Additional Flexibilities with regards to the recovery of overpayments, Emergency Salary Advances and priority payments


To: Heads of Human Resources, Chief Financial Officers, Deputy Chief Financial Officers, Directors/Chiefs of Labour Relations, and Compensation Public Service Pay Centre, Miramichi

This bulletin provides information on additional flexibilities, introduced for employees impacted by the Phoenix pay system, regarding the recovery of overpayments, Emergency Salary Advances (ESAs) and priority payments. These flexibilities are to ensure that the recoveries do not impose additional financial hardship and stress on employees.

Amendments to the Directive on the Terms and Conditions of Employment with respect to the recovery of overpayments, and a new interpretation regarding the recovery of Emergency Salary Advances and priority payments, provide these flexibilities and ensure related recoveries are managed consistently.

It does not change the management of recoveries associated with termination of employment, or the end of term or casual contracts without further extension or renewal.


Treatment of Emergency Salary Advances and Priority Payments

The Treasury Board of Canada Secretariat is of the view that Emergency Salary Advances and priority payments are not in fact advances pursuant to the Accountable Advance Regulations. Rather, these payments are for services rendered for which employees have not yet been compensated.

To ensure that all recoveries are managed on a consistent basis, recovery of these payments is to be handled in a similar manner as that for salary overpayments, based upon the amended Directive on Terms and Conditions of Employment, described below.

Changes to the Directive on Terms and Conditions of Employment

In order to relieve and mitigate the financial stress and hardships of employees experiencing overpayments in Phoenix, the Directive on Terms and Conditions of Employment has been amended to allow the Employer to delay, all or in part, the recovery of overpayments.

A new subsection in the Directive has been added, 15.4.4,  which states that:

The person with the delegated authority may establish alternate timelines for the recovery of overpayments, as required to facilitate the effective resolution of issues related to Phoenix. Timelines may include a deferral of repayments, and may differ on a case-by-case basis.

Under the Directive on Terms and conditions of Employment both the Receiver General (on behalf of the Public Service Pay Centre (Pay Centre)) and positions identified under the departmental Human Resources delegation of authorities instrument have delegated authority to recover overpayments.

Accordingly, the Pay Centre has the authority to develop and implement overpayment recovery plans with respect to employees of the departments/agencies it serves; in non-Pay Centre departments/agencies, the person with the delegated authority may do so.

The delegation would also permit alternative arrangements, for example in support of a more effective, employee-centred administrative process.

To “facilitate the effective resolution of issues related to Phoenix”, a flexible and respectful approach to managing the recovery of overpayments (including ESAs and priority payments) will be adopted to be responsive to employees’ individual circumstances.

Commencement of Recoveries

Unless an employee chooses an earlier repayment, no recovery of an overpayment (including ESAs and priority payments) is to commence until an employee’s pay file is reconciled, namely, until the employee’s pay problems, i.e., incorrect or no pay, have been resolved.

Organizations must be prepared to respond to employees' questions, and provide evidence and explanation as required, regarding the cause of the overpayment.

For individuals on leave without pay, recoveries shall not be initiated until they return to work, or their employment is terminated.

Recoveries shall not commence until employees have received their correct pay for three consecutive pay periods.

Development of a Recovery Plan

It is incumbent on the delegated authority (the department/agency or the Pay Centre) to develop in conjunction with the employee a repayment schedule flexible enough to avoid, as possible, adverse impacts on the employee.  The employee shall be provided maximum discretion, as reasonable, to determine a repayment plan.

This includes delaying the recovery of overpayments (as well as ESAs and priority payments) until such time as the employee receives monies owed. Examples may include awaiting the receipt of income tax refunds in respect of an amended T-4 and/or Relevé 1 slip, or the receipt of retroactive payments from the implementation of collective agreements in place or soon to be concluded.

All questions should be directed to your Departmental Corporate Labour Relations or Corporate Compensation Official who, if required will direct their questions to the Compensation and Labour Relations group at the following email address:

Baxter Williams
Executive Director
Strategic Compensation Management
Compensation and Labour Relations
Office of the Chief Human Resources Officer

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