CD 2013-016

Subject: Pay Equity Implementation for the Following Separate Employers:

October 18, 2013

• Office of the Auditor General (AUD)
• Canadian Institutes of Health Research (CRI)
• Communications Security Establishment (CSE)
• Canadian Security Intelligence Service (PAY)
• Office of the Superintendent of Financial Institutions (SIF)
• Social Sciences and Humanities Research Council (SSH)

1. Purpose

The purpose of this directive is to provide information on the implementation of the pay equity agreement as agreed to between the Public Service Alliance of Canada (PSAC) and a number of separate employers.

2. Background

2.1. Office of the Auditor General

The Office of the Auditor General authorized payment of a pay equity adjustment for employees in the CR, DA-CON, LS, ST-OCE, ST-SCY or PE groups based on the Settlement signed on February 13, 2013.

2.2. Canadian Institutes of Health Research

The Canadian Institutes of Health Research authorized payment of a pay equity adjustment for employees in the CR, DA, ST or PE groups based on the Settlement signed on February 26, 2013.

2.3. Communications Security Establishment

The Communications Security Establishment authorized payment of a pay equity adjustment for employees in the CR or DA-CON groups based on the Settlement signed on March 1, 2013.

2.4. Canadian Security Intelligence Service

The Canadian Security Intelligence Service authorized payment of a pay equity adjustment for employees in the CR, ST; or IS groups based on the Settlement signed on March 26, 2013.

2.5. Office of the Superintendent of Financial Institutions

The Office of the Superintendent of Financial Institutions authorized payment of a pay equity adjustment for employees in the CR, ST-OCE, ST-SCY or PE groups based on the Settlement signed on March 1, 2013.

2.6. Social Sciences and Humanities Research Council

The Social Sciences and Humanities Research Council authorized payment of a pay equity adjustment for employees in the CR, DA-CON or ST-SCY groups based on the Settlement signed on March 1, 2013.

3. Policy

3.1. Eligibility

3.1.1. Employees must meet the following requirements based on the agreements between AUD, CSE, CRI, PAY, SIF, SSH and PSAC to be eligible for a pay equity adjustment:

• Be an employee occupying one of the groups within the period covered by the respective agreement and in be in receipt of a salary, an allowance (maternity allowance or parental allowance), disability benefits or workers’ compensation benefits.

3.1.2. An employee will not be considered an eligible employee for any portion of the retroactive period during which the employee was a temporary office assistant, a casual employee, or on secondment from another employer.

3.1.3. The pay equity retroactive adjustment will be calculated on the actual periods of service in the eligible classifications. The adjustment will be reduced by periods of leave without pay (LWOP), with the exception of maternity or parental leave where the employee received maternity or parental benefits.

3.1.4. The pay equity retroactive adjustment amounts are to be prorated for part-time employment based on the assigned work week (AWW) during the retroactive period.

3.2. Factors

3.2.1. Office of the Auditor General

The retroactive adjustment covers the period from March 8, 1985 to April 1, 1999 for AUD employees classified as a CR, DA-CON, LS, ST-OCE, ST-SCY and from October 1, 1991 to April 1, 1999 for AUD employees classified as a PE. The retroactive payments for lost wages are to be considered pay for all purposes, including for the Public Service Superannuation Act (PSSA). The pay equity retroactive adjustment is considered to be all inclusive as recalculations are not to be made on salary related benefits such as overtime, severance pay and unused leave for this period. There is no provision for interest payments in this agreement.

3.2.2. Canadian Institutes of Health Research

The retroactive adjustment covers the period from March 8, 1985 to March 31, 1999 for CRI employees classified as a CR, DA or ST and from October 1, 1991 to September 30, 1999 for CRI employees classified as a PE. The retroactive payments for lost wages are to be considered pay for the purposes of the Public Service Superannuation Act (PSSA). The pay equity retroactive adjustment is considered to be all inclusive as recalculations are not to be made on salary related benefits such as overtime, severance pay and unused leave for this period. There is no provision for interest payments in this agreement.

3.2.3. Communications Security Establishment

The retroactive adjustment covers the period from March 8, 1985 to July 22, 1997 for CSE employees classified as a CR or DA-CON. The retroactive payments for lost wages are to be considered pay for all purposes, including the Public Service Superannuation Act (PSSA). The pay equity retroactive adjustment is considered to be all inclusive as recalculations are not to be made on salary related benefits such as overtime, severance pay and unused leave for this period. There is no provision for interest payments in this agreement.

3.2.4. Canadian Security Intelligence Service

The retroactive adjustment covers the period from March 8, 1985 to December 1, 1987 for PAY employees classified as a CR or ST and from January 1, 1988 to March 31, 1992 for PAY employees classified as an IS. The retroactive payments are considered compensation in lieu of lost wages and are not considered pay for the purposes of the Public Service Superannuation Act (PSSA). The pay equity retroactive adjustment is considered to be all inclusive as recalculations are not to be made on salary related benefits such as overtime, severance pay and unused leave for this period. There is no provision for interest payments in this agreement.

3.2.5. Office of the Superintendent of Financial Institutions

The retroactive adjustment covers the period from July 2, 1987 to December 31, 1997 for SIF employees classified as a CR, ST-OCE or ST-SCY and from October 1, 1991 to December 31, 1997 for SIF employees classified as a PE. The retroactive payments for lost wages are to be considered pay for all purposes, including for the Public Service Superannuation Act (PSSA). The pay equity retroactive adjustment is considered to be all inclusive as recalculations are not to be made on salary related benefits such as overtime, severance pay and unused leave for this period. There is no provision for interest payments in this agreement.

3.2.6. Social Sciences and Humanities Research Council

The retroactive adjustment covers the period from March 8, 1985 to March 31, 1999 for SSH employees classified as a CR, DA-CON or ST-SCY. The retroactive payments are considered compensation in lieu of lost wages and are not considered pay for the purposes of the Public Service Superannuation Act (PSSA). The pay equity retroactive adjustment is considered to be all inclusive as recalculations are not to be made on salary related benefits such as overtime, severance pay and unused leave for this period. There is no provision for interest payments in this agreement.

3.2.7. In the case of deceased employees or former employees that have since died, any payments owed will be made payable to the estate. The administrator of the estate will be responsible for payment distribution.

3.3. Acting Pay

Employees who were acting (code 002) in one of the affected groups during the retroactive period, whether or not their substantive position is in one of the affected groups, are eligible for the pay equity adjustment based on their acting classification.

Employees whose substantive position was in one of the affected groups during the retroactive period but who were acting (code 002) outside of one of the affected groups are not eligible for the pay equity adjustment during the period in which they were acting.

3.4. Acting Premium

Employees whose substantive position was in one of the affected groups and who received an acting premium (code 238) while this code was in effect, are to be paid the pay equity adjustment based on their substantive group and level.

If the employee's substantive position was not in one of the affected groups then there is no pay equity adjustment to be paid.

The acting premium was in effect from September 1, 1986, to April 30, 1989.

Example

• Employee's substantive position: CR-04
• Acting premium (code 238) from March 1, 1989 to April 30, 1989
• Employee reverts to CR-04 effective May 1, 1989
• Acting CR-05 (code 002) from June 1, 1989 to August 31, 1989
• Employee reverts to CR-04 effective September 1, 1989
• Acting AS-01 (code 002) from September 1, 1990 to October 31, 1990

• Pay equity adjustment paid at the CR-04 rate up to and including May 31, 1989
• Pay equity adjustment paid at the CR-05 rate from June 1, 1989 to August 31, 1989
• Pay equity adjustment paid at the CR-04 rate from September 1, 1989 to August 31, 1990
• No entitlement to the pay equity adjustment from September 1, 1990 to October 31, 1990
• Pay equity adjustment paid at the CR-04 rate from November 1, 1990 to April 1, 1999

3.5. Leave Without Pay (LWOP)

The pay equity adjustment amount must be reduced by all periods of LWOP, with the exception of maternity leave (Reason Code "K") while in receipt of maternity allowance, parental leave (Reason Code "R") while in receipt of a parental allowance and sick leave (Reason Code "C") while in receipt of disability benefits or workers’ compensation benefits.

The eligible periods of leave should be considered as active service for a period from the "temporarily struck off strength (T-SOS)" date up to the earliest of the following dates:

• end of receipt of the allowance or benefit; or
• the "retaken on strength (RE-TOS)" date; or
• the end of the adjustment period as per the pertinent pay equity settlement.

Compensation advisors will be required to verify eligibility and adjust the amount paid, if applicable.

3.6. Pay Equity Adjustments

3.6.1. Office of the Auditor General, Canadian Institutes of Health Research, Communications Security Establishment and Office of the Superintendent of Financial Institutions

The retroactive pay equity adjustments included in the agreement for AUD, CRI, CSE and SIF are divided into different types of payments.

1. 50% of the pay equity settlement will be paid as compensation for lost wages, and;
2. 50% of the pay equity settlement will be paid as compensation pursuant to section 53(2)(e) of the Canadian Human Rights Act without deduction for tax to a maximum of $20,000
3. Should the amount in b) exceed $20,000.00 the excess amount payable is treated as lost wages as in a) above.

3.6.2. Canadian Security Intelligence Service and Social Sciences and Humanities Research Council

The retroactive pay equity adjustments included in the agreement for PAY and SSH are divided into different types of payments.

1. 40% of the pay equity settlement will be paid as compensation in lieu of lost wages, and;
2. 60% of the pay equity settlement will be paid as compensation pursuant to section 53(2)(e) of the Canadian Human Rights Act without deduction for tax to a maximum of $20,000
3. Should the amount in b) exceed $20,000.00 the excess amount payable is treated as lost wages as in a) above.

4. Procedures and Instructions

The following new entitlement codes have been created for the processing of the pay equity adjustments described in section 3.2:

• Code 1G6 is taxable, pensionable and subject to all statutory deductions, but is not subject to supplementary death benefit (SDB) or to insurances. It is to be used for payments under part a).
• Code 1G7 is taxable but not pensionable. It is subject to all statutory deductions, but is not subject to SDB or insurances. It is to be used for payments under part c).

4.1. Retroactive Pay Equity Adjustment

Employees are to be paid the entitlement for the retroactive period covered in the agreement, where their actual classification reflects service in one of the affected groups, either acting or substantive.

The Regional Pay System (RPS) has been modified to accept the value of pay equity "PE" in the pay period field on the Entitlement Commence (ENC) screen for entitlement code 1G6 to result in the correct calculation for the pension contribution rate. 1G7 is non-pensionable and does not require the calculation.

• Rate before 1997: 4.7 %
• Rate 1997: 4.5%
• Rate 1998: 4.3%
• Rate after 1998: 4.0%

The pay equity transaction can be split by fiscal year but the split is not mandatory. Compensation advisors are not required to break for pay period calendar years.

4.2. No Master Account

For former employees where no Master Account exists in the Regional Pay System (RPS), compensation advisors will be required to create a taken on strength (TOS) transaction, using employee type code "x", and a struck off strength (SOS) transaction for these accounts. These transactions must be processed in separate updates but within the same pay period to ensure that regular pay cheques are not produced.

4.3. Retroactive Payments for SOS Accounts

If the account is currently in SOS status and the employee received a return of contributions (ROC), pension contributions should not be withheld from the retroactive payments and code 1G7 should be used to pay the retroactivity. If the account was SOS, the employee received a ROC and has since returned to work, pension contributions should be calculated and withheld from the payment of pensionable service as identified by entitlement code 1G6.

4.4. Pension Deficiencies

Pension deficiencies owing for periods of LWOP should be withheld from the retroactive payment. While only periods of LWOP identified in section 3.1.1. are included in the pay equity settlement, periods of LWOP that are not eligible for payment of the pay equity adjustment still require pension deficiencies to be collected, unless the employee opted out of the LWOP over three months. Periods of LWOP deficiencies are to be input using an Entitlement Adjust (EAJ) with code 202 (single rate) or code 270 (double rate) based on the reason code for the LWOP.

4.5. Tax Waivers

Upon entering pay equity entitlements, if accompanied by a waiver letter of taxes from the Canada Revenue Agency and/or Revenu Québec, compensation advisors will need to input the applicable entitlement codes:

• 395: Special Tax Exemption (Federal)
• 396: Special Tax Exemption (Quebec)

The transactions will be accepted when entered with a 1G6 and/or 1G7 recognizing the pay equity payment as a supplementary payment. No value of "PE" is required for code 395 and 396.

The RPS has been modified to accept the tax exemptions for an amount less than or equal to the payments of the pay equity. Entering a higher amount of tax exemption for pay equity payments generate a supplementary payment deducting a federal and/or a provincial amount.

5. Inquiries

5.1. Any inquiries on the information contained in this directive should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.

Reference(s): CJA 9015-29