Archived: Government of Canada update on the Phoenix pay system for December 14, 2016

Good morning everyone, and thank you for attending. Joining me today is Randy Hewlett, from the Canada Revenue Agency, who is here to provide information about the resources available to public servants who may have tax implications because of pay issues.

I want to start today’s briefing with a direct message to employees. This has been a very challenging year. I understand how difficult this situation continues to be for those experiencing pay issues, especially as we head into the holiday season. Your patience and tolerance are deeply appreciated. Please know that our top priority remains providing you with support and resolution.

I want to remind employees that they can request a salary advance for missing pay. These payments can be issued within 24 to 48 hours and can be requested through managers or human resources advisors. If, for some reason, you are having difficulty getting salary support, please contact us through our feedback form so we can help you.

Backlog

We continue to close cases in our backlog. Our progress remains slow because of the complexity of these very old cases, but we are nearing a significant mark. We have closed the vast majority of terminations and those of employees going on long-term leave without pay within the backlog. These categories are important because they involve overpayments and could have tax implications.

To date, we have closed pay transactions for 95% of the employees in our backlog. There are just over 10,000 employees with cases remaining in the backlog.

The remaining cases mainly involve employee transfers and actings, so we are not talking about employees going without their regular pay. Nonetheless, these cases are important and continue to be handled by a dedicated team of expert compensation advisors in Miramichi and the satellite offices.

Achieving a steady state

Each month, our Pay Centre receives a constant stream of new pay transactions from the 46 departments we service. These requests vary from creating accounts for new hires, to processing promotions, to handling final payments for employees leaving the public service. As a result, at any given time, we have more than 80,000 pay requests in the system awaiting processing. Most new pay requests are supposed to be processed within 20 days. As I’ve said before, we are not currently meeting our service standards. This is due to slow processing speeds in the months following the introduction of Phoenix. As a result, we currently have the equivalent of two and a half months of additional work to process.

As users have become more proficient with Phoenix, our processing rates have increased, in September and October we processed approximately 100,000 transaction each month. Our processing capacity will further increase once we’ve cleared the backlog and are able to dedicate our full complement of compensation advisors to incoming pay requests. As well, new employees recruited through the Compensation Advisors Professional Development Program will soon start handling cases as part of their training, further increasing our pay processing capacity.

We are organizing our ongoing work by focusing on four priority areas: terminations, leave without pay, disability insurance and new hires. As I mentioned, terminations—or employees exiting the public service—and leave without pay can have a significant impact on taxes.

We have also organized incoming work to maximize productivity and to address priority cases in the system that may cause financial hardship for employees. We continue to refine our approach based on feedback from employees, departments and unions. Our goal, which is shared by all my deputy minister colleagues, is to achieve our steady state as soon as we can. Getting there will not happen overnight, but we are seeing steady progress.

In the meantime, our satellite offices will remain with us for as long as needed. Looking back, I have to say that establishing these offices was a critically important action.

Tax implications

As the year-end approaches, we are aware that employees who were not paid correctly are worried about tax implications. They are understandably concerned about the effect of overpayments and ensuring that their T4s reflect their actual earnings.

We have been working very hard with the Canada Revenue Agency, Revenue Québec, the unions and the Treasury Board of Canada Secretariat to minimize the potential for problems and provide employees with the information they need.

As a first step, we have implemented a process to ensure that overpayments recorded in Phoenix are not reflected in an employee’s yearly earnings, regardless of whether or not overpayments have been repaid. All employees who believe they may have been overpaid should contact our call centre before the end of the month so we can adjust their files. As of mid-October, we were aware of about 14,000 who have overpayments and these cases are being dealt with so they will not appear on their T4s.

For any overpayments identified in the new year, an amended T4 will be issued.

Employees should note that emergency salary advances and priority payments are not considered to be overpayments and will not appear on their T4, with a few exceptions. That’s important information for employees to know.

For employees who are missing pay, their income tax will be calculated using the actual amount they have received. Therefore, any salary paid in 2017, even if it relates to salary that would normally have been paid in 2016, will be included in their 2017 T4s.

You’ll hear from my colleague, Randy, in a moment, but the Canada Revenue Agency has played an important role as we prepare for the end of the year.

Recognizing that employees may have questions about the amounts on their T4s, we plan to provide detailed information about earnings and benefits. You may remember that I previously mentioned that employees had raised concerns about understanding the information on their pay stubs. Soon, they will be able to access detailed information on all their payments since Phoenix was implemented. This information will be available through the government’s Compensation Web Applications and will allow employees to better understand amounts received or recovered throughout the year and confirm the accuracy of their pay. This detailed pay information will be updated each pay, so that employees can always get information on their pay.

Employees can also visit the Canada Revenue Agency and Revenue Québec websites or contact their call centres for general tax enquiries.

Working with departments

We continue to work closely with our colleagues in departments to enhance the system. We are looking at the cases that have been particularly problematic, such as return from leave, terminations, leave without pay, disability claims and salary levels for new hires and students.

Together, we are identifying opportunities for departments to help ensure that these types of pay requests be processed more quickly and accurately. Also, we are streamlining processes to reduce delays and errors that could result in missing or inaccurate pay.

I’ll give you two examples. Employees returning from leave sometimes face delays having their pay restarted because their paperwork is either submitted or processed late. To prevent this from happening, we are looking at having human resources advisors in departments and agencies enter return dates directly into Phoenix when leave requests are submitted. This will accelerate the process to restart pay once employees return to work.

We’re also re-engineering processes so that salaries for new hires and students are correct. Currently, these employees, who are generally students, are automatically paid at the lowest level in a salary range, which is not always accurate. This adjustment further reduces the risk of errors or delays in getting paid correctly. As of next week, these measures will be in place.

Departments are providing us with feedback and advice, which is guiding us on our path to achieving a steady state and resuming normal processing times as quickly as possible.

Reporting progress

We are making progress, and it is important that employees can see evidence of improvement over time. In the new year, we will begin reporting on our overall performance.

Monthly reports will be posted online to track our processing speeds against our service standards. These reports will clearly demonstrate how the pay system is performing and how quickly certain pay transactions are being processed.

Conclusion

In closing, let me once again say that we are all working very hard to fix the issues and process all employee pay transactions as quickly as possible.

We will continue our updates in the new year.

I want to say a special thank you to employees here at PSPC, whether they are in Miramichi, the satellite offices or here in headquarters. We have a large group of employees who are working day and night to get their colleagues paid as quickly as possible.

The ongoing support from all our partners, as well as the patience and understanding of employees across the federal government, is helping us get there.

Thank you

Marie Lemay, P.Eng., ing.
Deputy Minister
Public Services and Procurement Canada