Fair wages (federal construction)

In Canadian federal construction contracting, fair wages are the wage floor written into Government of Canada construction contracts: wages generally accepted as current in the district for the class of work performed, never below the Canada Labour Code minimum. The regime stems from the Fair Wages and Hours of Labour Act — repealed for new contracts in 2014, but still governing legacy contracts that contain a fair wage clause.

What it is

The Fair Wages and Hours of Labour Act (R.S.C., 1985, c. L-4) defined the term directly: "fair wages means such wages as are generally accepted as current for competent workmen in the district in which the work is being performed for the character or class of work in which those workmen are respectively engaged, but shall in all cases be such wages as are fair and reasonable and shall in no case be less than the minimum hourly rate of pay prescribed by or pursuant to Part III of the Canada Labour Code." Section 3(1) made every contract with the Government of Canada for construction, remodelling, repair or demolition of any work subject to wage and hour conditions — all workers employed by the contractor or subcontractors had to be paid fair wages, and hours beyond eight per day or forty per week had to be paid at overtime rates of at least one and one-half times fair wages.

How the wage floor was set

Under the Fair Wages and Hours of Labour Regulations, where a provincial wage rate fixed by law applied in the district for the class of work and was generally accepted as current, that provincial rate was the fair wage; otherwise the rate was set from Statistics Canada occupational survey averages for the district. The ESDC Labour Program published fair wage schedules of hourly rates by trade (workers in Quebec, Manitoba and Yukon were paid provincial/territorial rates). Contractors had to post the labour conditions in the workplace, keep records for Labour Program inspectors, and file a statement swearing the conditions were met before receiving payment. The Act also carried a pointed enforcement tool: $50 in liquidated damages to the Crown for every default, deductible from monies payable under the contract — the same liquidated-damages concept you still see in modern construction contracts.

Repeal — and the legacy trap

Both the Act and Regulations were repealed on January 1, 2014 (ESDC, Government construction contracts). But ESDC notes that all federal construction contracts containing a fair wage clause continue to be governed by the provisions of the Act and Regulations for the duration of that contract. The fair wage clause also survives as a standard contract element — section 4.70.95 of the archived Supply Manual lists "Fair wages" among the standard clauses and conditions for solicitations, and the SACC Manual carries fair wage clauses for construction. So on federal construction work, check your actual contract: if it contains a fair wage clause, the old regime's wage, overtime and record-keeping discipline applies to your job.

What it means for vendors

If you bid federal construction, price your labour against the fair wage schedules for the district where the work happens, not just your collective agreement or the provincial minimum — a legacy fair wage clause can set a higher floor and allows inspection and the sworn statement before payment. Bidding artificially low labour that cannot meet the clause risks compliance action on a contract you cannot reprice, which sits alongside the performance risks covered by performance security.

Common questions

Do fair wages still apply to new federal construction contracts?

The Act and Regulations were repealed effective January 1, 2014, so no new contracts are made subject to them by statute. But contracts that contain a fair wage clause remain governed by the Act and Regulations for their duration, and fair wage clauses continue to appear in federal construction contract templates (SACC; archived Supply Manual 4.70.95). Read the contract, not just the statute.

How is a fair wage rate determined in practice?

Under the Regulations: provincial rate for the district if fixed by law and generally accepted as current; otherwise Statistics Canada survey-based district averages; never below the Canada Labour Code Part III minimum.

Is this the same as provincial prevailing wage or union rates?

They interact but are not identical. The federal fair wage floor defaulted to the provincial rate where one was fixed and current, but it could differ from a specific collective agreement rate. On provincial public construction, the provincial regime (e.g., Ontario's, discussed in our Ontario construction lien and holdback timing pages) operates separately from federal contract clauses.

Related definitions

Liquidated damages · Performance security · Substantial performance · Progress payments