Question Period Note: Salary Overpayments

This note focuses on salary overpayments. A salary overpayment is an amount of money paid to an employee to which they are not entitled. Overpayments to current and former employees can occur in all pay systems, and the recovery of overpayments has been a part of Government of Canada activities, even before the implementation of the Phoenix Pay System.

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 can occur in all pay systems, and the recovery of overpayments has been a part of Government of Canada activities, even before the implementation of the Phoenix Pay System
• In its stewardship role, the Government has an obligation to recover outstanding overpayments
• Since the launch of Phoenix, over 342,000 current and former federal employees have reimbursed overpayments. This represents over $2.92 billion in recovered funds

If pressed on support to 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, repayment options, as well as the steps to follow should they have questions about the overpayment amount identified
• 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 current process is being reviewed, and PSPC is looking to create a future model that is more human-centered, focusing on greater transparency, increased trust, and decreased employee burden

Recovery of overpayments supports the Government of Canada’s mandate to eliminate the backlog of outstanding pay issues for current and former public service employees, 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.

We recognize that the recovery of overpayments can be a source of stress. The Client Contact Centre is the first point of contact for current and former federal public servants looking to report a pay issue, provide status updates on their files or to receive assistance with technical issues (when using the Compensation Web Applications or the Phoenix pay system) and general enquiries. The Client Contact Centre is available to all current and former federal public servants with pay and benefits questions.

Flexible measures have been put in place to help minimize financial hardships for employees for the repayment of overpayments. This means that, for the recovery of most overpayments, a flexible repayment plan can be put into place in situations where public servants have acknowledged their overpayment and agreed to repay it.
Current employees and pensioners facing financial hardship can have their recovery rate, traditionally set at a rate of 10% of their regular payment, lowered upon request and as long as the overpayment is acknowledged and recovery will be complete within a reasonable period of time (typically within 5 years).

It is important to note that the information regarding overpayments included in the Key Facts includes both administrative and true overpayments. Administrative overpayments related to Acting transactions were a normal part of the pay administration process, from 2017 to 2020, and used to ensure employees were paid the accurate acting salary. They would be generated when an employee’s acting assignment was entered late and were automatically recovered at the time of the acting assignment’s retroactive payment. This allowed the pay system to automatically reconcile the difference between the regular salary rate and the acting salary rate in subsequent pay periods without affecting the employee’s pay. As of October 2020, a new process was put in place and these types of overpayments are no longer created for this purpose. A true/non-administrative overpayment is an amount of money paid to an employee to which they are not entitled. They usually occur when certain pay transactions are not submitted or processed promptly. 

• Outstanding salary overpayments stand at roughly $522 million (as of October 7, 2024)
• Since the launch of Phoenix, approximately 461,400 employees have been identified as having received either an administrative overpayment or true overpayment, totaling $3.44 billion. As of October 2024, overpayments were repaid by approximately 342,000 of those employees, representing a total of approximately $2.92 billion in recovered funds
• As of October 2024, approximately 119,400 employees have an outstanding overpayment, representing about $522 million