters for builders, contractors, and developers in Saskatchewan.
What’s Happening?
The Saskatchewan Construction Association (SCA) has criticized the provincial government for planning to exempt the residential and mining sectors from the new prompt payment legislation. Designed to expedite payments across the construction industry, the amendment establishes timelines for payments that many argue are essential for maintaining healthy cash flow in construction operations.
Justice Minister Don Morgan acknowledged the intention to exempt home builders early in the legislative process, citing concerns over its applicability to that market. This has provoked backlash from industry leaders like SCA President Mark Cooper, who argues that excluding sectors undercuts the effectiveness of the legislation. “Speeding laws don’t apply to just people driving green cars, right?” Cooper stated, emphasizing that the law should be uniformly applied.
Why the Exemption Matters
The push for prompt payment legislation stems from persistent issues related to delayed payments that can significantly impact the livelihood of subcontractors and tradespeople. Currently, it’s not uncommon for contractors to wait 60 to 90 days for payments—practices that can place a considerable financial strain on smaller contractors, who may lack financial buffers.
Jason Merkl’s case illustrates the fallout from the status quo: despite having paid his general contractor in full, he faced substantial liens placed on his property by unpaid subcontractors. This scenario highlights the urgent need for effective payment legislation to protect those most vulnerable to cash flow issues—namely, subcontractors working within the residential sector.
The Existing Landscape
As it stands, the construction payment process in Saskatchewan lacks regulation, leaving many tradespeople at a disadvantage. If the prompt payment law is enacted as anticipated, it will impose specific payment timelines: project owners must pay general contractors within 28 days, and general contractors must in turn pay subcontractors within seven days. Though this provides a structured framework for commercial projects, the exclusion of residential projects may dilute its intended benefits.
Cooper expresses concern that unique consultation processes around this legislation have left out vital voices from the residential building sector. Consequently, tensions are brewing between different industry associations, particularly as groups like the Regina and Saskatoon home builders associations voiced dissatisfaction with terms in the new regulations, including proposed payment timelines.
What This Means for Your Business
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Stay Informed on Legislative Changes: Keep abreast of any updates regarding the prompt payment legislation and its regulations. Being knowledgeable will allow you to anticipate changes that may impact your cash flow and operational practices.
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Evaluate Your Contracts: If you work in the residential sector, consider reviewing and potentially updating your contracts to be more in line with the anticipated payments structure to ensure you safeguard your financial interests.
- Engage in Dialogue: Participate in discussions within your professional network or associations to voice concerns and advocate for inclusive legislation that protects all sectors of the construction industry.
Conclusion: Opportunities and Challenges Ahead
As the Saskatchewan government prepares to finalize the prompt payment legislation, construction companies should remain vigilant. While the potential for increased financial stability in the commercial sector is promising, the challenges posed by exemptions could undermine the positive impacts of the law. For businesses in the construction sector, maintaining open channels of communication with industry groups and preparing for regulatory changes will be key to navigating this evolving landscape successfully.
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Published: 2020-07-14 02:00:00
Original Article: Read it here
