In construction, cash flow is everything. Contractors and subcontractors pay for labour, materials and equipment long before the money comes in, and slow payment can sink an otherwise healthy business. Ontario’s prompt payment rules were designed to fix that by putting firm deadlines on payment and creating a fast way to resolve disputes. If you work in the Toronto construction industry, understanding these rules can help you get paid faster.
How prompt payment works
The system starts with a “proper invoice.” Once an owner receives a proper invoice from a contractor, the owner generally has 28 days to pay it. If the owner disputes some or all of the amount, it must give a notice of non-payment within 14 days, explaining what it won’t pay and why. Without that notice, the full amount is due.
The obligation then flows down the payment chain. When a contractor is paid, it generally has seven days to pay its subcontractors for their share. Subcontractors in turn have seven days to pay those below them. If an owner doesn’t pay, the contractor has specific options: pay its subcontractors anyway, or give its own notice of non-payment and commit to resolving the dispute through adjudication.
Late payments can also carry interest, which adds to the pressure to pay on time.
What changed with invoices in 2026
Since January 1, 2026, the rules around invoices became even more contractor-friendly. An invoice is now deemed to be a proper invoice unless the owner, within seven days, gives written notice identifying what’s wrong with it and how to fix it. That makes it much harder for an owner to delay payment by arguing about paperwork weeks after the fact.
For contractors, this is a strong reason to make sure every invoice contains the information the Act requires, such as the contractor’s details, the period and description of the work, the amount owed and the payment terms. Clean invoices start the clock immediately.
When payment still doesn’t arrive
If you’re not paid, you have several tools. Adjudication is a fast, binding interim process where a qualified adjudicator decides the payment dispute, usually within weeks rather than years. The decision must generally be paid even if the parties later go to court. In 2026, the types of disputes that can go to adjudication also broadened, and adjudication can generally be started within 90 days after the contract is completed, abandoned or terminated.
You may also have lien rights. A construction lien gives you security against the property, but the deadlines are short, usually 60 days to preserve and a further 90 days to perfect. Our guide on common construction disputes in Toronto explains how liens and adjudication fit together.
Tips to stay on top of payment
Read your contract carefully, especially the invoicing schedule and any approval process. Track every deadline from the date the owner receives your invoice. Keep good records of work performed and communications. And if a notice of non-payment arrives, don’t ignore it; it often starts its own set of deadlines.
Talk to a construction lawyer
The prompt payment rules are powerful, but only if you use them on time. Our Toronto construction lawyers help contractors and subcontractors prepare compliant invoices, respond to non-payment and bring adjudications. Contractors negotiating with owners should also read about preserving warranty rights while settling, and you can learn more about our construction law services.
This article is general information, not legal advice. Rules depend on when your contract was signed.
