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
  • Since the launch of Phoenix, we have implemented a series of measures and made consistent progress towards pay stabilization
  • We have put in place over 3,000 systems enhancements and fixes, which have helped move the pay system to a much steadier environment
  • As of May 25, 2022, the backlog of financial transactions beyond the normal workload has decreased by 57% since the peak of January 2018, representing a reduction of 220,000 transactions
  • Over the same period of time, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 44%, representing a reduction of 280,000 transactions
  • Our significant progress in addressing the queue has been slowed somewhat by sustained high intake as well as our objective to manage new intake to service standards so as to minimize and prevent new backlog cases
  • Our adherence to service standard continues to improve. To date in 2022, the Pay Centre has met service standards 83% of the time on average, compared to 80% of the time on average in 2021, 72% on average in 2020, and 57% on average over 2018-2019
  • In addition, we have processed over $2 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
  • We continue to focus on addressing outstanding transactions while also working towards processing new transactions within service standards 95% of the time

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
• The Client Contact 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
• In April 2021 we launched the MyGCPay stub – designed to be more user-friendly and to help employees better understand their pay
• We prioritize cases that can have a large impact on an employee’s pay, for example, parental and disability leaves were processed within service standards 99% of the time, on average in 2021

If pressed on performance pay to executives involved in fixing Phoenix:

• The Government of Canada remains committed to supporting employees and resolving public service pay issues as quickly as possible
• Public service executives are eligible for performance pay in accordance with the Treasury Board’s Directive on Terms and Conditions of Employment for Executives
• Between 2016 to 2017 and 2019 to 2020, a number of executives who were assigned duties related to the ongoing response to address Phoenix pay system issues received performance pay against established performance commitments
• Senior executives responsible for the planning and implementation of Phoenix did not receive performance pay for their work on this initiative during 2015 to 2016, when Phoenix was finalized and launched

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

• New and existing 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, HR priorities which have contributed to workload increases, as well as ongoing compensation workforce retention and recruitment challenges
• The Pay Centre has experienced an increase in the number of transactions received in 2021, and this increase has accelerated in 2022
• 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 HR actions
• Extensive pay and compensation staffing activities are underway to fill known and anticipated vacancies
• We are regularly reorganizing the workload so that the most complex transactions are assigned to our most experienced staff
• Our investments in automation and improved processes are paying off. In 2021, we processed 55,000 more transactions compared to 2020, a 6% increase, with a slightly reduced number of compensation advisors, and we expect ongoing improvements in this area

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 One Pay-Processing Workforce approach that strategically aligns pay processors’ skillsets to the pay workload, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions.

In addition, we are focusing on other operational priorities in pay administration including pension arrears, terminations, and overpayments. We have improved service standard compliance while managing sustained increases of transactions submitted to the Pay Centre by departments and agencies, starting in 2021 and expected to continue going forward.

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, however, our progress has slowed somewhat. In March 2021 the backlog of financial transactions beyond the normal workload had decreased by 76% since the peak of January 2018 -- and as of May 25, 2022 it has decreased by 57% representing a reduction of 220,000 transactions, from 384,000 to 164,000. Over the same period of time, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 44%, representing a reduction of 280,000 transactions, from 633,000 to 353,000.

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.

In addition, new challenges have been affecting progress to eliminate the backlog and keep up with new intake since March 2021. These challenges include the high complexity of cases that remain in the backlog, HR priorities such as classification reform and mandatory vaccination policies which have contributed to workload increases, and ensuring support to critical system upgrades during the summer of 2021.

There have been unplanned impacts, resulting in rising intake, as well as ongoing compensation workforce retention and recruitment challenges. The Pay Centre received 178,000 more transactions in 2021 versus 2020. It also processed 55,000 more transactions in 2021 versus 2020, with fewer compensation advisors.

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. We continue to focus on addressing outstanding transactions while also working towards processing new transactions within service standards 95% of the 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 of which 116,117 were related to Phoenix system issues.

Preparations for the 2018, 2019, and 2020 tax years successfully avoided T4 amendments related to Phoenix system issues. As of May 2022, there were approximately 97,000 amended tax slips produced for 2018, 80,000 amended tax slips produced for 2019, and 46,000 amended tax slips produced for 2020, none of which were related to Phoenix system issues.

The 2021 year-end tax plan included 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. As of May 2022 there were approximately 23,000 amended tax slips for 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.

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 through the automated process for 128 TBS and separate employer agreements, representing over $2 billion in payments to employees (as of May 2022).

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 2014 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 April 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

Latest Public Service Pay Centre dashboard figures

The number of transactions received by the Pay Centre has increased significantly over past year (+17% for May 2022 compared to May 2021). As of May 25, 2022, there are 353,000 transactions ready to be processed for Pay Centre client department and agencies, including:

• 164,000 transactions with financial impact, which include: 146,000 beyond Pay Centre’s normal workload, and 18,000 repatriated to home departments and agencies for processing and closure
• 80,000 financial transactions that are part of Pay Centre’s normal workload
• 57,000 transactions with no financial impact, or general inquiries
• 7,000 collective agreement transactions
• 45,000 transactions waiting to be closed for which employees have already received payment

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