A recent Consultation Paper seeks feedback on possible legislative amendments that would make contractors liable for their subcontractors’ failure to pay wages.
Currently, under Ontario’s workplace laws, if a subcontractor fails to pay its employees the wages they are owed, the employees or their trade union must seek recourse against the subcontractor itself. This may involve filing a grievance under an applicable collective agreement, commencing a court action, or lodging a complaint with the Ministry of Labour, Immigration, Training and Skills Development (the “Ministry”). If an employee is able to establish that they did not receive the proper wages, an order could be issued against the subcontractor.
Recently, the Ministry has sought public feedback on a new framework that would allow employees and their representatives in the construction industry to seek recovery from a contractor should the subcontractor fail to pay their employees. These contemplated changes are described in a Consultation Paper, which includes a number of questions inviting input on the appropriate form of any legislative amendments. The stated purpose of this proposed framework is to limit the non-payment of wages in Ontario’s underground economy.
As the Consultation Paper notes, the subcontractor would continue to be responsible for the payment of wages to their employees. However, in the event that a subcontractor failed to pay these wages, the contractor that engaged the subcontractor would become liable for those payments. Liability would not pass on further to homeowners. Although the Consultation Paper does not contain the language of the proposed amendments, it does refer to the changes being introduced through amendments to the Employment Standards Act.
As this proposed framework is still at the consultation stage, a number of important questions remain unanswered at this point. The Consultation Paper does not include a definition of “wages” that would be used for this new framework. It is not clear whether the changes would apply to unionized employees, who already have access to grievance procedures. Although the Consultation Paper refers to the prevalence of the underground economy in the residential sector of the construction industry specifically, it does not confirm whether the changes would be limited to that sector. The Consultation Paper specifically invites comments on the possibility of contractors being held liable if a subcontractor at any tier of the “contracting chain” fails to pay wages, so it is not certain that liability would be limited to the company that engaged the delinquent subcontractor.
To be clear, no legislation has been introduced at this point, and the proposed framework may never come to pass. However, in the event that the Ontario government were to introduce this new framework, it could create significant new liabilities for contractors. The Ministry has invited interested parties to provide submissions to the Ministry by e-mail (MLITSD.Submissions@ontario.ca) on or before the deadline of February 2nd, 2026. Further details regarding the submission process can be found in the Consultation Paper itself.
Should you have any questions regarding the potential implications of these proposed changes, please contact any member of the Mathews Dinsdale Construction Labour Law Group.
