Question Period Note: Phoenix Salary Overpayments

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 and former employees.

Notes:

• Questions related to the Directive on Terms and Conditions of Employment should be directed to the President of the Treasury Board
• Questions related to overpayment write-offs due to the six-year statutory restriction should be directed to the President of the Treasury Board
• Questions regarding the tax implications of Phoenix payroll issues should be directed to the Canada Revenue Agency

• Our priority is to support current and former employees and resolve outstanding pay issues as quickly as possible, including the recovery of overpayments
  • Overpayments to employees occur in all pay systems, and the recovery of those overpayments has been a part of Government of Canada activities, even before the implementation of the Phoenix Pay System
  • The recovery of overpayments from active and former employees, as well as employees in receipt of a pension, is also a normal part of the pay administration process
  • In its stewardship role, the Government has an obligation to recover outstanding overpayments
  • Since the launch of Phoenix, over 267,800 current and former federal employees have reimbursed overpayments, or have made arrangements to do so. This represents over $2.5 billion in recovered funds

If pressed on support to current and former employees:

• We recognize that the recovery of overpayments can be stressful for those affected. Multiple measures have been put in place to support individuals experiencing financial hardship, including flexible repayment options
• The overpayment letters sent to employees provide detailed information on the pay event that led to the overpayment, as well as the steps to follow should they have questions about the overpayment amount identified
• If an employee acknowledges the overpayment within the timeline stated in the letter, typically four weeks, they will continue to benefit from flexible repayment measures

• This means a flexible repayment plan can be put into place and recoveries would only start when:

  • all of the employee’s outstanding transactions have been addressed
  • the employee has received three consecutive correct pay cheques
  • a recovery agreement has been confirmed by the employee

• For pensioners who do not make arrangements with their compensation office to repay their overpayments: the Receiver General will recover the overpayment from pension benefits through the Government of Canada Pension Centre

  • The collection of funds from former employees’ individual pension benefits is typically set at a rate of 10% of the monthly pension payment
  • However, individuals claiming financial hardship may have their recovery rate lowered to a minimum of 5% of the monthly payment

If pressed on debt write-off of statute barred salary overpayments:

• The recovery of overpayments is part of the responsible handling of taxpayer funds, as the failure to do so would result in a significant loss to the Crown
• As part of its core responsibilities, Public Services and Procurement Canada supports federal departments and agencies by administering pay and benefits and pension plans for the Government of Canada
• Each department and/or agency is responsible for reporting their accounts receivables (debts owing to the Crown) to the Receiver General for inclusion in the Public Accounts
• The Pay Centre does not have the authority to determine when an overpayment, in part or in whole, is statute barred. This determination is made by the client departments. Client departments, with the support of TBS, are also responsible for the submission of debt write-offs for statute-barred salary overpayments
• Outstanding salary overpayments stands at roughly $553.3 million (as of April 24, 2023)

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