Prompt Payment Legislation
Prompt payment legislation is the family of statutes that impose mandatory payment timelines on construction contracts, usually paired with a fast interim dispute mechanism (Construction Adjudication). The model spread from the UK Housing Grants Construction and Regeneration Act 1996 and Australia’s security-of-payment Acts to the United States (most states plus a federal Prompt Payment Act), and most recently to Canada. The recurring design is a cascade of deadlines down the Construction Payment Pyramid: the owner must pay the contractor within a fixed number of days of a “proper invoice”, and each tier must then pay the tier below within a short further window.
Prompt Payment Legislation [opposes] Global Subcontractor Payment Delays Prompt Payment Legislation [relates] Construction Adjudication
Canada illustrates both the model and its uneven roll-out. Ontario’s Construction Act regime came into force on 1 October 2019; Alberta’s Prompt Payment & Construction Lien Act followed on 29 August 2022; and British Columbia’s Construction Prompt Payment Act received Royal Assent on 27 November 2025 but is not yet in force. The standard timeline across these regimes is: owner pays the contractor within 28 days of a proper invoice; the contractor pays subcontractors within 7 days of receiving payment; the obligation flows down the pyramid. The US federal Prompt Payment Act uses a tighter 14-day owner-to-contractor window on federally funded projects.
Ontario Construction Act [part-of] Prompt Payment Legislation Prompt Payment Legislation [regulates] Construction Payment Pyramid
A statute on the books is not the same as money in the bank, and the vault must test that gap. Even where prompt payment laws exist, three weaknesses recur: the “proper invoice” trigger can be disputed (Ontario added a deeming provision in 2026 after numerous such disputes); timelines can be reset by notices of non-payment; and laws that protect only SMEs may leave gaps. The UK Late Payment Reform 2026 package — adding a 60-day payment cap, mandatory 8%-above-base interest, and a ban on retention withholding — is itself an admission that the 1996 Act did not end late payment. The vault therefore records, for each market, not just whether a prompt payment law exists but whether enforcement is real.
UK Late Payment Reform 2026 [supports] Prompt Payment Legislation Prompt Payment Legislation [contradicts] Pay-When-Paid Clauses
For the comparative analysis, prompt payment legislation is the single most informative legal variable: its presence, age, payment-window length, adjudication availability, and enforcement track record together describe how strongly a market protects subcontractors. Markets with no prompt payment law (much of the Middle East, parts of Asia and Africa) rely instead on general contract and insolvency law, which the vault treats as a structurally weaker baseline.
Prompt Payment Legislation [relates] Country Region Market
Connections
- Ontario Construction Act — first Canadian prompt payment regime, source: 2019
- Housing Grants Construction and Regeneration Act 1996 — UK origin of the model, source: 1996
- Construction Adjudication — paired fast dispute mechanism, source: 2026
- UK Late Payment Reform 2026 — strengthens the UK regime, source: 2026
- Global Subcontractor Payment Delays — the problem the laws target, source: 2026
- Pay-When-Paid Clauses — practice the laws restrict, source: 2026