Pay system: Committee of the Whole—August 12, 2020
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Phoenix overall queue and backlog decrease
Context
This note focuses on the ongoing reduction of the overall queue and backlog, implementation of collective agreements, taxes, overpayments and underpayments.
Notes
- All questions related to next generation human resources and pay solution should be directed to the minister of Digital Government
- All questions related to the negotiation of collective and compensation agreements should be directed to the president of the Treasury Board of Canada Secretariat (TBS)
Suggested response
- Employees deserve to be paid accurately and on time
- Resolving pay issues is a top priority and thanks to the hard work of our compensation employees we continue to see a steady decline in the backlog
- As of July 22, 2020, the number of transactions waiting to be processed at the Pay Centre has decreased by 52% since the peak of January 2018, representing a reduction of 332,000 transactions from 633,000 to 301,000
- Over the same period of time, the backlog of transactions with financial implications has decreased by 68%, representing a reduction of 263,000 transactions, from 384,000 to 121,000
- We have also processed more than $2.4 billion in collective agreement retroactive payments to employees
If pressed on the tentative agreement with the Public Service Alliance of Canada:
- TBS is responsible for engagement with Public Services and Procurement Canada (PSPC), employees and unions on collective and compensation agreements
- PSPC is working with TBS to identify options that will ensure the next round of collective agreements is processed in an efficient and timely manner
If pressed on overpayments:
- our priority is to support employees and resolve public service pay issues as quickly as possible
- as part of our COVID-19 measures, employees who have agreed on a repayment plan but now need to revisit it can contact the Client Contact Centre to discuss available options
- the Pay Centre has also suspended all new recoveries of overpayments that are eligible for flexible repayment measures
- the work to resolve pay issues is progressing with care as we recognize that unresolved pay issues represent undue stress and hardship for our employees and their families
- we continue to work with departments and agencies to improve the timeliness and accuracy of human resources (HR) data submitted to the pay system, which helps to prevents new cases
If pressed on taxes:
- for the 2020 tax-filing season, we built on lessons learned and implemented a more robust plan to issue accurate tax slips and assist employees
- the 2019 year-end tax plan included robust testing, dry runs, and improved communication of year-end information to the compensation community and employees
- tax slips for 2019 were released to federal employees on a staggered schedule by the legislated deadline of the end of February 2020
Background
Queue and backlog
In total, as of July 22, 2020, there are approximately 301,000 transactions ready to be processed at the Pay Centre, including 121,000 with financial impact beyond the normal workload.
As of July 22, 2020, the overall queue of transactions waiting to be processed has decreased by 52% since its peak in January 2018, representing a reduction of 332,000 transactions (from 633,000 to 301,000).
Over the same period of time, the backlog of transactions with financial implications has decreased by 68%, representing a reduction of 263,000 transactions (from 384,000 to 121,000).
While we expect the general downward trend of the last 2 years to continue, the number of transactions processed each month varies based on a variety of factors, such as the complexity of cases, collective agreement implementation and seasonal trends. Large reductions will, at times, be followed by slower progress or even increases.
2020 tax-filing season
The 2019 year-end tax plan included clear direction on robust testing, completion of dry runs, quality and integrity verification of data, implementation of the tax updates, as well as communication of year-end information to the compensation community and employees. Tax slips for 2019 were released to federal employees on a staggered schedule by the legislated deadline of the end of February 2020.
PSPC continues to actively work with departments and agencies to communicate with employees who may receive amended tax slips because of outstanding issues with their pay file.
Preparations for the 2018 tax year successfully avoided T4 amendments related to Phoenix system issues. As of May 2020, there were approximately 45,000 amended tax slips produced for 2018, none of which were pay system related. In comparison, approximately 213,000 T4 amendments were issued for 2017.
Under current legislation, the Canada Revenue Agency (CRA) ceased to automatically review amended T4s for 2016 in January 2020. Employees will need to request reassessments, which CRA has agreed to facilitate. Communications for employees were sent and more are being developed.
Overpayments
As the Phoenix pay system cannot segregate true overpayments from administrative overpayments, it is not possible to accurately provide specific figures for true overpayment, which represent money owed to the government.
Administrative overpayments are part of the system’s design and are not a technical issue. They have no impact on employees considering that refunds are automatically generated and netted out in the next pay period. Administrative overpayments are created to ensure employees receive the pay to which they are entitled.
In recognition of extraordinary challenges due to the backlog, recovery of most overpayment balances will not begin until: all of the employee’s outstanding pay transactions have been processed; the employee has received 3 consecutive accurate pays; and the employee has indicated their preferred repayment option.
To note, these flexibilities do not apply to routine operations—for example, leave without pay (LWOP) of 5 consecutive days or less is recovered from first available funds.
It is important to note that when PSPC reports a balance of overpayments, the figure includes both true overpayments and administrative overpayments. True overpayments represent employees receiving pay that they are not entitled to, whereas administrative overpayments are part of the system’s design and have no impact on employees.
Underpayments
Employees who have been underpaid can request emergency salary advances or priority payments from their departments.
Unpaid amounts owed to employees can be related to several factors. They can result from regular pay transactions such as overtime and acting pay that are not yet processed or due to errors.
Underpayments are not automatically tracked in the Phoenix pay system because it is impossible to obtain these figures accurately until all backlogged pay related transactions are processed by compensation advisors.
Collective agreement implementation: 2014 and 2018 contracts
With regard to the 2014 round, there are currently 126 TBS and separate employer’s agreements and salary rate updates that have been processed, representing more than $2.4 billion in payments to employees.
To ensure retroactive payment amounts are accurate, PSPC is conducting a manual review of almost 180,000 accounts. This manual work is on track to be completed in Fall 2020.
In August 2019, the first of the 2018 round of collective agreements were signed. The implementation of a number of these collective agreements is underway.
Lessons learned from the implementation of the 2014 round of bargaining allowed PSPC to collaborate with departments and agencies, and bargaining agents to simplify processes, improve accuracy of payment and reduce the need for manual work.
We expect that only 5% of the 2018 round of collective agreement transactions will need manual intervention, resulting in a reduction of hundreds of thousands of manual transactions.
In comparison, the 2014 round required compensation advisors to manually process and validate more than 60% of collective agreement transactions.
TBS is responsible for engagement with PSPC, employees and unions on collective and compensation agreements. PSPC is working with TBS to identify options that will ensure the next round of collective agreements is processed in an efficient and timely manner.
Issue: Phoenix IBM and systems upgrades
Context
This note focuses on vendor support on the Phoenix file (IBM / innovation challenge) as well as the Phoenix pay system software upgrade (PeopleSoft 9.2).
Note
All questions related to Next Generation Human Resources and Pay solution should be directed to the Minister of Digital Government.
Suggested response
- The Government of Canada is committed to supporting employees and resolving public service pay issues as quickly as possible
- We are reaching out to experts, federal public sector unions and the private sector for innovative solutions to help stabilize the pay system
- The government has also launched a procurement process to engage the private sector in innovative solutions to further help stabilize the pay system
- System improvements continue to further stabilize the pay system
If pressed on the invitation to qualify for pay system in-service support / Application managed services contract:
- on May 8, 2020, Public Services and Procurement Canada (PSPC) issued an invitation to qualify for operational support for the pay system
- this procurement process is required to ensure Phoenix is supported after the current contract with IBM ends in March 2022 (if option is exercised)
- an independent fairness monitor was engaged to observe and report on the procurement process to ensure its integrity
- we will continue to ensure employees are supported and that we are well prepared to transition to a new pay system when the time comes
If pressed on the upgrade to the Phoenix system:
- as part of its continued efforts to stabilize the pay system, the department is proceeding with a Phoenix pay system software upgrade from PeopleSoft 9.1 to 9.2
- the upgrade is needed to ensure ongoing vendor support and updates which are required to calculate pay accurately and on time
- we have an extensive implementation plan in place, based on the lessons learned from the Phoenix rollout, so that employees are not affected by this upgrade
- this upgrade, expected to go live in spring 2021, will not affect or require upgrades to the 30+ human resources (HR) systems that feed into Phoenix
Background
IBM contract and amendments
In June 2011, IBM was awarded the contract for the new pay system through an open and transparent bidding process. Since then, there have been 48 amendments to the original contract, for a total contract value of $447 million (taxes included). Amendments are a regular part of the contract management process and were anticipated at the time of contract award.
The most recent amendment was issued in March 2020, and was required to exercise options for software maintenance and to continue support services essential for pay stabilization and PeopleSoft version 9.2.
In service support: Re-procurement
The current application managed service contract with IBM Canada Ltd. will end on March 31, 2021. It has an option year until March 31, 2022, which provides the Government of Canada a transition period towards a future state.
Application managed services is an outcomes-based agreement where the contractor is responsible for delivering services based on our requirements, and ensuring the government of Canada receives what it needs for a fixed price.
On May 8, 2020, PSPC issued an invitation to qualify (ITQ) on Buyandsell.gc.ca to qualify suppliers interested in providing the application managed services for 24/7 operational (functional and technical) support for pay, once the current contract with IBM Canada Limited ends. An independent fairness monitor has been engaged to observe and report on the procurement process to ensure its integrity.
We will need to rely on Phoenix until we are ready to transition to a new pay system. The backlog of existing pay issues must also be addressed to allow for a smooth transition to any new pay system. This is the main reason why the Government of Canada is still investing in Phoenix—so that employees continue to be supported and to ensure that we are well prepared to transition to a new pay system when the time comes.
Notice of proposed procurement
PSPC launched a procurement process in August 2018 to engage the private sector in innovative solutions to help stabilize the pay system.
Industry has been consulted in several areas identified as key to reaching stabilization. These are:
- robotic process automation: 2 contracts were awarded in March 2019 for phase I. A contract was awarded to KPMG on November 8, 2019 for Phase II work. This involves implementing the solutions that KPMG proposed under phase I to automate manual pay processes. An extension was awarded to KPMG on June 30 to continue phase II work
- HR processes
- lowering the queue: 2 contracts were awarded in May 2019
- improving user experience
- enhanced user access management
- training
- accelerator services: a contract was awarded in February 2020
- PSPC is currently re-evaluating the remaining challenge categories against current and future requirements
Phoenix system upgrade (PeopleSoft 9.2)
The upgrade to PeopleSoft 9.2 will ensure that PSPC continues to receive software patches, fixes, and tax rate updates that Phoenix requires to generate payroll accurately.
The PeopleSoft 9.2 upgrade consists of implementing a new version of the PeopleSoft application with limited impact and disruption to operations and users. The scope of the project is limited to the pay system (Phoenix) and does not include upgrading the departmental HR systems. Extensive testing is currently being performed with departments and agencies to ensure that employees’ pay is not impacted when the upgrade is launched.
PSPC estimates that the overall upgrade is expected to take approximately 24 months (including the planning phase) with a target go live in spring 2021. Through budget 2018, the department has secured $22.1 million in funding for the upgrade to PeopleSoft 9.2.
Update on Phoenix stabilization planning, investments and employee support
Context
This note focuses on the efforts and progress to stabilize the Pay System, support employees, as well as financial investments in Phoenix.
Notes
- All questions related to the next generation human resources and pay solution should be directed to the minister of Digital Government, responsible for Shared Services Canada
- All questions related to the mental health for public servants should be directed to the Treasury Board Secretariat (TBS)
- All questions related to the negotiation of collective and compensation agreements should be directed to the President of the TBS
Suggested response
- Supporting employees facing pay issues and making sure they are paid accurately and on time is a top priority
- As part of our ongoing efforts we have increased our compensation workforce 4-fold since 2016, to more than 2,300 employees
- We have ensured public servants facing pay problems have access to emergency payments
- We have also focused efforts on priority files such as parental leave, disability leave, student pay and collective agreements implementation
- We have introduced MyGCPay to all departments and agencies. MyGCPay is a new web application that provides employees with a centralized and simplified view of their pay and benefits
- We continue to build strong partnerships between departments, unions and all stakeholders so that pay transactions can be processed quickly and accurately
If pressed on specific measures for COVID-19:
- pay services are essential, and we have the resources in place to make sure they are operating without interruption
- the Client Contact Centre (CCC) remains available to assist any current or former public servant experiencing pay issues
- we recognize that the recovery of overpayments can be a source of stress for employees, even more so now given the current circumstances
- employees who have agreed on a repayment plan but now need to revisit it can contact the CCC to discuss available options
- the Pay Centre has also suspended all new recoveries of overpayments that are eligible for flexible repayment measures
- we have introduced interim administrative measures to simplify and speed up the approval process of a range of pay-related transactions
If pressed on support to employees:
- we have launched MyGCPay, a new web application that provides employees with a centralized and simplified view of their pay and benefits. Created by employees for employees, it helps them identify pay issues earlier and allows them to monitor their open cases with more detail
- we have improved services offered by the CCC to provide better support to employees, including the ability to resolve pay issues in a faster and more effective way at the first point of contact
- the CCC escalates cases of hardship so they can be addressed quickly, and agents are trained to respond to situations where employees may be in distress
- across government, progress has been made to increase mental health awareness. Work continues to better equip managers, practitioners and leaders on how to address pay-related mental health issues in the workplace and to inform employees of the services and support tools that are available, including flexible repayment options
If pressed on the 2020 to 2021 Supplementary Estimates (A):
- to continue progress on pay stabilization, Public Services and Procurement Canada (PSPC) sought additional funding to continue efforts to eliminate the backlog of pay issues for public servants, maintain measures to deliver pay and support employees, and stabilize pay for the Government of Canada
- the investment announced in the Supplementary Estimates (A) for 2020 to 2021 represents $203.5 million
- this new funding will help to eliminate the backlog and to stabilize the pay system. To do so, we will:
- sustain employee capacity
- increase our processing rate
- increase the automation of as many transactions as possible through system enhancements
Background
COVID-19 measures
Services related to pay are considered essential and measures are in place to ensure that operational requirements are met. Following the recommendation of the Public Health Agency of Canada, PSPC asked all its employees, including those at the Public Service Pay Centre and the CCC, to work from home if possible, while ensuring the delivery of essential services.
The Pay Centre continues to deliver all of its pay services which include regular pay, new hires, return from leave, maternity and parental leave, as well as disability insurance.
Supporting employees and eliminating the backlog remain our top priorities and we continue to see progress. From June 24 to July 22, 2020, the backlog of transactions with financial implications has decreased by 4,000, and now stands at 121,000. Overall, the backlog has been reduced by 68% since the January 2018 peak, when it stood at 384,000 transactions.
The CCC remains the first point of contact for current and former federal public servants looking for information or help with compensation and benefits, and for technical issues when using the Compensation Web Applications or MyGCPay. Clients may, however, experience increased wait times when calling the CCC.
We are working closely with all our partners, including employees, unions, members of Parliament offices, departments and their representatives from human resources (HR) and pay, to provide support during this challenging time.
Total investments to deliver pay and respond to pay issues is $1.177 billion:
- $50 million (2016) PSPC—Build capacity, enhance technology, employee support
- $142 million (2017)—Build capacity, enhance technology, employee support. This included $15 million for TBS and $127 million for PSPC
- $431.4 million (budget 2018) PSPC/TBS—Build capacity, enhanced technology, and employee support
- $5.5 million (budget 2018) Canada Revenue Agency (CRA)—Process income tax reassessments needed due to pay issues
- $16 million (budget 2018) TBS—Work with experts, federal public sector unions and technology providers on a way forward for a new pay system
- $523.3 million (budget 2019) PSPC—Ensure adequate resources to address pay issues; support system improvements
- $9.2 million (budget 2019) CRA—Process income tax reassessments needed due to pay issues
2020 Supplementary Estimates: Public information
The investment for the pay system announced on June 2, 2020, in the Supplementary Estimates (A) 2020 to 2021 represents $203.5 million.
PSPC sought this additional funding to continue efforts to eliminate the backlog of pay issues for public servants, maintain measures to deliver pay and support employees, and stabilize pay for the Government of Canada.
To do so, we will sustain employee capacity, increase our processing rate and increase the automation of as many transactions as possible through system enhancements.
Since the launch of Phoenix, PSPC implemented a series of measures focused on stabilizing the pay system.
These include increasing the compensation workforce, providing employees with greater support through our CCC, introducing the pay pods model, implementing a backlog reduction strategy through our Strategic Engagement Sector, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions.
As a result, since its peak in January 2018, the Pay Centre's backlog of transactions with financial implications has been reduced by 68% (from 384,000 to 121,000) as of July 22, 2020.
PSPC has also met service standards 70% of the time on average so far this year, compared to a 57% average over 2018 to 2019.
On average, in 2020 to date, parental and disability leaves have been processed within service standards 99% of the time (as of July, 2020).
In addition to efforts underway, we are working closely with all stakeholders, including experts, federal public sector unions and the private sector for innovative solutions to accelerate pay stabilization.
We continue to regularly share information on progress with employees and Canadians through various platforms and tools.
[Redacted]
MyGCPay
MyGCPay is a web application developed by PSPC to help rebuild federal government employees’ confidence in the integrity of their pay. It provides employees with a centralized and simplified view of their pay and benefits. It helps employees identify pay issues earlier and allows them to monitor their open cases with more detail.
The application allows employees to:
- view the most current information about their pay and benefits
- print important documents such as, tax slips and proof of employment
- identify pay issues earlier and, if an employee’s current or former department was served by the Pay Centre, monitor any open enquiries and cases in detail
- access historical information, pay cheques, benefits plans, enquiries, and Pay Centre cases dating back to 2016
2019 Public Service Employee Survey results
Media coverage and union communications reported the Public Service Employee Survey (PSES) 2019 results negatively, especially regarding 74% of respondents indicating that they have been affected by pay issues since the launch of Phoenix in 2016. The 2019 survey highlighted engagement, leadership, workforce, workplace well-being, and compensation. Over 182,300 public servants responded to the survey in 86 federal departments and agencies. The results of the survey allow departments to make continuous, evidence-based improvements, shaped by the voices of public servants.
Compensation results highlight:
- 74% of respondents say that they have been affected by issues with the Phoenix pay system since its introduction in early 2016. Of those affected, 59% say they have had a new pay issue in the last 12 months:
- these figures indicate that 44% of all respondents (59% of 74%) reported having a new pay issue in the last 12 months
- this demonstrates improvement, considering that in 2017, approximately 18 months following the launch of Phoenix, 69% of PSES respondents reported having pay issues
- there are other improvements from the last 2 years in public servants’ views and perceptions in several areas:
- of those affected by Phoenix, 44% say that all of their issues have been resolved. This is an improvement of 9% compared to 2018 results (35%)
- the percentage of employees saying that pay issues caused them stress to a high or very high degree shows a decrease from 34% (2017) to 32% (2018) to 28% (2019). An improvement of 6% since 2017
- 25% of those affected by Phoenix say they are satisfied with support received from the Pay Centre, compared to 19% in 2018 and 16% in 2017. An improvement of 9% since 2017
- 39% are satisfied with the related support received from their organization to help them resolve their pay issues, up from 3% in 2018
- 20% of respondents report that pay issues have, to a large or very large extent, affected their decision to seek or accept another position within their organization or the public service, a decrease of 2% from 2018
Office of the Auditor General Commentary on the 2018 to 2019 Financial Audits and House of Commons committee reports
The Office of the Auditor General (OAG) issued its Commentary on the 2018-2019 Financial Audits in December 2019, following the Government’s tabling of Public Accounts. The commentary observations state that there has been limited improvement with respect to pay errors. Despite this, the OAG states that pay expenses were presented fairly in the Government of Canada’s 2018 to 2019 consolidated financial statements. The OAG also recognizes that pay is a complex and shared responsibility across government.
The report focuses on a few key elements, including:
- backlog
- pay errors in 2018 to 2019, due to overpayments and underpayments
- pay element complexity
- effectiveness of pay pods
- timeliness and accuracy of data
In addition to 2 dedicated performance audit reports on Phoenix in 2017 and 2018, the Office of the Auditor General analyzes progress and provides feedback and recommendations on multiple aspects of HR-to-Pay on a yearly basis. Both performance audits came with recommendations, which the department and TBS have accepted and are implementing through management action plans.
The department is also implementing a series of measures related to pay transactions and processes, as well as information technology (IT) tools and infrastructure, in response to the observations made as part of the financial audits.
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