Question Period Note: Update on Pay Stabilization: overall queue and backlog elimination, support for employees, communications, and investments

This note focuses on the efforts and progress to provide support to employees, stabilize the administration of pay, the ongoing reduction of the overall queue and backlog, as well as financial investments in Phoenix.

Notes:

• All questions related to the mental health of public servants should be directed to the President of the Treasury Board
• All questions related to Next Generation Human Resources and Pay solution will be in a separate question period card developed by Shared Services Canada
• All questions related to the negotiation of collective agreements and compensation for Phoenix damages agreements should be directed to the President of the Treasury Board
• Issues related to income tax are under the purview of the Canada Revenue Agency. Questions related to the taxability of damages payments should also be directed to Canada Revenue Agency

• The Government of Canada is committed to supporting employees and continues to take action on all fronts to resolve public service pay issues
  • Thanks to the hard work of our compensation employees, we are seeing progress
  • As of November 24, 2021, the backlog of financial transactions beyond the normal workload has decreased by 69% since the peak of January 2018, representing a reduction of 264,000 transactions
  • Over the same period of time, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 54%, representing a reduction of 340,000 transactions
  • In addition, we have processed over $1.8 billion in collective agreement retroactive payments to employees to date, for the 2018 round
  • While there is still much work to do, we continue to progress towards pay stabilization, to ensure federal government employees across Canada are paid accurately and on time

If pressed on Phoenix damages agreements payments to employees:

• All public servants deserve to be accurately paid for their work
• The Government of Canada continues to take action on all fronts to resolve pay issues
• We recognize that the implementation of the Phoenix pay system has had an impact, directly or indirectly, on employees, which is why we have negotiated agreements with bargaining agents to compensate current and former employees for damages caused by the Phoenix pay system
• A claims process is available for current and former employees and the estates of deceased employees, who experienced severe personal or financial impacts as a result of issues with the Phoenix pay system

If pressed on support to employees:

• Financial support is and will remain available for employees missing any of their pay. This support includes an emergency salary advance or priority payment
• Flexible measures have been put in place to help minimize financial hardships for employees for the repayment of overpayments related to Phoenix pay system issues
• The Client Contact Centre is available to all current and former federal public service employees with pay and benefits questions, including available options regarding repayment plans
• The Centre escalates cases of hardship so they can be addressed quickly, and agents are trained to respond to situations where employees may be in distress

If pressed on specific actions:

• We have introduced MyGCPay to all departments and agencies serviced by Phoenix. MyGCPay is a web application that provides employees with a centralized and simplified view of their pay and benefits, to help employees better understand their pay
• The Pay Centre has met service standards 80% of the time to date in 2021, compared to 72% on average in 2020, and 57% on average over 2018 to 2019
• We prioritize cases that can have a large impact on an employee’s pay, for example, parental and disability leaves have been processed within service standards 98% of the time, on average to date in 2021

If pressed on the recent increase in the overall queue and backlog of transactions with financial implications beyond normal workload:

• Since March 2021, new challenges have been affecting progress to eliminate the backlog and keep up with new intake
• These challenges include the high complexity of cases that remain in the backlog, and critical system upgrades during the summer of 2021
• There have also been unplanned impacts like the growth of the public service, resulting in rising intake, as well as ongoing compensation workforce retention and recruitment challenges
• Extensive pay and compensation staffing activities are underway to fill known and anticipated vacancies
• In the meantime, some compensation employees have been temporarily assigned from backlog to intake to help process incoming transactions
• Once transaction processing and the workforce complement stabilize, we expect the overall downward trend of the past three years to resume

Stabilizing the administration of pay

Since the launch of Phoenix, PSPC has implemented a series of measures focused on stabilizing the administration of pay.

These include providing employees with greater support through our Client Contact Centre, introducing the Pay Pods model, implementing a backlog reduction strategy, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions.

We are working closely with all our partners, including employees, unions, Members’ of Parliament offices, departments and their representatives from HR and pay, to support our employees and resolve public service pay issues as quickly as possible.

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.

Queue and backlog

Since January 2018, PSPC has made significant progress in reducing the overall queue and backlog of pay transactions.

As of November 24, 2021, the backlog of financial transactions beyond the normal workload has decreased by 69%, representing a reduction of 264,000 transactions, from 384,000 to 120,000. Over the same period of time, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 54%, representing a reduction of 340,000 transactions, from 633,000 to 293,000.

Between April and September 2021, the monthly dashboard has been increasing, however the November dashboard showed a decrease in the overall queue (-5,000) and backlog of financial transactions beyond the normal workload (-5,000).

While we expect the general downward trend of the last three 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. This is 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.

Pay administration efforts are also affected by ongoing and emerging government-wide Human Resource policy priorities, including the mandatory vaccine policy and leave without pay processing, classification conversion, leave cash-out, among others.

In addition, since April 2021, intake has been returning to – and in some cases exceeding – pre-pandemic levels. Given the growth in size of the population of public servants served by the Pay Centre (up almost 12% from August 2019 to August 2021), we expected that higher intake will be sustained over time.

2022 tax-filing season

Every year, amended tax slips are issued to employees to correct any errors. In 2017 approximately 259,000 T4 amendments were issued to employees.

Preparations for the 2018, 2019, and 2020 tax years successfully avoided T4 amendments related to Phoenix system issues. As of September 2021, there were approximately 86,000 amended tax slips produced for 2018, 66,000 amended tax slips produced for 2019, and 36,000 amended tax slips produced for 2020, none of which were pay system related.

The 2021 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.

Collective agreement implementation – 2014 and 2018 contracts

The Government is committed to implementing collective agreements within Phoenix in a timely manner. With regard to the 2014 round, we processed approximately 207,000 collective agreement transactions manually. To ensure retroactive payment amounts were accurate, PSPC conducted a manual review of over 200,000 individual accounts. This manual work was completed in December 2020. In total, we processed 126 TBS and separate employer’s agreements and salary rate updates, representing close to $2.5 billion in payments to employees.

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 98 TBS and separate employer agreements, representing over $1.8 billion in payments to employees ($1,801,120,972 as of November 10, 2021).

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 as compared to the 2104 round. The results of each retroactive payment process are expected to vary due to a combination of many factors, including agreement complexity and projected volumes. However, we are on track to complete the 2018 collective agreement implementation within negotiated timeframes.

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

TBS is responsible for engagement with PSPC, employees and unions on collective agreements and compensation for Phoenix damages.

MyGCPay

MyGCPay is a web application developed by PSPC to help rebuild federal government employees’ confidence in the integrity of their pay. It provides employees with a centralized and simplified view of their pay and benefits. It helps employees identify pay issues earlier and allows them to monitor their open cases with more detail.

On average, around 91,000, or 28% of employees across the Government of Canada have used MyGCPay each month since its implementation in November 2019.

The application allows employees to:

• view the most current information about their pay and benefits
• print important documents such as tax slips and proof of employment
• identify pay issues earlier and, if an employee’s current or former department was served by the Pay Centre, monitor any open enquiries and cases in detail
• access historical information, pay cheques, benefits plans, enquiries, and Pay Centre cases dating back to 2016

Following consultations with Government of Canada employees, the MyGCPay project team introduced a new and improved pay stub in June 2021.

Investments in Phoenix

This section provides an historical record of investments to deliver pay and respond to pay issues. The current total is $2.134 billion:

• $50 million (2016) PSPC – build capacity, enhance technology, employee support
• $142 million (2017) – build capacity, enhance technology, employee support. This included $15 million for Treasury Board Secretariat (TBS) and $127 million for PSPC
• $431.4 million (Budget 2018) PSPC/TBS - build capacity, enhanced technology, and employee support
• $5.5 million (Budget 2018) Canada Revenue Agency (CRA) – process income tax reassessments needed due to pay issues
• $16 million (Budget 2018) TBS – work with experts, federal public sector unions and technology providers on a way forward for a new pay system
• $523.3 million (Budget 2019) PSPC – ensure adequate resources to address pay issues; support system improvements
• $9.2 million (Budget 2019) CRA – process income tax reassessments needed due to pay issues
• $910 million (Budget 2020) – 3-year forward plan funding, to continue efforts to eliminate the backlog of pay issues for public servants, maintain measures to deliver pay and support employees, and stabilize pay for the Government of Canada
• $47 million (Budget 2021) over the next 2 years to support the workforce dedicated to processing pay transactions to help meet the target of eliminating the backlog by December 2022

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