Canadian government races to collect Phoenix overpayments as deadline looms

By on 01/02/2022 | Updated on 02/02/2022
It is estimated that Phoenix issued overpayments to 337,000 employees totalling C$3bn (US$2.4bn). Photo by Sara Long via Flickr

Canada’s federal government is racing to recoup an estimated C$552m (US$433m) in overpayments made to employees as a result of the botched Phoenix pay system before they must be written off by law.

The centralised system for processing public service salaries was introduced in 2016. Since then, a series of technical problems and flawed record keeping has led to more than half of Canada’s 290,000 public servants either being underpaid, overpaid, or not paid at all. 

Public Services and Procurement Canada, the government’s pay administrator, estimates that Phoenix issued overpayments to 337,000 employees totalling C$3bn (US$2.4bn). So far, 222,000 of them have paid back about $2.3bn (US$1.8bn).

Six-year statute of limitations

By law, the federal government has six years to collect salary overpayments from employees after which they become unrecoverable and are written off as debt. The six-year statute of limitations expires next month prompting departments to identify any remaining overpayments made in the first year after Phoenix went live, recover the money, or initiate steps for repayment before the deadline.

Letters have been sent to the 21,000 employees still thought to owe money from 2016 asking them to acknowledge the overpayment in writing and offering them flexible options for repayment. If the letter isn’t acknowledged within four weeks, the money will be taken from their pay.

“This is about exercising due diligence, stewardship. This is taxpayer money, owed to the Crown, and we have to make sure taxpayers aren’t screwed,” one official who is not authorised to speak publicly told the Ottawa Citizen.

However, some public servants say they are not aware of having received any additional money and have no way to verify whether or not they were overpaid six years after the event, while others claim they have already paid back the amount owed.

Public Service Alliance of Canada has its say

Responding to the announcement, the Public Service Alliance of Canada (PSAC) said it was “absolutely outrageous” that the government was taking action to claw money back from employees. “The truth is, there hasn’t been a single pay period without issues since the Phoenix fiasco began in 2016,” said PSAC president Chris Aylward. “In most cases, these overpayments come as a complete surprise to our members, and many have no way of confirming if they even owe money at all.”

Most overpayments were made when short-term assignments, terminations, and various types of leave weren’t properly logged. Those moving to new departments could sometimes receive two salaries and in some cases, temporary employees or retirees continued to be paid even after they’d left the federal government.

“Public service workers who’ve suffered so much already at the hands of Phoenix deserve better, and their ordeal won’t be over until the government puts in place a pay system that pays them accurately and on time, every time,” Aylward said.  

Phoenix remains the government’s pay system until its replacement, dubbed NextGen, is completed. A pilot is underway, but it will be years before the new system is implemented.

Phoenix was meant to save the taxpayer C$70m (US$52m) per year. The government has so far spent C$1.3bn (US$1bn) on efforts to solve the problems and an additional C$560m (US$440m) in damages to compensate employees for emotional and financial hardship.

About Mia Hunt

Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.

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