Payment in arrears: Questions and answers

This payroll practice ensures that employees receive pay every second Wednesday for the ten days of work that concluded two weeks previously, between Thursday and Wednesday. This way, your pay more accurately reflects the actual time worked. In addition, payment in arrears allows the Public Service Pay Centre to avoid overpayments, so there are fewer adjustments to your pay over time.

The government officially implemented payment in arrears on April 23, 2014.

This move was part of the Pay Modernization Project, undertaken in 2009 to replace a 40-year-old pay system with a modern pay solution (Phoenix) and streamline business processes. The project aimed to improve pay services to employees.

No. The following employees did not transition to payment in arrears and did not receive the transition payment:

• employees paid once a month
• employees already paid in arrears
  • those who submit time sheets to cover the hours and days worked
• employees paid monthly but who receive an interim payment in the middle of the month, such as teachers

Limiting payment in arrears to new employees would have been cost ineffective, with some employees paid one way and others paid differently. The Government of Canada wanted to modernize and improve pay services for all employees, so payment in arrears is now the standard across the public service.

By implementing industry standard payroll practices, the Government of Canada has improved pay services to employees through timelier processing of changes in their pay, consistent and efficient pay services, increased transparency and predictability in earnings. Our new pay system, Phoenix, did not require costly changes and updates given our switch to arrears.

Moving to payment in arrears generally reduces overpayments and increases the accuracy of payments; thus reducing hardship on employees from having to pay back the amounts they were inadvertently overpaid.

No, payment in arrears does not have any impact on the five consecutive years of highest paid service for pension purposes.

All public servants working in 2014 under the previous payroll system received a transition payment, a one-time salary payment. Indeterminate, term, seasonal employees, casuals and students not yet paid in arrears, regardless of group or level, employer (core public administration, separate employer or Crown) and union affiliation, all received the payment.

The transition payment ensured that no workers would experience financial hardship because of the transition to payment in arrears. This one-time payment was equal to the "regular" pay, or basic pay, received May 7, 2014.

The transition payment included the following standard deductions:

• income tax (federal and provincial)
• Canada Pension Plan/Quebec Pension Plan
• Employment Insurance/Quebec Parental Insurance Plan
• pension plan contributions
• Disability Insurance/Long-term Disability Insurance
• Supplementary Death Benefit

If applicable to individual workers, other deductions might have included:

• union dues
• Canada Savings Bonds
• Public Service Health Care Plan
• Public Service Management Insurance Plan
• Government of Canada Workplace Charitable Campaign
• other

Employees received an official notification of the transition payment, which occurred in May 2014.

No, the transition payment did not affect an employees’ pensionable service.

No, employees did not receive a regular pay on May 21, 2014. Instead, they received a one-time transition payment, equivalent to their regular pay. This payment is recoverable upon the employees’ departure.

Employees received the one-time transition payment in the same manner as their regular pay, by direct deposit in most cases.

No. All employees paid on a bi-weekly current basis received the transition payment.

Employees received the same income they would have received if payment in arrears were not implemented. Employees’ 2014 tax slips reflected all money earned and all deductions taken during the 2014 calendar year.

The employee received one transition payment only, covering the regular salary, or basic pay, for both positions.

In this case, the employee received 2 transition payments: 1 from each department to cover the regular salary, or basic pay in each position.

The employee received a transition payment based on their reduced salary applicable to the approved leave with income averaging or pre-retirement agreement.

Yes, upon their return to work.

For example, if an employee returned to work on November 23, 2015, they should have received the transition payment within approximately two weeks of their return. The return-to-work pay action request would have triggered the pay system to automatically issue the transition payment.

The payment in arrears approach is now the standard payroll process for all new employees.

If compensation receives all of the necessary documentation promptly, a new employee should receive their first payment within four weeks of their starting date. For example, an employee starts work on Thursday, May 25, and compensation receives all documentation before June 8. The employee should expect to receive their first pay (for the five days from May 25 to the end of the pay period on May 31, inclusively) on Wednesday, June 14. The employee would receive their first full pay on June 28, and payments would continue every second week thereafter.

If both organizations are part of the Government of Canada and are paid by Public Services and Procurement Canada, a change in employer does not constitute a departure for the purposes of payment in arrears. In these cases, employees would continue to receive their regular salary, or basic pay, every two weeks.

Unlike new employees, existing employees did not have to wait four weeks to receive a salary payment when the transition to payment in arrears occurred. Existing employees continued to receive a salary payment every two weeks. As a result, they will not be entitled to a regular salary payment two weeks after they depart from the public service. Instead, their final payment will cover only the difference between their salary at departure and the transition payment issued back in May 2014. Employees hired after April 24 can expect to receive a regular salary payment two weeks after their departure.

A departure means resignation, retirement, end of specified term, termination of employment, change in employer (including a Crown corporation), dismissal, rejection during probation, layoff or death. A change in employer from Treasury Board to a separate agency, or vice versa, does not constitute a departure for the purposes of payment in arrears.

In rare cases, employees may be earning less when they leave the public service than when they received a transition payment in May 2014. For example, employees may only be working part-time at the time of their departure. To avoid owing money to the government, departing employees, particularly those who are retiring, may wish to make their last day of work a payday.

Otherwise, any money owing will be deducted from the first available funds including:

• final salary payment
• overtime
• pension benefits, if applicable
• return of contributions, if applicable
• other

And if there are no available funds, employees must provide a money order or certified cheque for the amount owing, payable to the Receiver General for Canada.

All money earned and all deductions taken during the applicable calendar year is reported on the income tax slips for that applicable calendar year, as usual.