Phoenix: Standing Committee on Government Operations and Estimates—June 2, 2021

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Human Resources-to-Pay Integrated Team

Key facts

Total investments to deliver pay and respond to pay issues since the launch of Phoenix is $1.428 billion:

• $50 million in 2016 to address issues after Phoenix rollout
• $142 million in 2017 to build capacity, enhance technology, employee support ($15 million for the Treasury Board Secretariat (TBS) and $127 million for Public Services and Procurement Canada (PSPC))
• $431.4 million via Budget 2018 (accrual), plus $16 million (TBS) for work towards a new pay system, plus $5.5 million (Canada Revenue Agency (CRA)) to assist in processing tax reassessments
• $523.3 million over 5 years via Budget 2019 (accrual), starting in 2019 to 2020, to ensure adequate resources to address pay issues
• An additional $9.2 million to CRA to process income tax reassessments needed due to pay issues
• $203.5 million via Supplementary estimates (A) 2020 to 2021, to eliminate the backlog of pay issues for public servants and continue delivering and stabilizing pay
• $47 million via Budget 2021, over the next 2 years to support the workforce dedicated to processing pay transactions to help meet the target of eliminating the backlog by December 2022

Under the transformation of pay administration initiative, PSPC consolidated and transferred pay services from 46 departments and agencies to the Public Service Pay Centre. It serves more than 220,000 employees.

Top issues

Capacity

• 14 offices across the country (includes the Pay Centre in Miramichi and regional offices)
• Multiplied the compensation workforce four-fold since 2016
• More than 2,300 compensation employees across the Pay Centre, Client Contact Centre, and Client Service Bureau

Public dashboard: As of April 28, 2021

• Approximately 268,000 transactions awaiting processing at the Pay Centre:
  • 178,000 transactions with financial impact, which include:
    • 98,000 beyond our normal workload
    • 80,000 that are part of our normal workload
  • 46,000 transactions with no financial impact, or general inquiries
  • 6,000 collective agreement transactions
  • 35,000 transactions waiting to be closed for which employees have already received payment

Collective agreements

• Processed 126 TBS and separate employer agreements and salary rate updates, for the 2014 round, representing almost $2.5 billion in payments to employees
• Use of the new automated mass retroactive process for 2018 agreements is expected to keep manual work requirements to an overall average of approximately 10%, resulting in a reduction of hundreds of thousands of manual transactions
• To date, 2018 collective agreement implementation salary adjustments and retro payments have been completed for 85 TBS and separate employer agreements, representing almost $1.6 billion in payments to employees

Taxes

• Year-end tax planning includes clear direction on robust testing, completion of dry runs, quality and integrity verification of data, implementation of tax updates, and communication of year-end information to the compensation community and employees
• PSPC continues to actively work with departments and agencies to communicate with employees who may receive amended tax slips
• Tax slips for 2020 were released to federal employees on a staggered schedule by the end of February 2021
• Successful 2020 tax-filing season with fewer data issues, no major system concerns, and fewer inquiries from clients

Overpayments and repayment options

• Amended the TBS Directive on the Terms and Conditions of Employment—the system will not proceed with the recovery of overpayments until certain conditions are met
• Created the TBS Claims Office to compensate employees who have incurred expenses or financial losses
• Changes made to the Income Tax Act that allow affected employees to repay only the net amount of the overpayment received in a previous year, rather than the gross amount
• Work has commenced on overpayment recoveries with a focus on 2016 files, and those of high value (over $40,000)

IBM contract

• 49 amendments to the original contract since June 2011, for a total contract value of $545 million (taxes included)
• The most recent amendment to the existing contract with IBM was required to exercise the option year to extend the current contract end date from April 2021 to March 2022

Innovation

• Industry has been consulted in several areas identified as key to reaching stabilization (for example, robotic process automation (RPA), accelerator services)
• Continued and broad engagement of public servants in the evolution of MyGCPay, including the development of a new online pay stub

Accomplishments

• Since January 2018, Pay Centre departments have seen a 58% decrease in the number of transactions awaiting processing, representing a reduction of over 365,000 transactions (from 633K to 268K), as of April 28, 2021
• Over the same period of time, the backlog of transactions with financial implications beyond normal workload has decreased by 74%, representing a reduction from 384K to 98K (286,000 transactions)
• Successful conclusion of the accelerator project pilot and the start of roll-out activities across the Pay Centre
• The Client Contact Centre has been enhanced 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
• Launched MyGCPay—an innovative new web application that provides employees with a centralized and simplified view of their pay and benefits, and helps them identify pay issues earlier and monitor their open cases with more detail
• Implemented the retro redesign solution, which further automates processing of individual late transactions, as well as eligible mass retro payments
• Multiple technical changes to stabilize the system have been implemented, including over 2,500 systems fixes/enhancements

Public Service Pay Centre dashboard as of April 28, 2021

Financial transactions beyond the Pay Centre’s normal workload since 2018

With respect to the backlog of financial transactions waiting to be processed at the Public Service Pay Centre, there has been an overall downward trend since January 2018, from 384,000 to 98,000, as of April 28, 2021. These figures exclude 80,000 transactions that are considered to be part of the normal workload.

The table below represents the backlog of financial transactions waiting to be processed at the Public Service Pay Centre.

Table 1: Financial transactions beyond Pay Centre's normal workload since January 2018

Year and month	Number of transactions
2018-01	384,000
2018-02	380,000
2018-03	377,000
2018-04	372,000
2018-05	347,000
2018-06	334,000
2018-07	316,000
2018-08	313,000
2018-09	311,000
2018-10	303,000
2018-11	289,000
2018-12	283,000
2019-01	275,000
2019-02	260,000
2019-03	248,000
2019-04	245,000
2019-05	239,000
2019-06	230,000
2019-07	230,000
2019-08	228,000
2019-09	228,000
2019-10	220,000
2019-11	214,000
2019-12	202,000
2020-01	197,000
2020-02	183,000
2020-03	166,000
2020-04	149,000
2020-05	137,000
2020-06	125,000
2020-07	121,000
2020-08	122,000
2020-09	124,000
2020-10	110,000
2020-11	103,000
2020-12	101,000
2021-01	112,000
2021-02	104,000
2021-03	94,000
2021-04	98,000

Financial transactions received and processed by the Pay Centre monthly since 2018

The number of financial transactions received from departments and agencies served by the Public Service Pay Centre varies each month. These variations are primarily due to seasonal trends. For instance, the months leading to the start of summer and fall usually consist of higher volumes of student and casual hiring, acting appointments, and employees returning from leave. The number of transactions processed monthly also varies based on different factors, such as the complexity of cases, collective agreement implementation requirements, and seasonal trends. Therefore, large reductions in the number of financial transactions waiting to be processed at the Pay Centre will, at times, be followed by a smaller decrease or even increases.

The table below represents the number of new financial transactions received, as well as the new and backlogged financial transactions processed by the Public Service Pay Centre every month, since 2018.

Table 2: Financial transactions received and processed by the Pay Centre monthly since 2018

Year and month	Financial transactions received	Financial transactions processed
2018-01	80,000	63,000
2018-02	73,000	77,000
2018-03	70,000	73,000
2018-04	131,000	136,000
2018-05	72,000	97,000
2018-06	72,000	85,000
2018-07	64,000	82,000
2018-08	65,000	68,000
2018-09	84,500	86,500
2018-10	110,000	118,000
2018-11	66,000	80,000
2018-12	67,000	73,000
2019-01	70,500	78,500
2019-02	62,500	77,500
2019-03	60,000	72,000
2019-04	85,000	88,000
2019-05	136,000	142,000
2019-06	79,000	88,000
2019-07	72,000	72,000
2019-08	75,000	77,000
2019-09	93,000	93,000
2019-10	115,000	123,500
2019-11	78,000	84,000
2019-12	73,500	85,500
2020-01	58,000	63,000
2020-02	66,500	80,000
2020-03	114,500	131,500
2020-04	58,000	75,000
2020-05	70,000	82,000
2020-06	60,000	72,000
2020-07	60,000	64,000
2020-08	66,000	65,000
2020-09	107,000	105,000
2020-10	62,500	76,500
2020-11	69,000	76,000
2020-12	74,000	76,000
2021-01	76,000	65,000
2021-02	69,000	77,000
2021-03	107,000	117,000
2021-04	87,500	83,500

Financial transactions beyond normal workload 2018 to present

• March 31 2021: 94,000
• April 28 2021: 98,000
• Target: 0

Financial transactions beyond normal workload

The number of financial transactions beyond the normal workload has increased by 4,000, from March 31 to April 28, 2021. This can be attributed to an expected year-end increase in transaction volume.

Reductions will, at times, be followed by slower progress or even increases. Since its peak in January 2018, the number of financial transactions beyond the normal workload has decreased by 286,000, from 384,000 to 98,000.

While the exact number fluctuates daily, it is estimated that almost half of public servants are experiencing some form of pay issue (including those served by the Pay Centre as well as non-Pay Centre departments). There are currently approximately 268,000 transactions ready to be processed at the Pay Centre, including:

• 178,000 transactions with financial impact, which include:
  • 98,000 beyond our normal workload
  • 80,000 that are part of our normal workload
• 46,000 transactions with no financial impact, or general inquiries
• 9,000 collective agreement transactions
• 35,000 transactions waiting to be closed for which employees have already received payment

Public Service Pay Centre workflow

Between March 31 and April 28, the Pay Centre received 87,500 transactions and processed 83,500. The Pay Centre also processed an additional 1,000 transactions associated with collective agreements.

Percentage of transactions processed within service standards

• Average in 2020: 72%
• April 28, 2021: 82%
• Target: 95%

Between March 31 and April 28, 82% of non-collective bargaining transactions met service standards.

Public Services and Procurement Canada prioritizes cases that can have a large impact on an employee’s pay. For example, in 2020, parental and disability leaves were processed within service standards 99% of the time on average.

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.

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 are seeing progress
• As of April 28, 2021, the backlog of financial transactions beyond the normal workload has decreased by 74% since the peak of January 2018, representing a reduction of 286,000 transactions, from 384,000 to 98,000
• Over the same period of time, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 58%, representing a reduction of 365,000 transactions, from 633,000 to 268,000
• The Pay Centre met service standards 82% of the time in April 2021, compared to 72% on average in 2020, and 57% on average over 2018 to 2019
• We have processed close to $2.5 billion in collective agreement retroactive payments to employees, for the 2014 round
• In addition, we have processed almost $1.6 billion in collective agreement retroactive payments to employees to date, for the 2018 round

If pressed on the recent increase in the backlog of transactions with financial implications beyond normal workload as of April 28, 2021:

• the increases observed for the number of transactions with financial implications beyond normal workload last month is primarily due to seasonal peaks in intake at the end of the fiscal year
• we have observed similar seasonal trends in previous years
• seasonal peaks are a normal part of the pay administration process and we expect the general downward trend seen in the backlog over the last 3 years to continue

If pressed on incorrect enrolment in the Public Service Pension Plan:

• employees who became new Public Service Pension Plan members on or after January 1, 2013 are subject to different rules and contribution rates
• employees are sometimes enrolled in the incorrect group within the pension plan, resulting in an overpayment, or underpayment, in contributions
• we have mechanisms in place to identify these errors, and issue refunds or collect recoveries. With these mechanisms, new errors in enrolment are identified much faster

If pressed on taxes:

• as for the past 2 years, we have a robust plan to issue accurate tax slips and assist employees with the 2021 tax-filing season
• the year-end tax plan includes thorough testing, dry runs, and communications to the compensation community and employees
• tax slips for 2020 were released to federal employees on a staggered schedule by the legislated deadline of the end of February 2021

Background

Queue and backlog

While we expect the general downward trend of the last 3 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.

Seasonal trends include peaks in intake at the end of the calendar year and the end of the fiscal year, as well as end of summer completion of many casual and student work terms. We have observed similar seasonal trends in previous years.

Seasonal peaks are a normal part of the pay administration process and we expect that large reductions will, at times, be followed by slower progress or even increases.

The number of financial transactions beyond the normal workload were reduced by 81,000 in 2019, and by 101,000 in 2020.

New retroactive redesign solution

In October 2020, PSPC implemented a new retroactive payment process in the Phoenix pay system.

The retro redesign solution will further automate the processing of individual late transactions, as well as eligible mass retro payments. The new solution is expected to result in more timely payments for employees and reduced demand for manual work by compensation advisors.

In addition, a new view page is now available in Phoenix, providing employees with more detailed information about their automated retroactive payments.

Public Services and Acquisition Canada Program and Administration Services group collective agreement implementation

On February 3, 2021, Public Services and Procurement Canada issued the retroactive payments owed to members of the Program and Administration Services (PA) group from the 2018 collective agreement, signed on October 23, 2020.

This highly complex endeavour entailed over 1.5 million additional transactions processed in the Phoenix pay system.

Payments were made in one lump sum to respect the timelines negotiated in collective bargaining. Employees are able to view detailed payment information, by pay year, in the pay system.

Approximately $620 million in retroactive payments were made to the Program and Administration Services group, comprised of just over 132,000 active and inactive employees.

2021 tax-filing season

The 2020 year-end tax plan includes 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.

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, 2019, and 2020 tax years successfully avoided T4 amendments related to Phoenix system issues. As of April 2021, there were approximately 77,000 amended tax slips produced for 2018, 53,000 amended tax slips produced for 2019, and 17,000 amended tax slips produced for 2020, none of which were pay system related. In comparison, approximately 259,000 T4 amendments were issued for 2017.

Under current legislation, the Canada Revenue Agency ceased to automatically review amended T4s for 2017 in January 2021. Employees will need to request reassessments, which CRA has agreed to facilitate. Communications for employees were sent and more are being developed.

Underpayments

Employees who have been underpaid can request emergency salary advances or priority payments from their departments.

Unpaid amounts owed to employees 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, we processed 126 TBS and separate employer’s agreements and salary rate updates, representing close to $2.5 billion in payments to employees.

To ensure retroactive payment amounts were accurate, PSPC conducted a manual review of over 200,000 individual accounts.

The implementation of the 2018 round of collective agreements is well underway. To date, 2018 collective agreement implementation (CAI) salary adjustments and retroactive payments have been completed for 85 TBS and separate employer agreements, representing almost $1.6 billion in payments to employees.

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.

Based on the work done so far, we expect an overall average of approximately 10% of the 2018 round of collective agreement transactions will need manual intervention, resulting in a reduction of hundreds of thousands of manual transactions. The results of each retroactive payment process are expected to vary due to a combination of many factors, including agreement complexity and projected volumes.

In comparison, the 2014 round required compensation advisors to manually process and manually validate approximately 90% of collective agreement transactions.

TBS is responsible for engagement with PSPC, employees and unions on collective agreements and compensation for Phoenix damages.

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).

Suggested response

• The Government of Canada is committed to supporting employees and resolving public service pay issues as quickly as possible
• Public Services and Procurement Canada has put in place over 2,500 systems enhancements and fixes which have helped move the pay system to a much steadier environment
• As a result, we have increased the overall system stability and performance in payroll processing
• We continue to reach out to experts, federal public sector unions and the private sector for innovative solutions to help further stabilize the pay system

If pressed on the McKinsey contract amendment award for accelerator services:

• McKinsey & Company was awarded a contract to provide accelerator services to the Public Service Pay Centre in February 2020. Earlier this year the contract was extended to the end of August 2021
• the work to date has resulted in substantial increases in the productivity and accuracy of work across the pilot teams at the Pay Centre
• our government takes ethical business practices seriously. We apply the standards of the Government of Canada’s Integrity Regime in all procurement activities
• McKinsey & Company was awarded this contract through an open, fair and transparent procurement process

If pressed on the IBM contract award for robotic process automation:

• robotic process automation services are used to process manual transactions in the Phoenix pay system, allowing compensation employees at the Public Service Pay Centre to focus on complex cases and address more transactions in the backlog
• a request for proposal was issued in October 2020 for a new contract that will build on the work completed to date
• following a thorough evaluation of the bids submitted by qualified suppliers, only IBM met the mandatory requirements, and was awarded the contract on January 19, 2021

If pressed on the re-procurement of the pay system in-service support / application managed services contract:

• in June 2019, PSPC launched a competitive procurement process seeking qualified 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
• we will need to rely on Phoenix until we are ready to transition to a new pay system
• an independent fairness monitor has been observing the procurement process and will report on its integrity

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 is expected to go live in late spring 2021, will not affect or require upgrades to the 30 plus human resources 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 with a fairness monitor. Since then, there have been 49 amendments to the original contract, for a total contract value of $545M (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 December 2020, and was required to exercise the option year to extend the current contract end date from April 2021 to March 2022. Exercising the option period is required to ensure ongoing application managed services for 24/7 operational (functional and technical) support for pay. This includes software maintenance and support services essential for pay stabilization, including the upgrade of the Phoenix PeopleSoft software to version 9.2.

In service support: Re-procurement

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.

In June 2019, PSPC launched a competitive procurement process seeking qualified 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 observing the procurement process and will report on 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.

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. It 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 human resources (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 expected completion in late-spring 2021.

Innovation challenge: Pay stabilization procurement initiatives

As part of its efforts to accelerate pay stabilization, PSPC has engaged the private sector in innovative solutions to help stabilize the pay system. This iterative approach includes robotic process automation and accelerator services.

Robotic process automation: Request for proposal

Robotic process automation is one of several ongoing initiatives that PSPC is taking to help reduce the backlog and stabilize the pay system. PSPC intends to use RPA services to process manual transactions in the Phoenix pay system. The objective is to allow compensation employees at the Public Service Pay Centre to focus on complex cases and address more transactions in the backlog.

On October 13, 2020, PSPC issued a new request for proposal (RFP) on buyandsell.gc.ca under the robotic process automation stream of the pay stabilization procurement initiative.

The RFP was sent to the 10 suppliers that had qualified for the RPA stream through an invitation to qualify launched in October 30, 2019 and closed on November 19, 2020. On January 19, 2021, following a thorough evaluation of the bids submitted, the contract was awarded to IBM.

This new RFP will allow PSPC to build on the work completed under the RPA stream to date, and to accelerate the automation of pay processing. With this new RFP, PSPC will have additional resources with expertise in RPA to support all ongoing RPA activities, including knowledge transfer to public servants.

Accelerator services contract amendment

The objective of the accelerator services project is to streamline processes and standardize work at the Public Service Pay Centre to increase efficiency and reduce processing times for pay transactions. McKinsey & Company was awarded a contract for accelerator services in February 2020 as a result of a competitive procurement process, and its work to date has resulted in substantial increases in the productivity and accuracy of work across the pilot teams at the Pay Centre. As such, on January 19, 2021, PSPC extended the contract with McKinsey & Company to the end of August 2021, to continue providing accelerator services to the Pay Centre.

Under this contract, McKinsey & Company will provide consulting services to transform ways of working, including management practices and tools, to improve both productivity and the experience of our clients and client organizations. They will also implement strategies to increase efficiency and reduce errors, which will lead to decreased wait time for employees’ pay issues to be processed.

As a result of McKinsey & Company’s work, approximately 1,300 Pay Centre employees will receive training on the new ways of working that are being introduced through the accelerator services contract.

NextGen pilot with the Department of Canadian Heritage

On October 14, 2020 the Minister of Digital Government announced the selection of the Department of Canadian Heritage for the first exploratory phase of the Next Generation HR and pay project. The government will work with the selected vendor (SAP) and the Department of Canadian Heritage to develop a business case, privacy impact assessment, change management and other planning considerations to learn how a future HR and pay solution can integrate information from multiple compensation-related HR systems.

This phase will take place in a test environment and will not affect employee’s current pay. Employees will continue to be paid through the Phoenix pay system while testing is completed. The planning phase began in October 2020 and future phases will be informed by the results of the planning phase.

Public servants, as well as bargaining agents, have been involved throughout the process and the government is committed to continuing to work with them in the next stages of the project. Long-term work to stabilize the Phoenix pay system will continue.

Update on Phoenix: Employee support, stabilization planning, and investments

Context

This note focuses on the efforts and progress to provide support to employees, stabilize the pay system, as well as financial investments in Phoenix.

Suggested response

• Supporting employees facing pay issues and making sure they are paid accurately and on time is a top priority
• No employee should be without pay. 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 web application that provides employees with a centralized and simplified view of their pay and benefits, to help employees better understand their pay
• As part of our ongoing efforts we have increased our compensation workforce four-fold since 2016, to more than 2,300 employees, increasing our ability to process incoming work to service standard as well as address backlog cases
• We continue to build strong partnerships between departments, unions and all stakeholders so that pay transactions can be processed quickly and accurately
• In addition, our government created the Treasury Board Secretariat Claims Office, to compensate employees who have incurred expenses or financial losses because of the implementation of the Phoenix pay system. A new claims process was launched in mid-January 2021, to compensate current and former employees who have experienced severe personal or financial impact

If pressed on Phoenix damages agreements payments to employees:

• all public servants deserve to be accurately paid for their work. The Government of Canada continues to take action on all fronts to resolve pay issues
• we recognize that the implementation of the Phoenix pay system has had an impact, directly or indirectly, on employees
• on October 23, 2020, the government finalized an agreement with the Public Service Alliance of Canada (PSAC) for damages incurred by the Phoenix pay system and the late implementation of the 2014 collective agreements
• as part of this agreement, most employees represented by PSAC received a payment of up to $2,500 (subject to statutory deductions) along with their regular pay on March 3, 2021 for general damages and compensation for the late implementation of the 2014 collective agreements
• approximately 175,000 employees received this lump-sum payment

If pressed on performance pay to executives involved in fixing Phoenix:

• public service executives are eligible for performance pay in accordance with the Treasury Board’s Directive on Terms and Conditions of Employment for Executives
• between 2016 to 2017 and 2019 to 2020, a number of executives who were assigned duties related to the ongoing response to address Phoenix pay system issues received performance pay against established performance commitments
• senior executives responsible for the planning and implementation of Phoenix did not receive performance pay for their work on this initiative during 2015 to 2016, when Phoenix was finalized and launched

If pressed on support to employees:

• we recognize that unresolved pay issues represent undue stress and hardship for our employees and their families
• financial support is and will remain available for employees missing any of their pay. This support includes an emergency salary advance or priority payment
• the Client Contact Centre (CCC) serves all current and former federal public service employees. It helps employees with pay and benefit questions, 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

Background

Claims and compensation: Phoenix pay system

On January 14, 2021, the Government of Canada launched a new claims process to compensate current and former employees who have experienced severe personal or financial impacts as a result of issues with the Phoenix pay system.

This claims process is another element of the damages agreement co-developed with federal public service unions in June 2019 to compensate approximately 121,000 current and 25,000 former employees for damages caused by the Phoenix pay system.

Claims for severe personal or financial impacts could include financial losses, mental anguish or other impacts attributed to Phoenix pay issues. Employees who took sick leave or other types of paid or unpaid leave because of an illness stemming from pay issues may also be eligible to apply for compensation through this new claims process.

Existing claims processes for expenses, financial costs and lost investment income, as well as general compensation for former employees continue to be available.

This claims process does not apply to current and former employees covered by the damages agreement, signed in October 2020, between the Treasury Board of Canada Secretariat and the Public Service Alliance of Canada. TBS continues to work in collaboration with PSAC to finalize the claims processes from this agreement and more information will be shared in the coming months.

TBS is responsible for engagement with PSPC, employees and unions on collective agreements and compensation for Phoenix damages.

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, Public Services and Procurement Canada 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.

Other support measures

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.

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 HR and pay, to provide support during this challenging time.

Investments in Phoenix

Total investments to deliver pay and respond to pay issues is $1.428 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 Treasury Board Secretariat 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—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
• $203.5 million (Supplementary estimates (A) 2020 to 2021)—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
• $47 million (Budget 2021) over the next 2 years to support the workforce dedicated to processing pay transactions to help meet the target of eliminating the backlog by December 2022

2020 approved 3-year forward plan funding:

• PSPC’s funding request for a 3 year pay stabilization plan has been approved by the Treasury Board. The funding profile was made public in Economic and Fiscal Snapshot 2020
• this investment represents $910M over 3 years to eliminate the backlog of pay issues for public servants and to continue delivering and stabilizing pay for the Government of Canada
• this figure includes amounts for pension integrity ($8.7M per year for 3 years) and $70.4M related to a service contract renewal to adjust and modify the pay system for 2022 to 2023
• the plan prioritizes increased productivity for processing cases; reduced case intake volume; and accelerated implementation of system improvements
• it targets elimination of the backlog by the end of 2022, at which point it will prioritize data quality improvements and preparations for the next generation HR and pay solution

Stabilizing the pay system

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.

On average in 2020, parental and disability leaves were processed within service standards 99% of the time.

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.

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

Following consultations with Government of Canada employees, the MyGCPay project team has developed a new and improved pay stub.

Phoenix overpayments

Context

This note focuses on Phoenix salary overpayments. A salary overpayment is an amount of money paid to an employee to which they are not entitled. Overpayments exist for current employees, pensioners, and former employees who are not in receipt of a pension.

Suggested response

• Our priority is to support employees, pensioners and former employees who are not in receipt of a pension and resolve public service pay issues as quickly as possible, including the recovery of overpayments
• Collecting salary overpayments has always been part of the Government of Canada activities, even before the implementation of the Phoenix Pay System
• In its stewardship role, the government has an obligation to collect outstanding Phoenix overpayments
• Numerous current and former federal employees have already reimbursed overpayments, or have made arrangements to do so
• We recognize that the recovery of overpayments can be stressful for those affected, and multiple measures have been put in place to support individuals experiencing financial hardship, including flexible repayment options

Background

Recovery of overpayments supports the Government of Canada’s mandate to eliminate the backlog of outstanding pay issues for current and former public servants as a result of the Phoenix pay system, in order to rebuild their confidence in the integrity of their pay and pensions.

Salary overpayments impact current and former public service employees across departments, agencies and across the country, though the majority would be located in the National Capital Region.

The Receiver General and Pension Branch, in collaboration with the Office of the Comptroller General, and the Pay Administration Branch, has begun work to establish recovery strategies:

• for current employees: priority has been given to overpayment recoveries with a particular focus in the first phase on 2016 files, as well as those of high value (over $40,000)
• for pensioners: the Receiver General has put in place a strategy to recover overpayments from pension funds through the Government of Canada Pension Centre
• for former employees who left without a pension: the Receiver General will provide support and guidance to departments and agencies

Recovery of overpayments from current employees is subject to the flexibilities put in place by the Office of the Chief Human Resources Officer—Employment Conditions and Labour Relations, which regulates when pay recovery may begin.

Recovery of most overpayment balances for current employees will not begin until all of the employee’s outstanding pay transactions have been processed and all monies owed to the employee have been paid, the employee has received 3 consecutive accurate pays, and the employee has indicated their preferred repayment option. However, these flexibilities do not apply to routine pay transactions—for example, Leave Without Pay (LWOP) of 5 consecutive days or less is recovered from first available funds.

The Receiver General and Pension Branch, in collaboration with the Public Service Pay Centre, has begun the collection of overpayments from pensioners previously employed by departments and agencies served by the Public Service Pay Centre.

For former non-pensioned employees who were served by the Public Service Pay Centre, 3 attempts are made by the Public Service Pay Centre to recover funds upon termination of employment. If unsuccessful in recovering through these attempts, the file is transferred to the employer department or agency for further action.

Departments and agencies not served by the Public Service Pay Centre are responsible for recovery of funds from their current and former employees, though the Government of Canada Pension Centre will assist with recovery from pension recipients if requested.

The Receiver General and Pension Branch will provide advice and guidance to departments and agencies to assist in the recovery of overpayments for former employees who left without a pension.

We recognize that the recovery of overpayments can be a source of stress, even more so now given the current circumstances. Current employees and pensioners facing financial hardship can have their recovery rate, traditionally set at a rate of 10% of their regular payment, lowered to a more manageable level if requested.

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