Ottawa warns former public servants face collection agencies to recover Phoenix overpayments
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For nearly a decade, the Phoenix payroll processing system has caused a backlog of complaints regarding cases of underpayments or overpayments that can take months to resolve.Ron Ward/The Canadian Press
Federal government departments have been sending letters to former public servants warning them that outstanding debts from salary overpayments, the result of the problem-plagued Phoenix pay system, could be referred to collection agencies or the Canada Revenue Agency.
Public-service unions are raising objections over the move because many of the former government employees were not aware of the issue.
For nearly a decade, the Phoenix payroll processing system has caused a backlog of complaints regarding cases of underpayments or overpayments that can take months to resolve.
“Many of these individuals left the public service years ago and were never notified that an overpayment existed, which makes these sudden notices and financial impacts all the more shocking,” Public Service Alliance of Canada president Sharon DeSousa wrote in letters this week to Treasury Board President Shafqat Ali and Finance Minister François-Philippe Champagne.
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Ms. DeSousa said the notices to former public servants generally involve cases in which the overpayments are beyond the legally enforceable six-year timeline laid out in the Crown Liability and Proceedings Act.
“Yet, once received, the CRA treats them as active debts on individuals’ tax accounts,” she said.
Her letters to Mr. Ali and Mr. Champagne include excerpts of notices sent to former PSAC members over the past month. The individuals are not identified by name.
One said that failure to respond by a set deadline would mean “your account will be submitted to a collection agency and/or the Canada Revenue Agency set-off program for collection.”
Ms. DeSousa asked Mr. Champagne to direct the CRA to limit any action to cases that fall within the six-year limit.
“PSAC members and former members have already endured years of hardship due to the government’s payroll failures through missed paycheques, financial stress, and uncertainty. They should not be subjected to further harm through unlawful recovery actions that contradict federal legislation and established limitation periods,” she wrote.
Matthieu Perrotin, a spokesperson for the Treasury Board president, said the government is looking into the issue.
“We are reviewing the concerns the union has raised regarding the recovery of certain overpayments, and we take this feedback seriously,” he said in an e-mail. “We are conducting a thorough assessment and remain committed to working in good faith with bargaining agents to address this issue.”
The Phoenix pay system began as a project in 2009 to find savings by centralizing the pay services of 46 departments and agencies. The system was designed and implemented by IBM to replace its 40-year-old predecessor.
Phoenix was ultimately launched in 2016 and quickly ran into major problems. While the size of the backlog of complaints has been reduced, it has never been eliminated.
The government announced in June that it selected Dayforce to replace the Phoenix pay system.
While the Treasury Board oversees the rules governing the public service, the Public Service Pay Centre is managed by Public Services and Procurement Canada.
Michèle LaRose, a spokesperson for PSPC, said in a statement that the pay centre does not send overpayment cases to collection agencies. However, individual departments may choose to take that step, but PSPC could not say how often this occurs.
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“Public Services and Procurement Canada does not track the use of collection agencies for salary overpayment recoveries by client departments,” she said.
Sean O’Reilly, president of the Professional Institute of the Public Service of Canada union, said a common issue is that the letters from departments often refer to alleged overpayments from several years ago, in which the details are unclear.
“The issue we’ve been dealing with is the fact that these letters are riddled with errors. They don’t make any sense,” he said in an interview.
Mr. O’Reilly said he urges people to repay the funds in situations where the matter is clear, but often, the letters raise questions and the government’s pay centre is slow to provide answers.
“We feel that going to a collection agency is a last resort, and I think there’s better ways to get that done. It seems very heavy-handed.”
