CD 2014-004

Information: GCintranet disclaimer

This information is only accessible from inside the Government of Canada network.

Subject: Change to Payment in Arrears

| March 21, 2014 Updated November 10, 2014

1. Purpose

1.1. The purpose of this directive is to provide details regarding the impacts on pay processing in the Regional Pay System (RPS) with the movement from a current to an arrears pay cycle effective April 23, 2014.

2. Background

2.1. Most employees are paid on a current bi-weekly basis (7C pay cycle) which means that when the regular pay is deposited, it covers the work performed for the preceding ten day period including the Wednesday of the pay day.

2.2. Currently, transactions that affect the regular pay must be processed by compensation advisors two weeks in advance in order to be reflected on pay day. Thus, 7C account payments are processed on a "presumed to have worked" basis which makes paying employees correctly challenging when there are changes to an employees situation. Changes that impose difficulties, (as they are often not reported to compensation advisors in advance), include employees moving from full time to part time hours, going on a leave without pay (LWOP) being temporarily struck off strength (T-SOS) or struck off strength (SOS). When these changes are reported after the applicable pay period (PP) they result in overpayments. These overpayment situations create additional work for compensation advisors who must input recovery transactions.

2.3. The change to payment in arrears will result in compensation advisors having more time to report the pay transactions that come into effect in the current pay period.

2.4. In order to reduce overpayment situations and align with standard industry practices, all employees paid bi-weekly will be paid on an arrears bi-weekly basis. This means that the payment will be based on actual hours worked in a pay period and paid two weeks after the work has been completed. The official pay day remains unchanged; it will continue to be every second Wednesday.

2.5. To achieve changes to payment in arrears without causing financial hardship to employees, a one-time Transition Payment (TP) will be issued to existing employees.

2.6. This directive should be read in conjunction with the Compensation Communiqué 2013-11-22 which includes Questions and Answers for Compensation Advisors and the Payment in Arrears Questions and Answers for employees.

3. Policy

3.1. As part of the Transformation of Pay Administration, the Government of Canada (GC) is replacing the 40 year-old pay system with a commercial-off-the-shelf solution and streamlining business processes based on industry-standard payroll practices.

3.2. This change does not affect employees who are already paid bi-weekly in arrears (7A-Arrears Positive or 7B-Arrears Negative) or paid monthly (6C-Monthly-Current).

3.3. The Directive on Terms and Conditions of Employment will be amended and will provide the authority for a Transition Payment (TP) and the adjustment of this TP when the employee leaves the public service.

4. Procedures and Instructions

These procedures and instructions apply to employees who are on the payroll by April 23, 2014 at 2 p.m. Eastern Standard Time (EST). All new employees that are on the payroll on or after April 23, 2 p.m. EST, will automatically be placed on the payment in arrears process and are not affected by these procedures.

4.1. Pay list and Pay Cycle

4.1.1. Rather than creating and moving employees to new arrears pay lists, Public Works and Government Services Canada (PWGSC) has created a program in the RPS to change the pay period schedule for all 7C pay lists to the payment in arrears pay schedule. This will ensure that the pay list numbers and address files remain the same and that the outstanding transfer transactions remain valid.

4.1.2. This change will result in the same pay period dates for both 7B and 7C pay lists while keeping separate indicators, therefore keeping the deduction adjustment (code 503) and some automated processes that do not exist on the 7B cycle. During the transition period, the pay period schedules will be identical; however, the RPS updates (cut-offs for regular pay) will process on different dates. Once the transition period is over, all bi-weekly pay cycles will have the same schedules and RPS updates.

This means that the regular pay for all pay cycles will process on the same day. Consequently, the distribution of paper cheques will be done for all three pay cycles during the same week. PWGSC will target to have these cheques to clients by the Monday of pay week.

Employees will continue to have access to their pay stub in the Compensation Web Application on the Monday prior to the pay day.

4.2. Pay Processing Schedules

4.2.1. On April 23, 2014, the last 7C current pay cycle regular pay will process; the payment of May 7, 2014, will cover the work performed from April 24 to May 7 inclusively. As of April 23, 2014, the pay period dates of the 7C cycle will be changed to reflect arrears pay. The first arrears regular pay will be paid on June 4, 2014, and will reflect the dates for work performed from May 8 to May 21 inclusively.

4.2.2. Between April 24 and May 14, supplementary updates will continue as scheduled; however, certain transactions will not process. Please refer to the Transition Period section of this directive for information.

All pay processing schedules and CD 2013-018 have been amended to reflect the changes outlined in this directive.

Table Summary

This table shows the regular pay schedule. The first column represents the dates of the salary payments between May 7 and June 18, 2014 inclusively as well as the associated pay periods which is the number of salary payments in that year. The second column represents the Current or Arrears Indicator. The third column represent the date that salary payment is processed. The forth column represents the period of work covered on that salary payment and the fifth column represents the type of deductions taken on that salary payment.

Updated  Regular pay processing under the revised National Processing Schedule
Payment Date
Pay Period (PP)
Pay Cycle Processing Date Pay Period Dates Deductions
May 7
PP 09
7C April 23 April 24 to May 7 Cycle 1
7B/7A April 29 April 10 to April 23 Cycle 1
May 21
PP 10
7C May 7 Transition Payment-NO pay period dates Cycle 2
7B/7A May 13 April 24 to May 7 Cycle 2
June 4
PP 11
7A/7B/7C May 27 May 8 to May 21 Cycle 1
June 18
PP 12
7A/7B/7C June 10 May 22 to June 4 Cycle 2

For accounts on the 7C pay cycle, the days paid in PP 09 and PP 11 are consecutive. This demonstrates how the TP doesnt form part of the regular salary for a specific period of work.

4.2.3. For the House of Commons and Canada Revenue Agency, the above processing dates are the same except for the first regular pay under the payment in arrears schedule that will process on May 28, 2014.

4.3. Change to Payment in Arrears

4.3.1. New Codes
4.3.1.1. Entitlement

Three (3) new entitlement codes have been created.

4.3.1.1.1. The first new entitlement code, 1H1, is called "Transition Payment 2014" and has been created for the system to generate the TP paid on May 21, 2014.

Compensation advisors will not have the capability to use this new code.

4.3.1.1.2. The second new entitlement code, 1H2, is called "Transition Payment Adjustment" and has been created for the system, to make adjustments on final salary payments following the SOS. This code will be used by the system only, to process the adjustment on the regular taxable payments such as the last regular pay and payment in lieu of leave. (entitlement code 029).

Compensation advisors and regional pay offices will not have the capability to use this new code.

4.3.1.1.3. The third new entitlement code 1H3, is called "Transition Payment RE-TOS" and has been created for the system to issue the TP when an employee, who was on LWOP when the transition payment was processed on May 7, 2014, returns from a LWOP.

Compensation advisors will have the capability to use entitlement code 1H3 when processing a transfer-in for an employee in T-SOS status who was on LWOP when the transition payment was processed on May 7, 2014. Further details are provided under section 4.5.4 and 4.6.1.3 of this directive.

Regional pay offices will be able to issue any rejected TP payments with codes 1H1 or 1H3. The transaction must include "TP" in the pay period field (Field 21).

Regional pay offices will also be able to process TP refunds under specific situations as detailed in the Responsibilities for SOS section of this directive.

4.3.1.2. Deduction

| 4.3.1.2.1. A new deduction code 5J1, called "Transition Payment Adjustment Retirement Allowance and Cash Receipts" has been created for the system to process the adjustment of the TP on payments with special tax treatment, such as severance payments, refer to Appendix B. It will also be used by compensation advisors to report cash payments for SOS employees who have no pension benefits. For example, the employee was Taken on strength (TOS) on April 7, 2014 and SOS on June 28, 2014. If there were insufficient funds from the finals payment(s) and there remains a balance in the Master Element Record (MER) 904 the compensation advisor will ask for a payment from the employee. Once the payment is received the compensation will report a CRT/PAC20 5J1 to clear the balance in MER904. Refer to the Job Aid section 4.5.2. for further details.

The list of entitlement codes used by the system to generate the adjustment with code 5J1 is included in the Job Aid.

4.3.2. Transition Payment

4.3.2.1. This TP doesnt represent work done in a specific pay period. It is a one-time payment issued instead of a regular pay to all active employees on May 21, 2014 and will ensure that employees are provided with a payment every two weeks without any interruption as we change to payment in arrears. Employees cannot opt out from receiving this one-time TP.

4.3.2.2. This payment will be identified as "Transition Payment 2014" on the pay stub, identified under entitlement code 1H1 on the payroll register and recorded on the MER904, called Trans. Payment, that is used for this purpose only. Compensation advisors can view this gross amount in the Salary Recovery and Pending Dues Sub-Set (SRS) screen.

4.3.3. Active Employees

Instead of a regular pay, the TP will be processed on May 7, 2014, with a payment date of May 21, 2014. It will be calculated based on the salary and assigned work week (AWW) on May 7 and will include any regular ongoing entitlement such as the bilingual bonus, supervisory differential or vacation pay (those with a bargaining status code 79 in field 26). This payment will have the regular cycle 2 deductions.

If the employee is on Leave with Income Averaging (LIA) or Pre-Retirement Transitional Leave (PRTL) on May 7, 2014, the TP payment will be calculated based on the reduced basic rate and on the reduced allowances for LIA accounts.

The regular pension contributions will be taken and the appropriate fields on the tax slips will be updated. The amount of the pension contributions taken on this TP will be held on the master file of the employee in MER755, called TP Pension, and on the SRS screen.

The RPS will use this value when the employee terminates (SOS) in order to adjust the pension contributions on the final pensionable payments.

4.3.4. Employees on LWOP or Seasonal Lay-off (T-SOS status)

4.3.4.1. For those in T-SOS status, including reason "Y" on May 7, 2014 (date the TP will be processed), the TP will not be paid on May 21, 2014. However, the RPS will calculate the TP based on the employees salary and AWW for a full pay period at that time. This calculation will include any regular ongoing entitlement such as the bilingual bonus or supervisory differential. It will not, however, include the vacation pay for those with a bargaining status code 79 in field 26. The transaction to generate the payment (code 1H3) will be posted on the Allowance/Deduction (A/D) block and the result of the calculated gross amount will reside on the MER904.

4.3.4.2. With the payment in arrears schedule, employees returning from T-SOS will receive their first regular pay within four weeks. The Re-Taken on Strength (RE-TOS/PAC14) transaction will automatically generate the TP payment held on the A/D block with the amount posted in MER904. The TP will be generated as a supplementary payment. From this TP, statutory deductions such as income tax will be deducted; however, the regular cycle 1 or cycle 2 deductions will not be taken from this supplementary payment. Pension contributions will be calculated and taken from this TP and the amount will then be recorded in MER755.

4.3.5. Transition Payment is Cancelled

4.3.5.1. Active employee: All active employees are entitled to receive the TP. Compensation advisors are not to cancel or intercept the May 21, 2014, transition payment, except for the instances such as the following:

If the compensation advisor has not yet reported the SOS/PAC02 transaction in the RPS for an employee with an effective date of May 8, 2014, or earlier, the TP payment of May 21, 2014, must be cancelled or intercepted. Following the cancellation of the TP in this situation, the system will reverse the transactions and put the MER904 and MER755 back to zero.

4.3.5.2. Employee in T-SOS status: These employees are entitled to receive the TP when they return to work (RE-TOS) only.

If a RE-TOS transaction is processed for the purpose of changing the effective date of the T-SOS, the TP generated by the system must be cancelled or intercepted.

4.3.6. Future End Dates on A/D Block

4.3.6.1. With the change to the payment in arrears schedule, this means that the RPS will read the end date based on the new arrears schedule, which results in the end date stopping one pay period later.

4.3.6.2. For example, with the current pay period schedule, if the end date of a transaction is June 4, 2014, it will stop in PP11 (paid on June 4, 2014). The reason it stops in PP11 is because this pay period covers from May 22 to June 4, 2014.

With the arrears pay period schedule, if a transaction has an end date of June 4, 2014, it will only stop in PP12 (paid on June 18, 2014). The reason it would stop in PP12 is because this pay period covers from May 22 to June 4, 2014.

Please refer to the Job Aid for examples of the different scenarios.

4.3.6.3. Deductions with a Future End Date on the A/D Block

Because the regular cycle 2 deductions will be taken on the TP of May 21, 2014, the bi-weekly deductions with an end date later than May 7 must not continue for an additional pay period. For this reason, the RPS will, after the update of May 7, 2014, automatically change the future end date on the A/D block to reflect 14 calendar days earlier.

4.3.7. Employees in a Dual Remuneration Situation

If the two positions are in the same department and pay office, only one TP will be issued, based on both salaries because the second position is paid on an ongoing basis with an open entitlement commence (18C027 or 18C232). If the salary of the second position is calculated as a lump sum and reported in each pay period, it will not be included in the calculation of the TP.

If the two positions are in different departments or pay offices, a separate TP will be issued under each position.

4.3.8. Employees in a Dual Employment Situation

For the position where the employee is in T-SOS status, the TP will be calculated but paid only when the employee is RE-TOS.

For the position where the employee is active, the TP will be paid to the employee on May 21, 2014, and adjusted when the employee terminates (SOS).

4.3.9. The following will process when the TP is issued:

  • Debts where the amounts are in MER953/MER954
  • Deduction Commence/Amend that are on the employees account

4.3.10. The following will not process when the TP is issued but will be kept on file and processed as usual on the next regular pay:

  • Entitlement Recovery (ENR/PAC18R)
  • Entitlement Arrears Recovery (EAR/PAC17C/PAC17A-ENT code)
  • Reduction of Earnings (REC/PAC15C)
  • Arrears Payment Regular Pay (APR/PAC31)
  • Entitlement Commence- Lump sum (ENC/PAC18C with rate base 0)
  • Entitlement Commence/Amend reported as a closed period

4.4. Transition Period

4.4.1. Transactions that are effective May 7, 2014, or before and affect the regular pay should be done before April 23, 2014 (PP09) under the current pay schedule or after the transition period.

4.4.1.1. The transition period is between April 23, 2014 2 p.m. EST and May 13, 2014 2 p.m. EST, and is required for PWGSC to:

  • Successfully change the schedule to arrears, generate the TPs and process required programs and
  • Restrict pay transactions on 7C accounts only that would impact the TP. Because this payment doesnt represent a pay period, no changes to the basic pay or master file can be done.

4.4.1.2. For the House of Commons and the Canada Revenue Agency, the transition period is between April 23, 2014 2 p.m. EST and May 14, 2014 2 p.m. EST.

4.4.2. Restricted Pay Transactions

4.4.2.1. The list of the restricted pay transactions is found in Appendix A.

4.4.2.2. During this period, if a restricted action is processed, it will be rejected with the following message: "PAC not allowed for the period of transition payment."

4.4.2.3. For on-line clients: Compensation advisors will have the capability of creating any restricted transactions but must use the Save command. Once the transition period is over, compensation advisors will retrieve the transaction from the Error Correction mode and use the Replace command.

Important:

During the transition period, compensation advisors must be made aware that the processing updates remain on different dates for 7C and 7B. This is the case even though the pay period dates reflect the same arrear periods. During the transition period, this will result in the 7C schedule reading pay period dates that have already been paid.

Between April 10, 2014 and April 23, 2014, the RPS will show for 7C, the period of April 10, 2014 to April 23, 2014.

Between April 24, 2014 and May 7, 2014, the RPS will show for 7C, the period of April 24, 2014 to May 7, 2014.

Between May 8, 2014 and May 27, 2014, the RPS will show for 7C, the period of May 8, 2014 to May 21, 2014.

Between May 28, 2014 and June 10, 2014, the RPS will show for 7C, the period of May 22, 2014 to June 4, 2014.

4.4.3. Garnishments and Family Support Deductions

4.4.3.1. During the transition period, compensation advisors may continue to process payroll deductions transactions. Therefore, it is important to ensure that any new or amended deductions for garnishments or family support are processed as per the Guidelines for the Processing of Garnishments.

4.4.3.2. For deductions that must start on the payment of May 21, 2014, these must be reported in RPS by May 7, 2014, before 2 p.m. EST.

4.4.4. Income Tax Arrears

During the transition period, regional pay offices must continue to process any request to commence or amend income tax arrears deductions.

4.4.5. Leave Without Pay (REC)

4.4.5.1. LWOP of six days or less, taken between April 24 and May 7, 2014, must be reported with a Reduction Commence (REC/PAC15C) either in PP09-2014 with the current pay schedule or in PP11-2014 with the arrears pay schedule.

4.4.5.2. LWOP reported in PP09 will not reduce the amount of the TP. The TP paid on May 21, 2014, doesnt reflect a period of work and will be issued for a full pay period (10 days).

4.5. Temporary Struck Off Strength (T-SOS)

4.5.1. Reverse a Pending T-SOS-Y

If a Status Change (STA/PAC 12A107) is processed to cancel a pending T-SOS-Y and puts the activity status back to active, the system will generate the TP based on the amount in MER904.

4.5.2. Notification to Employees in T-SOS Status

To help compensation advisors communicate this change to employees in T-SOS status, a template letter is attached to this directive and a report, called T-SOS Transition payment report, will be produced and sent via the Manage secure file transfer service to identify those in T-SOS on May 7, 2014.

4.5.3. No RE-TOS (SOS from LWOP)

If instead of returning to work, the employee in T-SOS status leaves the public service, the SOS transaction will automatically remove the transaction held in the A/D block and will put the amount on the MER904 to zero. This is done because the employee did not receive the TP previously calculated by the system that updated MER904.

If instead of returning to work, the employee in T-SOS status changes employer, SOS reason 19, the SOS transaction will transfer over to the new employer (TOS) the amount in MER904. If the employee remains on T-SOS status, after the T-SOS transaction has updated, the compensation advisor will report the ENC/PAC18C 1H3 in order for the TP to be paid upon RE-TOS.

If the employee returns to work on the same day as the TOS effective date, the compensation advisor of the TOS employer will need to send a batch form to the pay office in order for them to manually issue the transition payment with code 1H3. The pay office will then manually reduce the MER904 that was updated when the payment was issued.

4.5.4. Change Effective Date of T-SOS

If a RE-TOS is processed for the purpose of reporting a change in the effective date of the T-SOS, the RPS will issue the TP. Compensation advisors must intercept/cancel this payment. The cancellation of the TP will ensure that it is paid when the employee truly returns to work (RE-TOS).

If the TP is not cancelled, the compensation advisor must send a paper batch PWGSC 2549 form with an 18R 1H3 to the regional pay office. Since it was paid in error, the pay office will create a net overpayment that will be recorded in MER953 and will amend the tax slips. Pay office will also do a PAC30 MER755 to remove the pension contributions calculated on the payment. The pay office will not amend MER904.

Once the overpayment is created, the compensation advisor will report an ENC/PAC18 C 1H3 with a start date of May 21, 2014, and no amount in order to have the transition payment generated when the employee returns to work (RE-TOS). The compensation advisor should ask the employee to repay this overpayment and once the payment is received, will report a CRT/PAC20 566.

When the RE-TOS is processed, the system will issue the transition payment (TP) based on the amount recorded in MER904. Note that if the employee did not repay the overpayment or it wasnt deducted from another payment to the employee, the TP will be reduced by this amount.

4.5.5. Subsequent T-SOS

For any employee that already received the TP, whether it was in May 2014 or upon return to work from a T-SOS period, if the employee is T-SOS in the future, they will receive their last regular pay two weeks after T-SOS. Employees will not receive a second TP upon return to duty (RE-TOS).

4.6. Pay Transactions

4.6.1. Transfer-In/Out

4.6.1.1. The amount of the TP in MER904 and the amount of pension contribution in MER755 will remain under the former (OUT) department until the transfer is completed in the RPS. At that time, the transfer process in the RPS will automatically move the amount in MER904 and MER755 from the former (OUT) to the new (IN) department.

4.6.1.2. If the employee was in T-SOS status and did not receive the transition payment, the former (OUT) department must provide to the new (IN) department the Deduction Entitlement Select (DDT) screen showing all the deductions and entitlements on the A/D block including 1H3.

4.6.1.3. Input Instructions for Code 1H3:

Once the transfer-in is processed, the T-SOS transaction must be reported before the regular pay updates to prevent the issuance of a regular pay. Only after the T-SOS has updated in the RPS, will the compensation advisor report an ENC/PAC18C 1H3 with a start date of May 21, 2014. This date is to reflect when the RPS calculated the transition payment for all employees. All other fields must be left blank (i.e. no rate base and no amount).

This transaction will be recorded on the A/D block and will generate the transition payment (TP) when the employee is RE-TOS. The amount of the payment will be generated based on the amount previously calculated by the RPS and recorded in MER904 that was carried over from the previous department in the transfer process.

If the employee returns from leave without pay on the same day as the effective date of the transfer-in to the new department, the previous department (transfer-out) should do the RE-TOS in order to generate the transition payment and the regular pay until such time as the transfer is processed in RPS.

4.6.1.4. Errors

If the ENC/PAC18C 1H3, that was manually entered by the compensation advisor, was done on the wrong T-SOS account that already has the 1H3 on the A/D block, the transaction will be rejected by the RPS since the transaction is already on the master.

If the ENC/PAC18C 1H3, that was manually entered by the compensation advisor, was done on the wrong T-SOS account that already received the transition payment, the compensation advisor must report an Entitlement Stop (ENS/PAC18S) 1H3 with the effective from date of May 21, 2014. This will remove the transaction on the A/D block and no TP will be issued when the employee returns to work.

4.6.2. Leave with Income Averaging (LIA)

4.6.2.1. The TP of May 21, 2014, doesnt represent a period of work (pay period) and therefore is not part of the reduced salary averaging period. The end date of the reduced salary period in MER116 for accounts on LIA will also automatically continue for one more pay period based on the arrears schedule. This will result in the full salary being reinstated after 27 payments which include 26 regular pay periods and the one-time TP.

4.6.2.2. Compensation advisors must inform affected employees of the impact on their LIA due to the change to payment in arrears. If a new LIA is requested by the employee, special care must be taken to ensure that the LWOP is within the new averaging period and does not overlap the previous one.

4.6.2.3. A report, called TP-LIA REPORT, identifying those on LIA in May 2014, will be provided to departments with the managed secure file transfer service who may use the template letter attached to this directive to communicate the information to affected employees.

4.6.3. Pre-Retirement Transition Leave (PRL)

Because the RPS doesnt automatically reinstate the employee to their full salary and pre-PRL status when the end date is met, there will be no change to this date.

4.6.4. Ending a Dual Remuneration

4.6.4.1. When both positions are in the same department and pay office, the adjustment of the TP will be done when the employee leaves the public service (SOS). The TP will not be adjusted when the compensation advisor changes the status with the information of the substantive position with a Miscellaneous Staffing Action (MSA/PAC05).

4.6.4.2. When the positions are in different departments or pay offices, and the employee leaves one position, the adjustment of the TP paid for that position will be adjusted when the compensation advisor submits the SOS for that position.

4.6.5. Ending a Dual Employment

4.6.5.1. When both positions are in the same department and pay office, since no SOS is required to change the status back to the information of the substantive position, the adjustment of the TP will be done only when the employee leaves the public service (SOS).

Updated 4.6.5.2. When the positions are in different departments or pay offices and the secondary employment ends and the employee returns in his substantive position, the TP paid in the secondary position will be adjusted when the compensation advisor reports the SOS.

Updated When the dual employment status ends but the employee remains on LWOP in the substantive position, the TP calculated on May 7, 2014, and recorded on the A/D block with code 1H3 will be paid to the employee when they returns to work (RE-TOS) in that position.

4.6.5.3. The following procedures apply when the dual employment ceases because the employee accepts a substantive position with the secondary department and the original position is to be vacated

Updated Substantive Employment Department

  • Submit a ENS/PAC18S 1H3 in order to remove the transaction on the master
  • Ask the pay office to manually remove the amount in MER904 to avoid having this amount transferred over to the new substantive position
  • Submit a RE-TOS transaction
  • Provide the secondary employment department with the accounts information
  • Submit a Transfer Out (TOU/PAC03)

Updated Secondary Employment Department

  • Submit an SOS/PAC02 to cease the secondary employment, as per the PPIM 5-10
  • Use the reason code 19 to avoid having the system generate the adjustments of the TP. The amount in MER904 and MER755 will remain on file until the employee terminates from the public service
  • Arrange a transfer with the current substantive employing department
  • Submit a Transfer IN (TIN/PAC04) plus related pay actions, to establish the new substantive information

4.7. Adjustment of the Transition Payment on Departure (SOS)

Updated 4.7.1. Upon termination of employment (SOS) from the public service or when PWGSC is no longer be the pay service provider (SOS-50), an employee who received the TP will be issued, if applicable, a salary adjustment (positive or negative) of the difference between the gross amount of their entitlements from their last pay periods and the gross amount of the TP received.

An adjustment (positive or negative) of the difference between pension contributions to be paid on the final payments and pension contributions paid on the TP (recorded in MER755) will also be done.

4.7.2. Change in Employer (TOS/SOS 19)

4.7.2.1. When an SOS-19 is processed, the RPS will not trigger the adjustment of the TP.

4.7.2.2. The system program PAG28 will generate PAC30 transactions to move the amount in MER904 and MER755 from the SOS employer to the TOS employer without any pay office intervention.

4.7.3. Reporting an SOS

In order to ensure there are sufficient payments to adjust the full TP recorded in MER904, compensation advisors may report a T-SOS/PAC13-Y in the pay period prior to SOS. If that pay period is already closed, compensation advisors may intercept the regular pay.

Example under the National processing schedule

A full-time employees last day of work is June 13, 2014 (SOS effective June 14).

The compensation advisor is notified before the close of PP12 (June 10, 2014) that the employee is leaving. He will report a T-SOS-Y to prevent the payment of the regular pay paid on June 18, 2014. The RPS will accept the SOS transaction as soon as June 11, 2014 (when the SOS date is included in the current pay period dates). The RPS will generate a supplementary payment for the final salary (from May 22 to June 13, 2014) for 17 days, which will be reduced due to the adjustment of the TP (10 days). The employee will receive a supplementary payment for the difference, less the applicable deductions.

If the compensation advisor is notified later than June 10, 2014 but before June 17, 2014 he can intercept or request that pay office recalls the payment of June 18, 2014. This will avoid having insufficient final payments to cover the adjustment of the TP.

4.7.4. System Generated Adjustments

4.7.4.1. Since the final payment owed to the employee represents the difference (positive or negative) between the gross amount of their entitlements from their last pay periods and the gross amount of the TP received, the adjustment of the TP will process first.

4.7.4.2. If the difference represents a positive amount and therefore a payment is generated, the deductions will be taken in accordance with the priority of deductions outlined in the Archived CD 2010-002.

4.7.4.3. Once the SOS is reported in the RPS, the system generates the final salary payment including any deduction refund (such as the deduction adjustment code 503 when the SOS is effective after the employee received the first regular pay in that month). This payment will be automatically reduced by the gross amount of the TP recorded in MER904, up to the amount of that payment. When the RPS calculates pension contributions on the final salary payments, this amount is reduced by any contributions already paid on the TP and recorded in MER755. If the amount in MER755 is greater than the amount of pension contributions owed by the employee on the final salary payment, the pay office will refund the excess pension contributions.

Once the refund or pension contribution is made, if there was still an outstanding amount in MER904, it will be reduced by the amount of this payment.

4.7.4.4. Any additional payment reported in the RPS after SOS such as vacation payout, extra duty or severance pay will also be automatically reduced by any outstanding amount of the TP in MER904.

4.7.4.5. If no further payments are owed to the employee, including any deduction refund and there is an outstanding amount in MER904, the compensation advisor will be responsible for reporting this amount on the PWGSC-TPSGC 2386 Termination/Retirement Information form if the employee was a contributor. If the employee was not a contributor, the compensation advisor will be responsible for collecting the remaining balance from the employee.

Please refer to the section 4.7.7. Outstanding Amount in MER904/MER755 for additional details.

4.7.5. RPS Adjustments Codes

4.7.5.1. For all regular final payments, the RPS will generate a reduction of gross earnings with code 1H2 to reduce the gross amount of that payment up to the gross amount in MER904. The pension contributions will also be calculated and adjusted by the RPS at this time.

4.7.5.2. For all final payments with a special tax treatment (listed in Appendix B), the RPS will generate a reduction of the gross earnings with code 5J1, to reduce the gross amount of that payment up to the gross amount in MER904.

4.7.5.3. For any system generated adjustment, the MER904 and MER755 will automatically be reduced by the amount of this adjustment.

4.7.6. Pay Office Manual Intervention

4.7.6.1. There is no change to the circumstances under which the SOS is not finalized by the RPS. The list of exceptions is available in the Personal Pay Input Manual (PPIM) under sections PPIM 4-4-02, PPIM 14-8-2 and PPIM 5-13.

When the pay office must manually finalize the SOS, the RPS will automatically process the adjustment of the TP.

4.7.6.2. When the pay office inputs the final payments with a Supplemental Entitlement (SUE), the RPS will verify whether a value is present in MER904/MER755. The adjustments and the applicable reduction of the MER904 will be generated by the RPS.

No additional steps are required on behalf of the pay office when they manually finalize an SOS.

4.7.7. Outstanding Amount in MER904/MER755 after Finalization of SOS

4.7.7.1. If, after all the final payments have been processed, there is still an amount recorded in MER904, the compensation advisor is responsible for finalizing the adjustment of the transition payment (TP).

4.7.7.2. If the employee was never a pension contributor and therefore is not eligible to a pension benefit, the compensation advisor will be responsible for collecting the remaining balance from the employee by personal cheque or money order. This payment will be reported with a CRT/PAC20 and deduction code 5J1, in order to reduce the MER904. When the CRT/PAC20 is processed, the pay office will automatically receive a notification to adjust gross earnings of the current year, or manually issue amended tax slips if there are no earnings in the current year.

Note: A personal cheque is not acceptable since if it is returned by the financial institution because of non sufficient funds, the system will not be able to update the centralized TP fund in department 79.

4.7.7.3. If the employee was a contributor during all or part of his period of employment and therefore is eligible to a pension benefit (including a return of contributions), the compensation advisor must report the outstanding amount on the PWGSC-TPSGC 2386 Termination/Retirement Information form. To determine whether the employee is eligible to a pension benefit, compensation advisors may verify the pension type code in salary service. If the last period of employment has a non contributor code but previous periods of employment shows a contributor code, compensation advisors will contact the pension center for a confirmation.

After the final termination payments have processed, compensation advisors should verify if there is an outstanding amount in the MER755 prior to issuing the PWGSC-TPSGC 2386 form to report a balance in MER904. When there is an outstanding amount in that element and the employee was not in T-SOS status immediately prior to the SOS, this amount will be refunded by the pay office. The refund of the pension contribution will be used by the system to reduce the outstanding TP in MER904. Therefore, this transaction will amend the outstanding amount to be reported on the PWGSC-TPSGC 2386 form.

4.7.7.4. When an employee who received the transition payment is in T-SOS status prior to SOS, there may be an outstanding amount in MER755 if no final payments are owed to the employee. The employee will be required to pay pension contribution deficiencies for their period of LWOP and therefore, the pay office will not refund these contributions to the employee.

The compensation advisor is responsible for reporting the outstanding amount in MER755 displayed on the SRS inquiry screen in RPS on the PWGSC-TPSGC 2386 Termination/Retirement Information form in order for the Pension Centre to reduce the LWOP pension deficiencies by this amount.

The pay office will process a PAC30 to remove the amount in MER755 once it is recorded on the PWGSC-TPSGC 2386 Termination/Retirement Information.

4.8. Re-Hire or Bulk Revision

4.8.1. When there is an outstanding amount in MER904 and the employee is re-hired in the same department and pay office or is paid a salary revision after SOS, the following will occur:

If the employee was NEVER a contributor: when the SOS of this new employment period occurs or if the employee receives a salary revision after SOS, the RPS will automatically reduce the final payment or revision payment by the outstanding amount in MER904 up to the maximum of the gross payment.

If the employee was a contributor during all or part of his period of employment: the adjustment will process as described above; however, the compensation advisor must inform the Pension Centre by completing an amended PWGSC-TPSGC 2386 Termination/Retirement Information form to the effect that the adjustment of the TP was done and state the amount.

  1. The Pension Centre will need to either stop the on-going adjustments on the pension benefit OR amend the stop date if it was not adjusted in full.
  2. | There is a possibility that the adjustment of the TP in the RPS was made in excess because of the timing constraints between the adjustments made on the pension and the notification to adjust the MER904. If this occurs, when pay office is notified, they will request the batch form from the client which will allow them to issue the refund and amend the MER elements.

4.9. Responsibilities for SOS

4.9.1. The Compensation Advisor will:
  1. Input the SOS transaction as soon as possible so that the Pension Centre may process any pension benefit to the employee.
  2. Report, after all final payments are issued, including any deduction refund, all outstanding amounts on the PWGSC-TPSGC 2386 Termination/Retirement Information form.
  3. Indicate for the outstanding transition payment the following Interdepartmental Settlement (IS) information:
    • Organization Code: 0035
    • Reference Code: TP and the employee’s Personal Record Identifier (PRI)
    • Department Number: 079
    • Contact name: PSGL079.GLSP079@pwgsc-tpsgc.gc.ca
    • Telephone number: 613-952-3778
  4. Provide an amended PWGSC-TPSGC 2386 Termination/Retirement Information form to the Pension Centre when an adjustment of the outstanding TP was done on a supplementary payment after the finalization of SOS (i.e. bulk revision) that was previously reported on the PWGSC-TPSGC 2386 Termination/Retirement Information form.
  5. Submit a batch form, when required by the pay office, to refund a TP (18R 1H3) adjusted in the RPS by error. Note that code 1H3 is used for this purpose because the amount will be automatically sent to Department 79 of PWGSC.
  6. When an employee is SOS and is not eligible to pension benefits and submits a certified cheque or money for the TP adjustment, report a CRT/PAC20 5J1. NOTE: Only in this situation is the CRT/PAC20 5J1 to be used.
4.9.2. The Pension Centre will:
  1. Start the deduction to adjust an outstanding TP amount reported to them on the PWGSC-TPSGC 2386 Termination/Retirement Information form.
  2. If the amount of the TP in MER904 would go negative, this means that the adjustment was done both in RPS and on the pension benefit. When this occurs, the pay office will contact the department to have a batch PWGSC 2549 form duly signed (Sections 33 and 34 under the Financial Administration Act) in order to refund the excess TP adjusted.
  3. Provide the employee with a repayment letter, in the year of the adjustment, showing the amount taken from the pension to adjust the outstanding TP reported in the year of SOS.
  4. Stop or adjust the period of adjustment for the TP following notification from the department.
  5. Consider the TP pension contributions reported on the Termination/Retirement Information form in the calculation of pension deficiencies.
4.9.3. The Financial and Payroll Accounting Division (Department 79 PWGSC) will:
  1. Reduce the accounts receivable by the amount received with the IS from the Pension Centre
  2. Provide the pay office with the account information received from the Pension Centre
4.9.4. The Pay Office will:
  1. Reduce the MER904 for each affected account by the amount adjusted on the pension benefit that was reported by the Pension Centre via the Financial and Payroll Accounting Division. Because the Pension Centre provides the employee with a repayment letter, the pay office will not amend any other MER.
  2. If the amount of the TP in MER904 would go negative, this means that the adjustment was done both in RPS and on the pension benefit. When this occurs, the pay office will contact the department to have a batch PWGSC 2549 form duly signed (Sections 33 and 34 under the Financial Administration Act) in order to refund the excess TP adjusted.
  3. Do a Supplemental Entitlement (SUE) with code 1H3 using the last active day for the From and To date, a lump sum rate base, the total amount to be refunded and TP in the pay period field. This will automatically update the relevant gross earnings and have the statutory deductions taken from the payment. However, it will also increase MER904 and MER755 which must be reduced, on the following RPS update, with a manual intervention (PAC30) by the pay office.
  4. Take the appropriate actions to amend the MER and issue amended tax slips, when required, following the reception of the PBNR6 system-generated message.

4.10. Final Payment with TP Adjustment is Cancelled

4.10.1. If a payment that includes the adjustment of the transition payment (TP) with code 1H2 is cancelled, the system will reinstate the gross earnings on the MERs and will reinstate the amount in MER904. The pay office will receive the message NZ2-Manual Adjustment required to Pension TP (M755) and will need to report a PAC30 to credit the amount back to this element.

4.10.2. If a payment that includes the adjustment of the transition payment with code 5J1 is cancelled, the system will put back the amount in MER904 only. The pay office will receive the message PB WH6 PAC30 adjustment to M700 must be done manually and will need to increase MER700 by the amount of the adjustment that was done on that payment.

4.11. Cash Receipt (CRT/PAC20)

4.11.1. Code 5J1 will be used by compensation advisors only, in situations where the SOS employee has no pension benefit and is provided a money order or certified cheque for the outstanding amount recorded in MER904. If the employee is not in SOS status, the CRT/PAC20 will reject.

Exception: compensation advisors may accept a payment if the SOS employee is eligible to a pension benefit but has no final salary payment AND the transition payment would be adjusted from an eligible retirement allowance payment such as a severance pay or separation pay payment. In this case, the CRT/PAC20 must be reported in the pay system prior to the retirement allowance payment transaction so that the employee is not negatively impacted by having the adjustment of the transition payment reduce the amount that may be transferred to a registered retirement savings plan (RRSP).

4.11.2. When a CRT/PAC20 is processed with code 5J1, the amount paid will reduce the MER904.

The pay offices will receive the following notification with a partial MER snapshot:

PB NR6: manual adj.req. to MER 700/706/707/724/762/734/118

Pay offices will be required to reduce the current year gross earnings with a PAC30 unless the amount of the CRT/PAC20 has no effect. This would be the case if for certain elements, the amount would remain at the maximum of the insurable or pensionable earnings.

4.11.3. If there are no earnings in the current year of the CRT/PAC20 J1, the pay office will be required to manually issue amended tax slips for the previous year.

4.12. PWGSC-TPSGC 2386 Termination/Retirement Information Form

4.12.1. This form and its instructions have been amended to include the following:

  1. The amount of pension contributions paid on the TP (MER755) that will be used by the Pension Centre to reduce the pension contribution deficiencies for the period of LWOP immediately prior to SOS.
  2. The amount of the TP that was not adjusted on SOS (MER904) and that the Pension Centre will arrange to recover from the pension benefit.
  3. The amount of current pension contributions that was not deducted from the final payment due to insufficient gross earnings once the adjustment of the TP was made.

4.13. Record of Employment (ROE)

Please refer to CD 2012-021 for instructions on how to submit an ROE electronically for an employee when there is more than one pay cycle within the reporting period. This means that a pay cycle change was done in the system (PCC/PAC35) in the last 27 pay periods immediately prior to the interruption of earnings.

4.13.1. Since the pay cycle indicator remains the same for 7C accounts that received the transition payment, there is no need to issue two distinct ROEs for these employees. The ROE web application will generate one ROE with the correct information for the period when the change to payment in arrears occurred.

4.13.2. It is important to note that the TP does not represent a period of work and therefore must not be included as earnings or insurable hours. Note that for the PP10 (TP paid on May 21, 2014), the ROE application will automatically ignore the transition payment or its adjustment.

4.14. Tax Slips

4.14.1. For active employees, the TP will be included in the 2014 tax slips. For employees in T-SOS status in May 2014, the TP will be included in the year that it is paid on RE-TOS.

4.14.2. In the year of the adjustment, when the employee leaves the public service (SOS), the gross earnings on the tax slips will reflect a reduced amount because of the adjustment of the TP taken from the final payments.

4.15. Pay Cycle Changes (PCC/PAC35)

4.15.1. Once the transition to payment in arrears is completed, 7B pay lists will no longer be created by PWGSC. All new employees are to be set up on 7C pay lists. We also suggest that, after transition, you move employees that are on a 7B pay cycle to a 7C pay cycle. To do this, compensation advisors must report a PCC/PAC35 transaction. No adjustments will be required since the schedules will be identical.

4.15.2. On the 7C cycle, employees benefit from the deduction adjustment factor 503) which minimizes the difference in the net pay between the first and second regular pay of the month. This is not the case with the 7B cycle.

4.15.3. On the 7C cycle, the majority of payments and adjustments resulting from pay transactions are system-generated. This is not the case with the 7B cycle where most pay transactions require a manual intervention from the regional pay office, which results in further delays for the finalization of the transaction and issuance of payments, when applicable.

Updated 4.15.4. PWGSC is offering to process a bulk pay cycle change to move the accounts from 7B to 7C. For those interested in this offer, please contact Rachid.Baik@pwgsc-tpsgc.gc.ca who will provide you with the required steps.

4.16. Personal-Pay Input Manual

4.16.1. The PPIM has been updated to include the information detailed in this directive.

5. Inquiries

5.1. Any inquiries on the information contained in this directive should be addressed to your PWGSC Compensation Services Office.

Original Signed by

Carrie E. Roussin
Director General
Compensation Sector
Accounting, Banking and Compensation

Reference: CR3871

Job Aid

Updated July 4, 2014 

The purpose of this document is to provide compensation advisors and regional pay offices with additional information on the payroll processing due to the change to payment in arrears.

The job aid is divided by topic to allow for easy retrieval of information.

Unless otherwise specified, all scenarios and examples are based on a Monday to Friday regular full-time work week schedule.

Note: The dates in the document represent the National Pay Processing Schedule. House of Commons (HOC) and Canada Revenue Agency (CRA) should refer to the National Pay Processing Schedule when referencing this document.

Table of Contents

  • 1.0 Employees Hired not Affected
    • 1.1 New Hire / Taken on Strength (TOS/PAC01) Employees who did not receive the Transition payment
    • 1.2 Struck off Strength (SOS/PAC02) Employees who did not receive the Transition payment
  • 2.0 Transition Payment
    • 2.1 Transition Payment Rejections / Pay Office Intervention
    • 2.2 Future End Date on Deductions
    • 2.3 Dual Employment
    • 2.4 Leave with Income Averaging (LIA)
  • 3.0 Transition Period
    • 3.1 Maternity and Parental Allowances during transition
    • 3.2 Re-Taken on Strength (RE-TOS RET/PAC14) during transition period
  • 4.0 After the Transition Period
    • 4.1 Cancellation of Transition payment on Re-Taken on Strength (RE-TOS/PAC14)
    • 4.2 Retroactive Transactions (i.e. not processed within the current pay period)
    • 4.2.1 RE-TOS (RET/PAC14)
    • 4.2.2 Revert to Basic Pay (RBP/PAC18)
    • 4.2.3 Statutory Increment (INC/PAC08)
    • 4.3 Transactions Processed in the Current Pay Period
    • 4.3.1 Revert to Basic Pay (RBP/PAC18)
    • 4.3.2 Statutory Increment (INC/PAC08)
    • 4.4 Vacation Pay Calculation (Code 073) as a Lump Sum Payment - Employees who received the transition payment
    • 4.5 SOS Employees who received the transition payment
    • 4.5.1 SOS-19/TOS
    • 4.5.2 Adjustment of Transition Payment on SOS
    • 4.5.3 Pay Office Intervention: Pension Contributions Refund to Employee
    • 4.6 Regular Pay Direct Deposit Intercepts/Recalls

1.0 Employees Hired not Affected

1.1 New Hire / Taken on Strength (TOS/PAC01) Employees who did not receive the Transition payment

Taken on Strength (TOS) processed on or after the close of PP09 (i.e. April 23, 2014 at 2 p.m. EST), will be paid in arrears. Under the Directive on Terms and Conditions of Employment, the employees first payment covering the entitlement for the time worked during the first two-week pay period is due at the end of the second two-week pay period.

1.1.1 Scenario

The employees first day of work is October 6, 2014. The compensation advisor is able to input all the pay transactions, which will include an Entitlement Recovery (ENR/PAC18R) on October 6 (Regional Pay System (RPS) PP21 from September 25, 2014 to October 8, 2014). The employees first regular pay will be on October 22, 2014 for time worked from October 6 to October 8, 2014 (3 days). The next regular pay (10 days) will be on November 5, 2014, for time worked from October 9 to October 22, 2014.

Note: In the scenario above, the compensation advisor must also process an ENR/PAC18R for 7 days from September 25 to October 3, 2014 to ensure the first regular payment is only issued for the 3 days of performed duties.

1.1.2 Scenario

The employees first day of work is October 6, 2014. The TOS pay transactions, which would include the Entitlement Adjustment (EAJ/PAC71) for this scenario, are input on October 16 (RPS - PP22 from October 9 to October 22, 2014). The employee will receive a supplementary payment, in the following seven days, for time worked from October 6 to October 8, 2014 (3 days) and the first regular pay will be on November 5, 2014, for time worked from October 9 to October 22, 2014 (10 days).

1.2 Struck off Strength (SOS/PAC02) Employees who did not receive the Transition payment

Employees, who did not receive a transition payment (TP), will be issued their final salary payment two weeks following their departure.

1.2.1 Scenario

The employees term started after April 23, 2014 and ended December 12, 2014. The regular pay of December 17, 2014 represents the time worked from November 20 to December 3, 2014. The final payment for time worked between December 4 and December 12, 2014 will be issued as a supplementary payment after the Struck off Strength (SOS) is reported.

2.0 Transition Payment

2.1 Transition Payment Rejections / Pay Office Intervention

All transition payment transactions manually input (IH1 and 1H3) by the pay office; following a reject from the RPS, with a Supplemental Entitlement (SUE) and applicable deductions with Supplemental Deduction (SDE) must all include "TP" in the pay period field (Field 21).

When creating the SUE 1H1 transaction, one must be done representing the amount of the basic or acting pay and another one for any allowance to be paid.

The SUE paid with 1H1 that represents either the basic or acting rate must include 9999999999 (10 digits with the number 9) in field 30 (account coding). This is required to ensure that the register file (R922) is updated in the same manner as when the system generates the 1H1 payment. Field 30 for the SUE paid with 1H1 for any allowance, such as bilingual bonus, will be left blank.

For a SUE paid with 1H3, only one transaction must be done. The amount stored in M904 represents the full amount pre-calculated by the system that includes both the basic or acting rate and any other ongoing allowances. In order to update the register file (R922) in the same manner as when the system generates the 1H3 payment, pay office will enter TP in the pay period field and 9999999999 in the account coding field.

The requirement for the input of "TP" was created so that if other payments are done on the same update, these will be recycled until the next update. This is to ensure that the transition payment is a unique payment and will not include any other supplementary payments.

For these reasons, the RPS is looking for a family of transactions based on the SDE, if:

  • Both SUE and SDEs have "TP", they will all be processed as a family on the same supplementary payment
  • Both SUE and SDEs do not have "TP", they will reject
  • Both SUE and some SDEs have "TP" but one of the SDEs does not have "TP", all the SDEs will reject but the SUE will process anyway but without the cycle 2 deductions
  • The SDE has a value of "TP" but the SUE does not, both will reject because the SDE is not accompanied by the SUE with "TP")
  • The SDE has no "TP" value but the SUE has "TP" , the SDE will reject and the SUE will process

2.2 Future End Date on Deductions

The change to the arrears pay schedule will impact future end-dated transactions

The reason why the change to arrears impacts future end-dated transactions is because in the arrears pay schedule, the actual pay day is not included in the payment as it was in the current pay schedule. For monthly deductions, the end date is based on the accounting month and for bi-weekly deductions the end date is based on the pay period schedule (not the pay day date).

For example:

Under the current pay schedule, a deduction is due to end on July 2, 2014. The last regular pay for which the employee is subject to the deduction is the pay they received on July 2, 2014 (for work from June 19 to July 2)

Under the arrears pay schedule, a deduction is due to end on July 2, 2014. The last regular pay for which the employee is subject to the deduction is the pay they received on July 16, 2014 (for work from June 19 to July 2)

2.2.1 Scenario Deduction with an end date started prior to TP (i.e. PSSA deficiency DAR/PAC17C 577)

An employee owes a total of $1,000, which was set up by the compensation advisor to be deducted over 5 regular pays in installments of $200 per pay. The original end date was June 4, 2014, back when the system was still in the current pay schedule.

As a deduction of $200 is taken from the TP, the end date must be changed to May 21, 2014. Since the system is now following the arrears pay schedule, the last deduction will be taken from the regular payment of June 4, 2014. Please see below:

  • Regular pay of April 9 (from March 27 to April 9, 2014) deducted $200, balance owing $800
  • Regular pay of April 23 (April 10 to April 23, 2014) deducted $200, balance owing $600
  • Regular pay of May 7 (from April 24 to May 7, 2014) deducted $200, balance owing $400
  • TP of May 21 (no pay dates attached) deducted $200, balance owing $200
  • Regular pay of June 4 (from May 8 to May 21, 2014) deducted $200, balance owing $0

The RPS will automatically correct the end date by moving the end date 14 calendar days in the past.

2.3 Dual Employment

Here is an example of how the RPS will handle employees in dual employment situations when the TP is processed.

2.3.1 Scenario

On April 9, 2014 an indeterminate employee from Public Works and Government Services Canada (SVC) is on relocation of spouse, Temporarily Struck off Strength (T-SOS), and is working as a term employee with Industry Canada (DUS). On September 4, 2015, the term employment ends at DUS.

Term position with DUS: The employee will receive the TP (1H1) on May 21, 2014 based on their salary and assigned work week (AWW). In September 2015, when the employees term ends (SOS), this pay transaction will trigger the adjustment (1H2) to be taken from the final payment(s) from DUS. If there are insufficient funds, the compensation advisor (DUS) will be responsible for collecting the remaining balance of the TP from the employee. This payment will be reported with a Cash Receipt (PAC20/CRT 5J1) in order to reduce the TP element in the Master Employee Record (MER 904) and the gross earnings.

Substantive position with SVC: On May 7, 2014, the system will calculate the amount of the TP based on the salary and AWW. The transaction will be posted on the Allowance and Deduction (A/D) block and the amount will show in the MER904. When the employee returns to work, Re-Taken on Strength (RE-TOS), the system will issue the TP (1H3) as a supplementary payment. The adjustment of the TP will be done when the employee leaves the public service (SOS). If the employee never returns to his substantive position at SVC and is SOS, the system will remove the transaction from the A/D block and will cancel the amount posted in MER904, since the TP will not have been paid.

2.4 Leave with Income Averaging (LIA)

Due to the change to the arrears pay schedule, employees on leave with income averaging (LIA) at the time of the TP will be impacted. The TP paid on May 21, 2014, will be a reduced payment because it is based on the |reduced rate of pay and AWW. The TP is not linked to any pay period and it will be adjusted when the employee leaves the public service (SOS) therefore it does not form part of the reduced salary schedule. Thus, the full salary will not be reinstated until there are 26 regular pays issued at the reduced salary.

2.4.1 Scenario

The employee is on LIA from June 20, 2013, to June 18, 2014 and will receive their pays at the reduced salary from the July 3, 2013, to June 18, 2014, inclusively. The employee was scheduled to return to their full (unreduced) salary effective the regular pay of July 2, 2014, based on the current pay schedule. With the change to payment in arrears, the employee will only return to their full (unreduced) salary on the regular pay of July 16, 2014.

2014 Pay Information:

Regular pay on April 23: 22nd pay at the reduced salary

Regular pay on May 7: 23rd pay at the reduced salary

TP on May 21: One-time payment with no pay period attached

Future SOS: Adjustment of the TP of May 21, 2014

Regular pay on June 4: 24th pay at the reduced salary

Regular pay on June 18: 25th pay at the reduced salary

Regular pay on July 2: 26th pay at the reduced salary

Regular pay on July 16: Full salary

It will be the responsibility of the compensation advisors to ensure that the employees are informed of the change in end date of the reduced salary, especially for those employees who take back to back LIA, as this could impact the employee's period of leave for their upcoming LIA agreement.

A sample letter is provided to assist compensation advisors in communicating the change to impacted employees.

3.0 Transition Period

Because the transition payment doesnt represent a period of work, no pay transactions that affect the rate of pay are to be reported during this transition period.

(Refer to Appendix A for the list of restricted transactions.)

Table Summary

This table shows the processing updates during the transition period for the National pay processing schedule. The first column represents the dates for input by users, the second column represents the pay periods which is the number of salary payments in that year, the third column represents the date of the salary payment, the forth column represents the period of work covered on that salary payment and the fifth column provides additional clarifications for that period.

Processing Period
(National)
Pay Period Payment Date Period of Work Remarks
April 10 April 23 PP-09 May 7 April 24 May 7 Last current regular pay
April 24 May 7 Transition Period May 21 - Transition payment (restricted transactions)
May 8 May 13 Transition
Period
Updated June 4 Updated May 18 - May 21 * see NOTE below (restricted transactions)
May 14  May 27 PP-11 June 4 May 8 May 21 First arrears regular pay

*Note: Between April 24 and May 7, 2014 RPS will show the following dates "from" 24-4-2014 "to" 07-05-2014. Between May 8, 2014 and May 13, 2014 RPS will show the following dates "from" 08-05-2014 "to" 21-05-2014. The transition period to change the system from the current to the arrears pay schedule is from April 24, 2014 to May 13, 2014. After the close-off time on May 7, the system will calculate all the transition payments and report any rejects to the pay office.

Table Summary

This table shows the processing updates during the transition period for the House of Commons and Canada Revenue Agency pay processing schedule. The first column represents the dates for input by users, the second column represents the pay periods which is the number of salary payments in that year, the third column represents the date of the salary payment, the forth column represents the period of work covered on that salary payment and the fifth column provides additional clarifications for that period.

Processing Period
(HOC and CRA)
Pay Period Payment Date Period of Work Remarks
April 10 April 23 PP-09 May 7 April 24 May 7 Last current regular pay
April 24 May 7 Transition Period May 21 - Transition payment (Restricted transactions)
May 8 May 14 Transition
Period
Updated June 4 Updated May 18 - May 21 ** see Note below (restricted transactions)
May 15 May 27 PP-11 June 4 May 8 May 21 First arrears regular pay

**NOTE: Between April 24 and May 7, RPS will show the following dates "from" 24-4-2014 "to" 07-05-2014. Between May 8, 2014 and May 14, 2014 RPS will show the following dates "from" 08-05-2014 "to" 21-05-2014. The transition period to change the system from the current to the arrears pay schedule is from April 24, 2014 to May 14, 2014. After the close off time on May 7, the system will calculate all the transition payments and report any rejects to the pay office.

Pay transactions that produce a supplementary payment only, such as extra duty pay or maternity allowances or other changes, such as direct deposit information, will not be restricted, and can continue to be done throughout the transition period.

3.1 Maternity and Parental Allowances during transition

For employees that are on maternity or parental leave prior to May 8, 2014, compensation advisors are to continue to issue these allowances based on the original payment schedule. This will ensure that affected employees continue to receive a payment every two weeks, without interruption.

With the change to payment in arrears, the RPS will accept the EAJ/PAC71 for maternity or parental allowance with an "Effective To" date that is in the future (i.e. future dated) of the current pay period.

When employees return to work (RE-TOS), they will receive the one-time TP generated by the TOS transaction and their first regular pay under the arrears schedule will be paid, at most, within four weeks.

For employees that begin a maternity or parental leave after receiving the TP of May 21, 2014, the payment schedule will be based on the arrears pay schedule. These employees will receive a regular pay two weeks after their T-SOS.

3.1.1 Scenario

If on April 24, 2014, an EAJ/PAC71 with code 148 is processed for the two-week period from April 20 to May 3, 2014, the compensation advisor will process the next payment on May 8, 2014 to cover the two-week period from May 4 to May 17, 2014. The following payment will be processed on May 22 to cover the next two-week period from May 18 to May 31, 2014, and so on.

3.2 Re-Taken on Strength (RE-TOS RET/PAC14) during transition period

Due to the change to arrears, RE-TOS transactions will need to be handled in a very specific manner in order to ensure the employee is correctly remunerated.

If the RE-TOS is processed in RPS by close of PP09 on April 23, 2014, compensation advisors will follow the current procedures for those paid in the current pay cycle.

Scenarios 3.2.1 - 3.2.4 apply to RE-TOS transactions processed between April 24 and May 13, 2014. These scenarios show how the transactions are to be processed during the transition period.

Note: When RE-TOS (RET/PAC14) and EAJ/PAC71 are processed on the same date, the EAJ/PAC71 will be recycled until the next supplementary update to ensure that the TP (triggered by the RET/PAC14) and EAJ/PAC71 payments are on separate supplementary payments.

3.2.1 Scenario Employee returns to work between April 24 and May 7, 2014 and the compensation advisor processes the RE-TOS transactions between April 24 and May 7, 2014

  • The employee is back on April 28, 2014 at which time the RPS "to" and "from" dates are (arrears pay schedule) April 24 to May 7, 2014
  • Between April 24 and May 7, 2014, RE-TOS is processed and EAJ/PAC71 is done for April 28 to May 7, 2014, which will result in the issuance of a supplementary payment (EAJ is required, as the regular pay of May 7, 2014 closed on April 23 under the current pay schedule)
  • TP is issued on May 21, 2014, for the full pay period (based on the AWW and salary on the master record)
  • First regular pay is June 4, 2014, for work performed from May 8 to May 21, 2014

3.2.2 Scenario Employee returns to work prior to April 24 and the compensation advisor processes the RE-TOS transactions between April 24 and May 7, 2014.

  • The employee is back on April 14, 2014
  • The RPS "To" and "From" dates (arrears pay schedule) are from April 24 to May 7, 2014
  • Between April 24 and May 7, 2014, RE-TOS is processed and EAJ/PAC71 is done for April 14 to May 7, 2014 which will issue a supplementary payment (EAJ is required, as the regular pay of May 7, 2014 closed on April 23 under the current pay schedule)
  • TP is issued on May 21, 2014 for the full pay period (based on the AWW and salary on the master record)
  • First regular pay is June 4, 2014 for work performed from May 8 to May 21, 2014

Note: If applicable, depending on the RE-TOS date, there is no change for those organizations that input financial coding; separate transactions will be required to break on March 31 and start on April 1, 2014.

3.2.3 Scenario Employee returns to work between May 8 and May 21, 2014, and the compensation advisor processes the RE-TOS transactions between May 8 and May 27, 2014.

  • The employee is back on May 8, 2014
  • The RPS "To" and "From" dates (arrears pay schedule) are from May 8 to May 21, 2014
  • On May 8, 2014, RE-TOS is processed (no EAJ/PAC71 to process full pay period)
  • TP triggered by the RE-TOS transaction and issued as a supplementary payment
  • First regular pay is June 4, 2014 for work performed from May 8 to May 21, 2014

3.2.4 Scenario Employee returns to work between May 8 and May 21, 2014 and the compensation advisor processes the RE-TOS transactions between May 8 and May 27, 2014.

  • The employee is back on May 12, 2014
  • The RPS "To" and "From" dates (arrears pay schedule) are from May 8 to May 21, 2014
  • On May 14, 2014, RE-TOS is processed and ENR/PAC18R is done for the period from May 8 to May 9, 2014
  • TP triggered by the RE-TOS transaction and issues as a supplementary payment
  • First regular pay is June 4, 2014 for work performed from May 12 to May 21, 2014

4.0 After the Transition Period

4.1 Cancellation of Transition payment on Re-Taken on Strength (RE-TOS/PAC14)

Updated If a RE-TOS transaction is processed in the same pay period as a new T-SOS is reported, such as amending a T-SOS date when the employee did not return to work, the compensation advisor must cancel (intercept) the system-generated TP that was issued as a result of the RE-TOS transaction.

Updated If a RE-TOS transaction with an effective date of May 7, 2014 or later is processed after the transition period and the employee is entitled to any basic pay entitlement, even if just for one day, the TP must not be cancelled.

Example:

  • Employee was in T-SOS effective April 10, 2014 and did not receive the TP on May 21, 2014.
  • RE-TOS is processed on June 16, 2014 with an effective date of May 12, 2014.
  • In the same pay period, a new T-SOS is processed on June 18, 2014 with an effective date of May 13, 2014.
  • The employee is entitled to 1 day of regular pay AND is entitled to the full TP that was calculated on May 7, 2014.

Updated If, after the transition period, a RE-TOS transaction is done and the employee is subsequently T-SOS with an effective date that is prior to May 7, 2014, then the TP must be cancelled.

Example:

  • Employee was in T-SOS effective April 10, 2014 and did not receive the TP on May 21, 2014.
  • RE-TOS is processed on June 16, 2014 with an effective date of April 28, 2014.
  • A new T-SOS is processed on June 18, 2014 with an effective date of May 5, 2014.
  • The employee is entitled to 5 days of regular pay but is NOT entitled to the TP since he was not active on the date that the TP was processed (May 7, 2014).
  • The TP must be cancelled and it will be paid when the employee returns to work with an effective date of May 7, 2014 or later.

When this TP (issued as a result of the RE-TOS with code IH3) is cancelled (intercepted), the system will keep the amount of the TP to be paid on the next (future) RE-TOS transaction and will re-post the information on the A/D block.

4.2 Retroactive Transactions (i.e. not processed within current pay period)

The TP is not a factor as it is not linked to any pay period: it is a one-time payment based on the employees salary and AWW indicated in the RPS on May 7, 2014. This amount will be adjusted on termination from the public service and therefore does not form part of any calculations that are based on number of days, hours or weeks.

With the change to payment in arrears, all 7C schedules, going back to 2002, have been changed to reflect arrears pay periods. When a retroactive transaction covers more than one year, the cut off dates for either calendar or fiscal year end must reflect those pay period dates under the 7B arrears schedule for any 7C account.

4.2.1 RE-TOS (RET/PAC14)

4.2.1.1 Scenario RE-TOS done with retroactive date

  • The employee is back on August 11, 2014
  • Compensation advisor is only made aware on August 21, 2014 and proceeds with the pay transactions
  • The RPS "To" and "From" dates: August 14 to August 27, 2014
  • RE-TOS is processed and EAJ/PAC71 is done for August 11, 2014 to August 13, 2014 which will result in the issuance of a supplementary payment
  • If applicable, the TP is triggered by the RE-TOS transaction and is issued as a supplementary payment. First regular pay is September 10, 2014 for work performed from August 14 to August 27, 2014.

4.2.1.2 Scenario RE-TOS done in the current pay periods on the RPS for a full pay period

  • The employee is back on August 14, 2014
  • The RPS "To" and "From" dates: August 14 to August 27, 2014
  • RE-TOS is processed (no EAJ/PAC71 to process full pay period)
  • If applicable, the TP is triggered by the RE-TOS transaction and is issued as a supplementary payment First regular pay is September 10, 2014 for work performed from August 14 to August 27, 2014

4.2.1.3 Scenario RE-TOS done in the current pay periods on the RPS for a partial pay period

  • The employee is back on August 18, 2014
  • The RPS "To" and "From" dates: August 14 to August 27, 2014
  • RE-TOS is processed and ENR/PAC18R is done for August 14 to August 17, 2014
  • If applicable, the TP is triggered by the RE-TOS transaction and is issued as a supplementary payment First regular pay is September 10, 2014 for work performed from August 18 to August 27, 2014
4.2.2 Revert to Basic Pay (RBP/PAC18)

4.2.2.1 Scenario

Employee was in an acting position from July 7, 2014, to August 15, 2014. On August 13, 2014, the compensation advisor is notified that the acting ended earlier: the last day of acting was July 17, 2014. On August 13, 2014 (RPS, arrears schedule, for PP17 from July 31 to August 13, 2014), the compensation advisor inputs the pay transactions.

The compensation advisor will create a Revert to Basic Pay (RBP/PAC18) with the effective date of July 18, 2014 (left open) and 9 days and the ENR/PAC18R with entitlement code 002, effective from July 18 to July 30, 2014 (9 days). This will process the adjustment for the August 27, 2014 pay.

  • Regular pay on August 13, 2014 paid at acting salary for the period worked from July 17 to July 30, 2014 (10 days)
  • Regular pay on August 27, 2014 for the period worked from July 31 to August 13, 2014 will include the substantive rate of pay for the full 10 period and the recovery of the acting salary overpayment from July 18 to July 30, 2014 (9 days)
4.2.3 Statutory Increment (INC/PAC08)

4.2.3.1 Scenario

Compensation advisor notices that the employee was never issued the statutory increase. The increase due is retroactive to July 8, 2014. On July 29, 2014 (RPS, arrears schedule, for PP16 from July 17 to July 30), the compensation advisor inputs the pay transaction.

The compensation advisor inputs the Statutory Increment (INC/PAC08) with "Effective From"July 8, 2014"Effective to"open and 7 days

  • Regular pay on July 30 is paid at the lower substantive salary for the period worked from July 3 to July 16, 2014 (10 days)
  • Supplementary pay is issued to pay the PAC08/INC for 7 days (July 8 to July 16, 2014)
  • Regular pay on August 13, 2014 is paid at correct substantive salary for the period worked from July 17 to July 30, 2014 (10 days)

4.3 Transactions processed in the current pay period

When the "Effective From" date is later than the start date of the current pay period for 7C accounts in Active status, and the rate amount present in Field 66 is greater than the former rate amount in Field 69 (i.e. promotion) the system will automatically generate an Entitlement Recovery (ENR/ Pay Action Code (PAC) 18R) to recover the salary overpayment from the current regular pay.

In situations where the Rate amount in Field 66 is smaller than the former rate amount in Field 69 (e.g. demotion), the system will automatically generate a Supplementary Adjustment (SUE/PAC 71) to adjust the salary.

With the arrears process, all Entitlement Commence (ENC/PAC18C) transactions with an effective date in the current pay period, based on the pay calendars, will be paid on the regular pay as opposed to a supplementary payment. For example, if an ENC/PAC18 is done in the current pay period to pay additional hours for a part-time employee with the entitlement code 049, the payment will be included in the regular pay for that period of work.

4.3.1 Revert to Basic Pay (RBP/PAC18)

4.3.1.1 Scenario

Employee was in an acting position from July 7, 2014 to August 15, 2014. On August 15, 2014 (RPS, arrears schedule, for PP17 from July 31 to August 13, 2014), the compensation advisor will input the pay transactions when the next pay period opens. In this scenario, the compensation advisor enters the transactions on August 20, 2014, during the current pay period (RPS, arrears schedule, for PP18 from August 14 to August 27, 2014).

The compensation advisor will create a RBP/PAC18 only, as the system will automatically adjust for the acting in the current regular pay.

  • Regular pay on August 27, 2014, paid at acting salary for the period worked from July 31 to August 13, 2014 (10 days)
  • Regular pay on September 10, 2014, for the period worked from August 14 to August 27, 2014, will include the substantive rate of pay for the full 10 day period and the adjustment for the acting salary for August 14 and August 15, 2014 (2 days)
4.3.2 Statutory Increment (INC/PAC08)

4.3.2.1 Scenario

The increase due is with an effective date of August 11, 2014. The compensation advisor enters the INC/PAC08 transaction on August 11, 2014 (RPS, arrears schedule, for PP17 from July 31 to August 13).

The compensation advisor will create a INC/PAC08 only with an effective date of August 11, 2014, as the system will automatically adjust for the increment in the current regular pay.

  • Regular pay on August 13, 2014, paid at the lower substantive salary for the period worked from July 17 to July 30, 2014 (10 days)
  • Regular pay on August 27, 2014, for the period worked from July 31 to August 13, 2014 (10 days), with the adjustment for the days at the lower substantive rate of pay.

4.4 Vacation Pay Calculation (Code 073) as a Lump Sum Payment - Employee who received the transition payment

When calculating the vacation pay to process the Entitlement Commence (ENC/PAC18) 073, the TP received on May 21, 2014, must not be included in the calculation. The salary calculation should be based on days or hours.

Case for scenarios below: Term employee hired from April 22, 2014 to May 30, 2014 (SOS date 31/05/2014), part-time 30 hours a week (6 hours per day) and paid $25.55 hourly, he employee is entitled to the 4.25% in lieu of stat holidays and also to 4% vacation pay.

  • Supplementary payment issued for work completed from April 22 to April 23, 2014 (12 hours) in the gross amount of $306.60 + (4.25%) $13.03 = $319.63
  • First regular pay issued on May 7, 2014 for work completed from April 24 to May 7, 2014 (60 hours) in the gross amount of $1,533.00 + (4.25%) $65.15 = $1,598.15
  • TP issued on May 21, 2014 (not attached to any period worked) in the gross amount of $1,598.15 and on the pay stub, the information will show as 'Transition Payment 2014'
  • Regular pay issued on June 4, 2014 for work completed from May 8 to May 21, 2014, with 6 hours deducted for the stat holiday on May 19 (54 hours instead of 60) in the gross amount of $1,379.70 + (4.25%) $58.64 = $1,438.34
  • Final pay issued on June 18, 2014 for work completed from May 22 to May 30, 2014 (42 hours) in the gross amount of $0.00:
    $1,073.10 + (4.25%) $45.61 = $1,118.71
    Final salary payment $1,118.71 - TP adjustment $1.598.15 = -$479.44
  • The payment statement (stub) will show $1,073.10 (salary 001) + $45.61 (4.25%) - TP adjustment 1H2 of $1,598.15
  • Employee has an outstanding balance of $479.44 in the MER904

The calculation must be based on the hours paid as regular salary, therefore excluding the TP:

  • 12 + 60 + 54 + 42 = 168 hours
  • 168 hours × 25.55 hourly = $4,292.40
  • 4.25% (in lieu of stat holiday for part-time employees) = $182.43
  • $4,292.40 + $182.43 = $4,474.83
  • ($4,474.83 × 4% = $178.99)
  • The compensation advisor creates the ENC/PAC18C 073, rate base P, in the amount of $4,474.83
  • The supplementary pay issued for the 4% vacation payment is in the net amount of $0.00, as the MER904 had a balance of $479.44
  • The MER904 is reduced by $178.99, and the outstanding balance in MER904 is now of $300.45 ($479.44 - $178.99 = $300.45)
  • Employee has an outstanding balance of $300.45 which the compensation advisor will collect from the employee in one of the following ways:

If the employee is not eligible for a pension benefit and there is an outstanding amount in the MER904, the compensation advisor will be responsible for collecting from the employee a money order or certified cheque for the remaining balance. This payment will be reported with a CRT/PAC20 5J1 transaction in order to reduce the amount in MER904 and the gross earnings. A CRT/PAC20 5J1 will only be accepted if the account is in SOS status. The CRT/PAC20 5J1 cannot be greater than the amount in MER904. This process should never be used if the employee is entitled to a pension benefit.

If the employee is eligible for a pension benefit, the compensation advisor will report the outstanding amount of the TP in the MER904/Salary Recovery and Pending Dues Sub-Set (SRS) screen on the PWGSC-TPSGC 2386 Termination/Retirement Information form.

Note: If the total gross earnings (which would have included the TP) had been used for the vacation pay calculation, the amount issued to the employee would have been at a higher rate, resulting in an overpayment to the employee.

4.5 SOS Employees who received the transition payment

Moving from the current to arrears pay schedule means that the employee will be paid two weeks after the completed pay period of work. This section provides examples on how the change will impact certain pay transactions.

It is important to note that a T-SOS-Y should be done to stop the issuance of the regular pay in the pay period prior to SOS. This is to reduce the risk of having insufficient final salary payments to fully adjust the TP.

4.5.1 SOS-19/TOS

SOS-19 / TOS will not trigger the adjustment of the transition payment.

4.5.1.1 Scenario

Employee is SOS-19 dated Saturday, September 13, 2014 (last paid day Friday September 12, 2014, with SOS organization) and TOS in the new organization on Monday September 15, 2014. The employee will receive the following payments when the SOS-19 and TOS are processed:

  • Regular pay on September 24, 2014, for work performed from August 28 to September 10, 2014 (10 days) in the SOS organization
  • Final pay (supplementary payment) will be issued for work performed on September 11 and 12, 2014 (2 days) in the SOS organization
  • Regular pay on October 8, 2014, for work performed from September 15 to 24, 2014 (8 days) in the TOS organization
  • Regular pay on October 22, 2014, for work performed from September 25 to October 8, 2014 (10 days) in the TOS organization

This demonstrates that if both organizations report the application pay actions (SOS and TOS) in a timely fashion, the employee will not see an interruption in earnings.

4.5.2 Adjustment of Transition Payment on SOS

Compensation advisors should T-SOS-Y the account in the pay period prior to the SOS. This will allow the final payment to be made for a longer period than the usual 10-days.

4.5.2.1 Scenario Termination on a pay day (last day paid = pay day) and the T-SOS-Y done two pay periods prior to the SOS (the pay period prior to SOS: October 9, 2014 to October 22 PP23)

  • Employee received a TP in the gross amount of $2,000
  • 6 months later the employee is promoted
  • The employee leaves the public service (SOS); last paid day is November 5, 2014 which is a pay day. (SOS date is November 6, 2014)
  • Compensation advisor processes the T-SOS-Y (between October 15 and October 28, 2014 RPS current pay period October 9 to October 22, 2014)
  • SOS can be processed starting on November 12, 2014 (RPS current pay period from November 6 and November 19, 2014)
    • If the SOS is processed on November 12, 2014, the employee will receive their final payment as a supplementary pay on November 24, 2014
    • If the SOS is processed on December 5, 2014, the employee will receive their final payment as a supplementary pay on December 16, 2014
  • The final supplementary payment will include the following: $6,400 (20 days October 9 to November 5, 2014). This amount ($6,400) will be adjusted by $2,000 (gross TP). The gross balance of $4,400 will be reduced by the applicable deductions
  • Note that the pension deduction will be based on the original gross salary ($6,400), which will be reduced by the amount in the MER755 and the balance will deducted from the final payment
  • Statutory deductions, such as income tax and employment insurance, will be based on the reduced gross amount ($4,400)

Note: Compensation advisors should be aware that the Pension Centre cannot finalize a pension benefit until the SOS is reported in the system.

4.5.2.2 Scenario Termination on a non-pay day and the T-SOS-Y in the pay period prior to SOS

  • Employee received a TP in the gross amount of $2,000
  • 6 months later the employee is promoted
  • The employee leaves the public service (SOS); last paid day is November 14, 2014, which is a non-pay day
  • At the time of SOS, the employee is earning $3,200 gross bi-weekly
  • T-SOS-Y done on October 29, 2014 (RPS-PP23 from October 23 to November 5, 2014)
  • SOS transaction can be processed starting on November 12, 2015 (RPS in current pay period from November 6 to November 19, 2014)
    • If the SOS is processed on November 17, the employee will receive their final payment as a supplementary pay on November 26, 2014
    • If the SOS is processed on December 19, 2014, the employee will receive their final payment as a supplementary pay on January 5, 2015
  • Final bi-weekly salary at the time of SOS is in the gross amount of $3,840 (17 days from October 23 to November 14, 2015)
  • Final pay of $3,840 is adjusted by $2,000 (TP) and the balance of $1,840 gross will be reduced by the applicable deductions

4.5.2.3 Scenario T-SOS-Y not done in prior pay period, resulting in insufficient funds to adjust for the Transition payment

  • Employee received a TP in the gross amount of $2,000
  • 6 months later the employee is promoted
  • The employee leaves the public service (SOS); last paid day is January 30, 2015, which is a non-pay day
  • At the time of SOS, the employee is earning $3,200 gross bi-weekly
  • Final pay at the time of SOS is in the gross amount of $640 (2 days for January 29 and January 30, 2015)
  • Final pay of $640 is adjusted by $2,000 (TP); there are insufficient funds to clear the MER904 and the final payment is issued as $0.00
  • Employee will receive a pay stub showing the amount owed (salary) and the amount adjusted (TP) with the net as $0.00
  • The outstanding gross amount of $1,360 will be applied against any other payments, such as a leave payout or retirement allowance,* until the amount has been adjusted and the MER904 shows zero
  • The pension contributions on the final payment will be calculated and then reduced by the amount of pension contributions deducted on the transition payment (MER755). If there is a pension contribution still owed by the employee, the pay office will report the amount on the PWGSC-TPSGC 2386 Termination/Retirement Information form, to be collected from the pension benefit.

*If the employee is eligible for a pension benefit, the compensation advisor will report the outstanding amount of the TP in the MER904/SRS screen on the PWGSC-TPSGC 2386 Termination/Retirement Information form.

Or

If the employee is not eligible for a pension benefit and there is an outstanding amount in the MER904, the compensation advisor will be responsible for collecting from the employee a money order or certified cheque for the remaining balance. This payment will be reported with a CRT/PAC20 5J1 transaction in order to reduce the amount in MER904 and the gross earnings. A CRT/PAC2 5J1 will only be accepted if the account is in SOS status. The CRT/PAC20 5J1 cannot be greater than the amount residing in MER904. This process should never be used when the employee is entitled to a pension benefit.

Note: Compensation advisors should be aware that the Pension Centre cannot finalize a pension benefit until the SOS is reported in the system.

4.5.3 Pay Office Intervention: Pension Contributions Refund to Employee

When the amount of pension contributions on final payments is less than the amount of pension contributions paid on the TP (MER755), a refund is owed to the employee. This will require a manual intervention by the pay office.

Updated If the SOS is in the same year as the TP, the pay office will process a refund in the RPS, which will reduce the current year pension contributions on the tax slips. A PAC30 M755 will be required to remove the amount in MER755. If the employee had an outstanding TP balance in MER904, this pension contribution refund will automatically be applied to reduce the TP balance.

If the SOS is in a year subsequent to the TP, the pay office will complete a GC80 form, so that the Financial and Payroll Accounting Division (FPAD) can process the refund issued and report the amount to the Pension Centre in order to update Penfax.

The pay office will process a PAC30 to debit the amount out of MER755, and a PAC30/ASR transaction to credit the amount to M726 "Return of Contributions" in order to generate a T4A for the amount of the refund.

4.6 Regular Pay Direct Deposit Intercepts/Recalls

With the change to payment in arrears, under the National Processing Schedule, the regular pay for arrears is processed in the RPS on the Tuesday of the non-pay week as opposed to the Wednesday of the pay week. Compensation advisors will view the payroll registers the next day and will have three (3) business days to intercept the direct deposit regular pay.

Regional pay offices will continue to process recalls of the regular pay up until noon on the Tuesday prior to the pay day.

Although the window to process intercepts is smaller under the arrears schedule for regular pay because the pay period dates are two weeks prior to the payment, there is actually a greater window for compensation advisors to process the pay transactions that come in effect during that period.

Example:

Table Summary

This table shows an example of the direct deposit intercepts and recalls under the current pay cycle. The first column represents the date of the payment, the second column represents the date that the pay system generated the payment, the third column represents the period of work covered on that payment and the forth column represents the dates that the user can intercept that payment.

7C - CURRENT
Payment Date RPS Update Pay Period Dates Intercept Period
7 days
June 4 May 21 May 22 to June 4 May 22 to May 30
June 18 June 4 June 5 to June 18 June 5 to June 13
Table Summary

This table shows an example of the direct deposit intercepts and recalls under the arrears pay cycle. The first column represents the date of the payment, the second column represents the date that the pay system generated the payment, the third column represents the period of work covered on that payment and the forth column represents the dates that the user can intercept that payment.

7C - ARREARS
Payment Date RPS Update Pay Period Dates Intercept Period
3 days
June 4 May 27 May 8 to May 21 May 28 to May 30
June 18  June 10 May 22 to June 4 June 11 to June 13

Appendix A

Restricted Pay Actions table 7C Accounts only

Table Summary

This table represents the list of pay actions that cannot be processed during a specified period. The top row shows the dates covered under the transition period for the three different pay schedules. The first column represents the pay action code that is restricted, the second column represents the screen name for those pay action codes and the third column represents the associated transaction name for those pay actions codes.

Restricted transactions
National Pay Schedule - Between April 24 to May 13, 2014
House of Commons Pay Schedule Between April 24 to May 14, 2014
Canada Revenue Agency Pay Schedule - Between April 24 to May 14, 2014
PAC Pay Action Transaction Name
01 TOS Taken on Strength
04 TIN Transfer In
05 MSA Misc Staffing Transaction
06 PRO Promotion
07 DEM Demotion
08 INC Increment
09 REV Revision
10 CVN Conversion
15 REC 301) Reduction of Earnings
15 LIW (306) Leave with Income Averaging (LWOP)
17A EAR Entitlement Arrears Recovery - Amend
17C EAR Entitlement Arrears Recovery - Commence
17S EAR Entitlement Arrears Recovery - Stop
18 LIA (306) Leave with Income Averaging -Commence
18 LIA (306) Leave with Income Averaging -Amend
18 LIA (306) Leave with Income Averaging -Stop
18 PRL (346) Pre-Retirement Leave - Commence
18 PRL (346) Pre-Retirement Leave - Amend
18 PRL (346) Pre-Retirement Leave - Stop
18 ACT Acting Pay
18 RBP Revert to Basic Pay
18C ENC Entitlement Commence
18A ENA Entitlement Amend
18S ENS Entitlement Stop
18R ENR Entitlement Recovery
21 _ Deletions of Debts Due Crown
23 _ Payment other to Employee - Name and Address Only
35 PCC Pay Cycle Change
Updated 88 OVD Overpayment

Appendix B

Allowances subject to adjustment with Code 5J1

When final payments are issued with the allowances listed below, which are not taxed at the same rate as regular earnings, the system will generate the adjustment with a PAC77 5J1 'Transition payment Adjustment Retirement Allowance and Cash Receipts'.

Table Summary

List of entitlements codes and its associated title that will be subject to the adjustment with code 5J1.

Entitlement Code Entitlement Title
041 Payment for Month of Death
051 Retiring Allowance Non-eligible
054 Severance Pay Eligible
108 Retiring Allowance (i.e. Separation Pay, Retirement Incentive Payment) Eligible
243 Pay Equity Separation Benefits Non-eligible
250 Separation Benefit or Alternative Lump Sum Payment Eligible
274 Pay Equity Separation Benefit Eligible
279 Separation Benefit or Alternative Lump Sum Payment Non-eligible
280 Severance Pay Non-eligible
318 Pers Pay Equity Separation Benefits Adjustment Eligible
319 Pers Pay Equity Separation Benefits Adjustment Non-eligible
363 Retention Payment Eligible
364 Retention Payment Non-eligible
365 Transition Support Measures (TSM) or payment in lieu of foregone benefits Eligible
366 Transition Support Measures (TSM) or payment in lieu of foregone benefits Non-eligible
367 Transition Support Measure Education Allowance or Compensation for pension reduction Eligible
368 Transition Support Measure Education Allowance or Compensation for pension reduction Non-eligible
369 Retiring Allowances Adjustment Eligible
370 Retiring Allowances Adjustment Non-eligible
371 Civilian Reduction Program Supplement or Age and years of service allowance under Early Departure Incentive (EDI) Eligible
372 Civilian Reduction Program Supplement Non-eligible
373 Early Departure Incentive Eligible
374 Early Departure Incentive Non-eligible
385 Alternative Delivery Initiative Lump Sum Eligible
386 Alternative Delivery Initiative Lump Sum Non-eligible
387 Alternative Delivery Initiative Pension Lump Sum Eligible
388 Alternative Delivery Initiative Pension Lump Sum Non-eligible
389 Alternative Delivery Initiative Salary Top-up Allowance Eligible
390 Alternative Delivery Initiative Salary Top-up Allowance Non-eligible
391 Additional Salary Top-up Allowance Eligible
392 Additional Salary Top-up Allowance Non-eligible
441 Additional Salary (HOC)
445 Salary Month of Death (HOC)
1C1 Institutional Retirement Lump Sum Non-eligible
1C2 Institutional Retirement Lump Sum Eligible
1S1 Indian Status - Eligible Severance Pay
1S2 Indian Status Non-eligible Severance Pay

Appendix C

PROTECTED B (when completed)

Paylist:

PRI:

Date

Name
Street
City, Province
Postal code

Dear: Insert appropriate name

Subject: Change to payment in arrears - Leave with Income Averaging (LIA)

Further to the Compensation Communiqué 2013-11-22 and Question and Answers for employees, the purpose of this letter is to provide you with information on how this will impact your leave with income averaging reduced salary schedule.

The May 21, 2014 payment is a one-time transition payment provided to avoid an interruption in earnings. Although the amount you receive will be at the reduced salary rate, it does not cover a period of work (pay dates). This one-time payment is not included in the reduced payment schedule for leave with income averaging purposes.

As a result of the move to payment in arrears, your leave with income averaging period will now cease on the regular pay of DD/MM/YYYY, rather than on the previously communicate date of DD/YY/YYYY.

Should you require additional information, do not hesitate to contact me at (###) ###-#### or by e-mail at Insert E-mail address.

Sincerely,

Insert name
Compensation and Benefits Advisor

c.c.: Employee file

Appendix D

PROTECTED B (when completed)

Paylist:

PRI:

Date

Name
Street
City, Province
Postal code

Dear: Insert appropriate name

Subject: Change to payment in arrears Leave Without Pay

This is to advise of recent changes that will impact your regular pay upon your return to work.

Public Works and Government Services Canada, as the public services payroll administrator, is implementing a major initiative which involves the transition to payment in arrears for all employees currently paid on a bi-weekly basis. This change will occur in the Regional Pay System (RPS) in May 2014.

Currently, most federal employees are paid on a current basis. This means that employees pay is calculated and processed in advance of the work being performed; therefore, the pay often does not reflect recent changes in the employees situation, such as leave without pay, resignation/termination or salary increases. Moving to the payment in arrears schedule means that employees will be paid for the period that ended two weeks before. Pay day will continue to be every second Wednesday.

To reduce financial hardship, you will receive a one-time transition payment which will be issued shortly after your return to work. The Transition payment will be the equivalent of your regular pay and calculated on the basis of your salary and your assigned hours of work on record.

The enclosed FAQ provides details regarding the change to payment in arrears.

Should you require additional information, do not hesitate to contact me at (###) ###-#### or by e-mail at Insert E-mail address.

Sincerely,

Insert name
Compensation and Benefits Advisor

c.c.: Employee file

Appendix E

PROTECTED B (when completed)

Paylist:

PRI:

Date

Name
Street
City, Province
Postal code

Dear: Insert appropriate name

Subject: Change to payment in arrears - Seasonal lay-off

This is to advise of recent changes that will impact your regular pay upon your return to work.

Public Works and Government Services Canada, as the public services payroll administrator, is implementing a major initiative which involves the transition to payment in arrears for all employees currently paid on a bi-weekly basis. This change will occur in the Regional Pay System (RPS) in May 2014.

Currently, most federal employees are paid on a current basis. This means that employees pay is calculated and processed in advance of the work being performed; therefore, the pay often does not reflect recent changes in the employees situation, such as leave without pay, resignation/termination or salary increases. Moving to the payment in arrears schedule means that employees will be paid for the period that ended two weeks before. Pay day will continue to be every second Wednesday.

To reduce financial hardship, you will receive a one-time transition payment which will be issued shortly after your return to duty. The Transition payment will be the equivalent of your regular pay and calculated on the basis of your salary and your assigned hours of work on record.

Your expected return to work date is DD/MM/YYYY. At that time, you will be eligible for the transition payment, which will be issued shortly after your return.

Next season, when you go on leave, you will receive your final salary pay two weeks after your last day of work. When you return to duty in the following season, you will receive your first regular pay within four weeks.

The enclosed FAQ provides details regarding the change to payment in arrears.

Should you require additional information, do not hesitate to contact me at (###) ###-#### or by e-mail at Insert E-mail address.

Sincerely,

Insert name
Compensation and Benefits Advisor

c.c.: Employee file

Appendix F

The purpose of the following examples is to provide sample paragraphs that can be used in various standard benefit letters.

RE-TOS Eligible for the transition payment
Sample paragraphs that may be included

Bi-weekly Pay in Arrears

It has been the practice of the Government of Canada to pay employees in arrears since May 2014.

Your first regular pay will be due on INSERT DATE which will pay you for the period of work from DD/MM/YYYY to DD/MM/YYYY.

One-time Transition payment

Employees on leave without pay (or seasonal lay-off) at the time of the transition from the current to the arrears pay schedule, did not receive a one-time transition payment. Since you were not issued the one-time Transition payment, one will be issued to you shortly to reduce financial hardship. It will be the equivalent of your regular pay and calculated on the basis of your salary and your assigned hours of work on record. The Transition payment does not cover a period of time worked.


SOS Transition payment issued
Sample paragraphs that may be included

Bi-Weekly Pay (Transition payment to be adjusted)

In May 2014, the Government of Canada changed the salary payment from a current to an arrears pay cycle. All employees received a transition payment which was a one-time payment made to avoid a disruption in employees bi-weekly pay. Since there was no disruption in your bi-weekly salary payments, you will not be entitled to an additional salary payment two weeks after you have left the public service. However, a final payment will be made to you in order to take into account the difference between your salary at the time of the Transition payment and your salary on departure.

The final payment, covering the period worked from DD/MM/YYYY to DD/MM/YYYY , will be reduced by the amount of $XXX,XX in order to adjust the gross Transition payment that was issued in the amount of $XXX.XX.

And (if applicable for cases where the final salary payment still has a balance in MER904)

(Outstanding amount in MER904)

There will be insufficient funds to adjust the full amount of the transition payment from your final pay. The remaining balance in the amount of $XXX.XX will be taken from all additional payments owing until the amount has been adjusted in full.

or

(Outstanding amount in MER904)

There will be insufficient funds to adjust the full amount of the transition payment from your final payments. The outstanding balance in the amount of $XXX.XX will be transferred to the Pension Centre and will be adjusted from your pension benefits.

or

Updated (Outstanding amount in MER904)

There will be insufficient funds to adjust the full amount of the transition payment from your final payments. There is an outstanding amount of $XXX.XX. The outstanding gross amount must be paid by money order or certified cheque payable to the Receiver General for Canada.

Once paid, Public Works and Government Canada will reduce on your tax slips your gross employment income, the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) pensionable earnings and Employment Insurance (EI) and Quebec Parental Insurance Plan (QPIP) insurable earnings, when applicable. When you file your income tax, any overpaid tax, CPP/QPP premium or EI/QPIP premium will be refunded at that time.

Please send your payment to:

Name
Street
City, Province
Postal code


New TOS or RE-TOS - No transition payment issued
Sample paragraphs that may be included

Bi-weekly Pay

It has been the practice of the Government of Canada to pay employees in arrears since May 2014.

The pay period begins on a Thursday and ends two weeks later on Wednesday (pay day). Your first regular pay will be due on Insert date, which will pay for the period of work from DD/MM/YYYY to DD/MM/YYYY.