On September 8, 2025, Quebec’s construction industry was ushered into a new era. The Regulation respecting prompt payments and the prompt settlement of disputes with regard to construction work (the “Regulation”) is progressively integrating more stringent frameworks for payment timelines, requests for payment, contractual withholdings, and faster dispute settlement into construction contracts involving public bodies.

These changes have concrete repercussions for how contractors, subcontractors, and public bodies manage contracts, cashflow, and conflicts. Here’s what you need to know.

When does the Regulation come into effect?

The Regulation is being implemented progressively in three phases:

  1. As of September 8, 2025, it applies to new building contracts with expenditures greater than $750,000 and civil engineering contracts with expenditures greater than $2,500,000.
  2. On September 8, 2026, it will also apply to building contracts with expenditures between $75,000 and $750,000 and civil engineering contracts with expenditures between $675,000 and $2,500,000.
  3. Starting September 8, 2027, it will apply to all contracts involving public bodies, regardless of their value.​

This gradual implementation enables market participants to revisit their practices, albeit on a tight schedule.

Stringent requirements regarding requests for payment

The Regulation focuses on requests for payment for the work completed. Each request for payment must include:

  • The requesting party’s contact information
  • The contract number and a description of the work, including when it was completed
  • The sum of money claimed
  • The name and contact information of the contractor’s representative
  • Any amounts due to subcontractors or arising from changes in the scope of the work

Public bodies can also require that certain essential documents be presented, provided a clause to that effect is included in the contract. General contractors may also include this requirement in contracts with subcontractors.

Subcontractors must send their requests for payment not later than the 25th day of the month, while general contractors have until the 1st of the following month. Subcontractors may include work that will be carried out up to the end of the specified month.​

If a request is sent late, the receiving party may choose to overlook the missed deadline or consider the request as though it was sent the following month. Amendments may be sought if the request is invalid for any other reason. The date the original request was sent still applies to the amended request.

Refusal timelines and payment schedules

The Regulation sets out that a party receiving a request for payment may partially or entirely refuse the request. This refusal to pay must be issued within tight timelines:

  • General contractors must indicate their refusal to pay not later than the last day of the month listed in the subcontractor’s request.
  • Public bodies must indicate their refusal to pay not later than the 21st day of the month.
  • Subcontractors must indicate their refusal to pay before issuing their own request for payment.

If the notice of refusal to pay is not sent within the prescribed timeline, the request for payment is deemed valid. The refusal must be sent in writing and include the amount being refused, the refused line items and any relevant contractual clauses.

Payments are due as follows:

  • Public bodies must pay not later than the last day of the month.
  • General contractors must pay not later than the 5th day of the second month following the month during which the request for payment from their subcontractors is received.
  • Subcontractors must pay not later than the 10th day of the second month following the month during which the request for payment is received. Subcontractors with their own subcontractors have five additional days to pay, and so on down the chain.​

For example, for work completed in August 2025:

  • The subcontractor must send its request for payment to the general contractor by August 25, 2025.
  • The general contractor has until August 31, 2025 to refuse payment.
  • The general contractor must send its request for payment to the public body by September 1, 2025.
  • The public body has until September 21, 2025 to refuse payment, and otherwise must pay by September 30, 2025.
  • The general contractor must pay its subcontractor by October 5, 2025.
  • The subcontractor must pay its own subcontractor by October 10, 2025.

What are the new protocols for deductions and withholdings?

The Regulation provides a framework for several types of deductions, including those associated with a refusal to pay, penalty clauses, and tax debt. It also specifies the timelines for notifying parties of deductions and withholdings, and sets out an obligation to include notices of refusal to pay. When a deduction is based on another party’s refusal to pay (e.g., a public body’s refusal to pay a contractor), said notice of refusal to pay must be attached to the written notice of deduction and sent not later than the 24th day of the month the refusal is received. A subcontractor must send the notices to its own subcontractors within two days of receiving a notice of deduction.

The Regulation also covers various withholdings, including:

  • A contractual withholding of up to 10%
  • Withholding for apparent defects or apparent poor workmanship
  • Withholding for damages
  • Withholding to pay subcontractors
  • Withholding related to contract closeout documents

Release conditions apply to these withholdings. In many cases, it may also be possible to provide sufficient security.

Contractors may send public bodies a formal notice in the event they are slow to accept the work or confirm their satisfaction as to repairs. The public body then has 60 days to respond, failing which the contractor may claim the payment of any withheld sum.​

Prompt settlement of disputes by a third-person decider

All disputes within public contracts or subcontracts may be submitted to a third-person decider if they address the validity of a request for payment, the compliance of a refusal to pay, the value of a change, or the payability of a sum, among other things. Claims for a loss of profit, productivity, or business opportunity may not be referred to a third-person decider.

A request for third-party intervention:

  • May be filed at any time in the 90 days following a complete acceptance
  • Must include certain information (i.e., the parties, the description and value of the dispute, relevant contractual provisions, the reasons for intervention, evidence of an attempt to resolve the situation amicably, and a list of third-person deciders) and
  • triggers tight deadlines for responding and selecting a third-person decider

Importantly, a contractor receiving or sending such a request must inform all implicated subcontractors, who must do the same down the chain.

Once the third-person decider has been chosen, the applicant has five days to send a detailed outline of its claims. The other party then has 15 days to respond. An oral hearing will be held based on testimony given mainly by written affidavit. Third-person deciders must render a decision within 50 days of receiving the file with a possible extension of 15 days. This does not preclude the parties from subsequently filing a civil proceeding. In other words, though the third-person decider’s decision is binding, it is not necessarily a final decision.

Conclusion: The Regulation changes how public projects are managed

The new framework requires rigorous contractual discipline and impeccable documentation. Contractors, subcontractors, and public bodies will have to revisit their internal processes, educate their teams, and adjust their contractual templates to be well prepared.

This represents a major cultural shift for the construction industry in Quebec, ushering in an era of faster payments, more structured refusals, and dispute resolution in weeks rather than years.

Need help reassessing your contracts or preparing your team to comply with Quebec’s new construction regulations? Our Construction and Infrastructure group can support you in updating your practices, revisiting your contract templates, and managing your project disputes.