A notice of non-payment is the only way a payer can legally withhold money under prompt-payment law, and it has to be issued fast, in writing, with a specific dollar amount and a specific reason. If the owner does not issue a valid notice within 14 days of a proper invoice (21 days on federal projects), the right to dispute is lost and the full invoice is payable. If a contractor who was not paid by the owner fails to issue a valid notice down to you, the contractor must pay you anyway, regardless of being unpaid from above. That failure is often a subcontractor's fastest route to getting paid.
What the notice is for
Prompt-payment law sets a 28-day clock for the owner to pay a proper invoice. The notice of non-payment is the payer's only off-ramp from that clock. It is not optional wording: it is a formal, deadline-bound document. The whole regime is built so that a payer either pays on time or formally disputes on time. There is no third option of staying silent and paying late without consequence.
What makes a notice valid
A notice that is vague is treated as no notice at all, which means the full amount becomes payable. To be valid, the notice must set out:
- The date the proper invoice was received.
- The full amount of the proper invoice.
- The specific dollar amount being withheld.
- The specific reason for withholding each amount. Vague words like "disputed" or "quality issues" are legally insufficient.
- The signature and date of the person issuing it.
In Ontario the owner uses the prescribed Form 1.0.1, and a contractor issuing a notice downstream uses Form 1.0.2 and must attach the upstream notice and undertake to refer the dispute to adjudication within 21 days. The Ontario Construction Act is the model the other in-force provinces follow.
The deadlines, tier by tier
The deadlines are short and stack up the chain. In Ontario and the provinces that follow its model:
- Owner to contractor: within 14 days of the proper invoice. Miss it and the full amount is payable on day 28.
- Contractor to subcontractor: by the earlier of 7 days after receiving the owner's notice, or 35 days from the proper invoice date.
- Subcontractor to its own sub: within 7 days of receiving the contractor's notice, or pay within 42 days of the original proper invoice date.
- Federal projects: the owner's notice deadline is 21 days, not 14.
In Saskatchewan, Manitoba and Alberta the owner's notice deadline is also 14 days. Saskatchewan, Manitoba and the federal regime publish prescribed notice forms; for example, Manitoba's are Forms 1 through 5 under Regulation 113/2024, available through the MPPAA forms page.
Why the contractor's notice matters most to subs
Before prompt-payment law, a contractor could hide behind a pay-when-paid clause: no money from the owner meant no money to you. The notice mechanism broke that. Now, if a contractor is not paid by the owner but fails to issue you a valid notice of non-payment within the 7-day or 35-day window, the contractor is on the hook to pay you in full anyway. The contractor cannot rely on "I have not been paid" as a defence unless it played the notice game correctly. A missed downstream notice is one of the most common and most expensive errors a contractor makes, and a clean win for the sub below.
Worked example: a silent owner in Ontario
Your work rolls into the prime contractor's proper invoice delivered to the owner on 1 June. The owner has until 15 June (day 14) to issue Form 1.0.1. The owner issues nothing. The owner has now waived the right to dispute, and the full invoice is payable by 29 June (day 28), with interest from 30 June. If the contractor then also fails to issue you a valid notice by 6 July (day 35), the contractor must pay you regardless of whether the owner pays them.
Common mistakes
- Treating a vague notice as final. If it lacks a specific amount and a specific reason, it is invalid and the full sum is due.
- As a contractor, missing the downstream window. Fail to issue a valid notice to your sub in time and you must pay them even though you were not paid.
- Forgetting federal projects use 21 days. The owner's window is longer on federal work.
- Not keeping proof. Date-stamp the proper invoice and every notice; the dates decide who owes what.
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