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 May 26, 2021, the backlog of financial transactions beyond the normal workload has decreased by 72% since the peak of January 2018, representing a reduction of 278,000 transactions, from 384,000 to 106,000
  • 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 359,000 transactions, from 633,000 to 274,000
  • The Pay Centre met service standards 82% of the time in May 2021, compared to 72% on average in 2020, and 57% on average over 2018 to 2019
  • We processed close to $2.5 billion in collective agreement retroactive payments to employees, for the 2014 round
  • In addition, we have processed almost $1.8 billion in collective agreement retroactive payments to employees to date, for the 2018 round

If pressed on the recent increase in the backlog of transactions with financial implications beyond normal workload as of May 26, 2021:

• The increases observed for the number of transactions with financial implications beyond normal workload last month is primarily due to seasonal peaks in intake at the end of the fiscal year
• Seasonal peaks are a normal part of the pay administration process. For example, we onboarded over 7,000 students in May 2021, compared to 600 in April and 200 in March
• Transactions throughout the year can sometimes surge due to a number of factors, such as the varying volume of HR actions, including end-of term contracts, periodic increases in acting appointments and employees returning from leave
• We have observed similar seasonal peaks before and we expect the general downward trend of the past three years to continue
• Regular variations in the overall queue and the backlog can be expected as the intake of new cases submitted by federal departments and agencies varies each month
• Depending on intake volume and number of cases processed, during some pay periods, reductions in the overall queue and backlog may be followed by slower progress or even increases

If pressed on incorrect enrolment in the Public Service Pension Plan:

• Employees who became new Public Service Pension Plan members on or after January 1, 2013 are subject to different rules and contribution rates
• Employees are sometimes enrolled in the incorrect Group within the pension plan, resulting in an overpayment, or underpayment, in contributions
• We have mechanisms in place to identify these errors, and issue refunds or collect recoveries. With these mechanisms, new errors in enrollment are identified much faster

If pressed on taxes:

• As for the past 2 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 were released to federal employees on a staggered schedule by the legislated deadline of the end of February 2021

Queue and backlog

While we expect the general downward trend of the last 3 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.

Seasonal trends include peaks in intake at the end of the calendar year and the end of the fiscal year, as well as end of summer completion of many casual and student work terms. We have observed similar seasonal trends in previous years.

Seasonal peaks are a normal part of the pay administration process and we expect that large reductions will, at times, be followed by slower progress or even increases.

The number of financial transactions beyond the normal workload were reduced by 81,000 in 2019, and by 101,000 in 2020.

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.

PSAC Program and Administration Services Group collective agreement implementation:

On February 3, 2021, PSPC issued the retroactive payments owed to members of the Program and Administration Services (PA) Group from the 2018 collective agreement, signed on October 23, 2020.

This highly complex endeavour entailed over 1.5 million additional transactions processed in the Phoenix pay system.

Payments were made in one lump sum to respect the timelines negotiated in collective bargaining. Employees are able to view detailed payment information, by pay year, in the pay system.

Approximately $620 million in retroactive payments were made to the PA group, comprised of just over 132,000 active and inactive employees.

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.

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, 2019, and 2020 tax years successfully avoided T4 amendments related to Phoenix system issues. As of May 2021, there were approximately 78,000 amended tax slips produced for 2018, 56,000 amended tax slips produced for 2019, and22,000 amended tax slips produced for 2020, none of which were pay system related. In comparison, approximately 259,000 T4 amendments were issued for 2017.

Under current legislation, the Canada Revenue Agency (CRA) ceased to automatically review amended T4s for 2017 in January 2021. Employees will need to request reassessments, which CRA has agreed to facilitate. Communications for employees were sent and more are being developed.

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, we processed 126 TBS and separate employer’s agreements and salary rate updates, representing close to $2.5 billion in payments to employees.

To ensure retroactive payment amounts were accurate, PSPC conducted a manual review of over 200,000 individual accounts.

The implementation of the 2018 round of collective agreements is well underway. To date, 2018 collective agreement implementation (CAI) salary adjustments and retroactive payments have been completed for 87 TBS and separate employer agreements, representing almost $1.8 billion in payments to employees.

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 an overall average of approximately 10% of the 2018 round of collective agreement transactions will need manual intervention, resulting in a reduction of hundreds of thousands of manual transactions. The results of each retroactive payment process are expected to vary due to a combination of many factors, including agreement complexity and projected volumes.

In comparison, the 2014 round required compensation advisors to manually process and manually validate approximately 90% of collective agreement transactions.

The Treasury Board Secretariat is responsible for engagement with PSPC, employees and unions on collective agreements and compensation for Phoenix damages.

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