Question Period Note: Phoenix overall queue and backlog decrease

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 agreements and compensation for Phoenix damages should be directed to the President of the Treasury Board

• 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 November 25, 2020, the backlog of transactions with financial implications has decreased by 73% since the peak of January 2018, representing a reduction of 281,000 transactions, from 384,000 to 103,000
  • Over the same period of time, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 57%, representing a reduction of 361,000 transactions, from 633,000 to 272,000
  • We have also processed close to $2.5 billion in collective agreement retroactive payments to employees, for the 2014 round

If pressed on the new collective agreement and Phoenix damages compensation with the Public Service Alliance of Canada:

• The Treasury Board Secretariat (TBS) is responsible for engagement with Public Services and Procurement Canada (PSPC), employees and unions on collective and compensation agreements
• PSPC is working with the TBS to ensure that collective agreements are 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, including the recovery of overpayments
• Recovery of most overpayment balances will not begin until all of the employee’s outstanding pay transactions have been processed, the employee has received three consecutive accurate pays, and the employee has indicated their preferred repayment option
• Employees are informed of the amount owing, the cause of the overpayment, and the repayment options
• Employees who have already agreed on a repayment plan, but now need to revisit it, can also call the Client Contact Centre to discuss available options
• Employees with pay issues continue to have access to emergency salary advances or a priority payment when necessary

If pressed on taxes:

• As for the past two 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 will be released to federal employees on a staggered schedule by the legislated deadline of the end of February 2021

Queue and backlog

In total, as of November 25, 2020, there are approximately 272,000 transactions ready to be processed at the Pay Centre, including 103,000 transactions with financial impact beyond the normal workload.

As of November 25, 2020, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 57% since its peak in January 2018, representing a reduction of 361,000 transactions (from 633,000 to 272,000).

Over the same period of time, the backlog of transactions with financial implications beyond normal workload has decreased by 73%, representing a reduction of 281,000 transactions (from 384,000 to 103,000).

We observed a slight increase in the number of transactions with financial implications beyond normal workload in August and September 2020, primarily due to seasonal peaks in intake, which are a normal part of the pay administration process.

While we expect the general downward trend of the last two and a half 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.

In 2019, the backlog of transactions with financial implications was reduced by 81,000. So far in 2020, we have reduced the backlog by 99,000.

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.

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. Tax slips for 2020 will be released to federal employees on a staggered schedule by the legislated deadline of the end of February 2021.

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 and 2019 tax years successfully avoided T4 amendments related to Phoenix system issues. As of October 2020, there were approximately 61,000 amended tax slips produced for 2018, and 36,000 amended tax slips produced for 2019, 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 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 three 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.

In March 2020, the Pay Centre temporarily suspended all new recoveries of overpayments that were eligible for flexible repayment measures as part of the COVID-19 response.

Starting October 7, 2020, the Pay Centre began recovery of these overpayments that were eligible for recovery and placed on hold.

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, there are currently 126 TBS and separate employer’s agreements and salary rate updates that have been processed, representing close to $2.5 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 by the end of December 2020.

The implementation of the 2018 round of collective agreements is well 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.

Based on the work done so far, we expect that under 10% 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 agreements and compensation for Phoenix damages.

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