CD 2014-006

Information: GCintranet disclaimer

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

Subject: Directive on Career Transition for Executives

April 8, 2014

1. Purpose

1.1. The purpose of this directive is to provide information on the processing of payments in the Regional Pay System (RPS) of elements negotiated in career transition agreements under the provisions of the Directive on Career Transition for Executives (DCTE).

2. Cancellation

2.1. This document supersedes the ARCHIVED Services Pay Directive: 1992-081 (36) on the Executive Employment Transition Policy - Financial Settlements, dated November 19, 1992.

3. Policy

3.1. The Directive on Career Transition for Executives came into effect on July 16, 2007 and applies to the following groups and levels:

  • Executive (EX) group, levels 01 to 05
  • Defence Scientific Service (DS) group, levels 7A, 7B and 08
  • Medical Officers (MD-MOF) group, levels 04 and 05
  • Medical Specialist (MD-MSP) group, level 03

In addition, the Terms and Conditions of Employment for the Law Management (LC) group, level 01 to 04, also follow the Directive on Career Transition for Executives.

3.2. Career transition is a situation that occurs when a deputy head decides that the services of an indeterminate executive are no longer required by reason of lack of work, the discontinuance of a function or the transfer of work outside those portions of the federal public administration.

3.3. When an executive’s position is declared surplus, the executive can choose between leaving the core public administration in exchange for eligibility to the career transition agreement or seeking further employment in the core public administration.

3.4. For executives choosing to leave the core public administration, only deputy heads authorize individual career transition agreements, within the limits prescribed by the Directive on Career Transition for Executives.

4. Procedures and Instructions

4.1 The lump sum payments described below are to be requested through the RPS.

4.2. Lump Sum Payment in Lieu of the Executive Continuing to Work During the Notice Period

4.2.1. Deputy heads can authorize a lump sum payment of up to 52 weeks (some exceptions apply) of the executive's substantive weekly salary.

4.2.2. Entitlement code 108 (Retiring Allowance-Transferable) is to be used to requisition that portion of the benefit which is eligible to be transferred to a registered retirement savings plan (RRSP) or to an registered pension plan (RPP).

4.2.3. Entitlement code 051 (Retiring Allowance Non-Transferable) is to be used to requisition that portion of the benefit which exceeds the established limits for transfer to an RRSP or to an RPP. This payment is subject to income tax on lump-sum payments.

4.3. Lump Sum Payment for Foregone Employee Benefits

4.3.1. A lump sum payment in lieu of lost benefits of up to 10% of annual substantive salary is available to enable the executive to purchase comparable private insurance coverage.

4.3.2. Entitlement code 365 (Eligible - Lump Sum Payment for Foregone Employee Benefits) is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP.

4.3.3.  Entitlement code 366 (Non-Eligible - Lump Sum Payment for Foregone Employee Benefits) is to be used to requisition that portion of the benefit which exceeds the established limits for transfer to an RRSP or to an RPP. This payment is subject to income tax on lump-sum payments.

4.4. Lump Sum Payment to Offset Pension Reduction

4.4.1. A lump sum payment of up to 30% of annual substantive salary to offset pension reduction is available to eligible executives between the ages of 50 and 54.

4.4.2. Entitlement code 367 (Contracting Out Payment or Compensation for Pension Reduction Transferable) is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP.

4.4.3.  Entitlement code 368 (Contracting Out Payment or Compensation for Pension Reduction Non-Transferable) is to be used to requisition that portion of the benefit which exceeds the established limits for transfer to an RRSP or to an RPP. This payment is subject to income tax on lump-sum payments.

4.5. Lump Sum Payment in Lieu of Financial and Outplacement Counseling and Other Outplacement Benefits

4.5.1. A lump sum payment of up to 15% of the executive's annual substantive salary is available when the executive foregoes financial counselling, job search benefits, outplacement counselling, training, travel, relocation benefits and all other non-cash elements.

4.5.2. Entitlement code 250 (Separation Benefit or Alternative Lump Sum Payment Transferable) is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP.

4.5.3. Entitlement code 279 (Separation Benefit or Alternative Lump Sum Payment Non-Transferable) is to be used to requisition that portion of the benefit which exceeds the established limits for transfer to an RRSP or to an RPP. This payment is subject to income tax on lump-sum payments.

4.6. Bi-Weekly Lump Sum

4.6.1. When an executive on surplus status is appointed to a position with a lower salary range maximum, the following salary administration will apply:

  • If the employee's substantive salary is less than or equal to the maximum salary of the new position, then the appointment will be treated as a transfer and the employee will be assimilated within the range at the appropriate rate.
  • If the employee's current salary is above the maximum salary of the new position, the employee's salary will be frozen on appointment until it is matched or exceeded by the range maximum applicable to the level of the position (salary maintenance).
  • In a salary maintenance situation, future salary increases will be made as bi-weekly lump sum payments equivalent to the percentage increase of the maximum salary of the employee's new level and applicable only for the duration of the period covered by the increase. Thus, if an increase is applied to the salary range applicable to the position, and the new range is to be effective for 15 months, the employee's bi-weekly salary cheque will reflect this increase as a supplementary amount which will cease to be paid on the date when the range ceases to be in effect.

4.6.2 Entitlement code 230 (Lump Sum Equivalent) must be used to request the bi-weekly salary adjustment indicated above. The adjustment should be reported as a continuing bi-weekly entitlement (rate base 7). Care should also be taken to terminate the adjustment at the end of the increase period.

4.6.3. If the employee is hired on a part-time basis, it will be necessary to prorate the bi-weekly amount of entitlement code 230 to account for the employee's reduced assigned work week.

4.7. Reason Codes - Struck Off Strength (SOS)

4.7.1. The SOS reason code "11" (Layoff) is to be used for an executive who had chosen to seek continued employment (surplus priority entitlement) in the core public administration but did not succeed at finding employment.

4.7.2. The SOS reason code "44" (Resignation under the Executive Employment Transition Program) is to be used for any executive who resigns in exchange for a career transition agreement.

Additional information on the SOS reason for leaving codes is provided in the Personnel-Pay Input Manual (PPIM) PPIM 3-5-3.

4.8. Pay Input Requirements

4.8.1. Compensation advisors are responsible for manually processing the payments of elements negotiated in career transition agreements. The attached Appendix A – Entitlement Codes provides a full list of the entitlement codes.

4.8.2. Report these payments by completing a Termination Entitlement (TEC) transaction with the applicable entitlement code. Refer to PPIM sections PPIM 14-6-7 and PPIM 4-4-71-1 for additional information.

4.8.3. Care should be taken to ensure that the appropriate entitlement codes are utilized. The proper codes must be used whether or not the executive requests a transfer of funds to an RRSP or to an RPP.

For further information concerning the determination of the limits for the transfer of funds to an RRSP or to an RPP, please refer to ARCHIVED CD 2006-002.

4.9. Leave Without Pay (LWOP) Period for Pension Qualification Purposes

4.9.1. A period of LWOP can be authorized to allow an executive who does meet the age and service criteria under the Public Service Superannuation Act to accumulate additional service for pension qualification.

4.9.2. An executive can only contribute to the pension plan for a total of 5 years in a career, while on LWOP for personal reasons.

4.9.3. In order to initiate the LWOP, compensation advisors will need to complete a Temporarily Struck Off Strength (TOS) transaction. Compensation advisors are to use LWOP reason code "T" for the first 3 months of LWOP and LWOP reason code "9" for the period of LWOP that exceeds the first 3 months. Refer to PPIM sections PPIM 14-8-3 and PPIM 4-4-13 for additional information.

4.10. Alternation Situation

4.10.1. Alternation occurs when an executive who has been notified in writing that his/her services are or will no longer be required exchanges positions with another executive who is willing to leave the core public administration with a career transition agreement.

4.10.2. SOS and TOS transactions must be processed for the alternate employee in the case of alternations between Treasury Board (TB) departments.

For opting employees, the Transfer-in (TIN) and Transfer-out (TOU) process will apply.

4.10.3. Note that the SOS/TOS process does not allow for accurate reporting of the payments issued to alternates via the RPS. The department that is receiving the alternate employee is responsible for tracking the payments to meet the TB reporting requirements.

4.10.4. As per current procedures, SOS and TOS transactions must be processed for the movement of employees between employers. Refer to CD 2013-020 for the change of employer procedures.

4.10.5. To avoid overpayments, it is recommended that the accounts be placed in pending SOS status, reason Y, to stop the processing of the regular pay, based on the effective date of the alternation.

4.10.6. This pay action must be followed by an SOS (PAC 02) with the appropriate reason code. Refer to PPIM 14-8-3 and PPIM 4-4-13 for additional information.

5. Inquiries

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

Original Signed by
Carrie E. Roussin

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

Reference(s): CJA 9015-24

Appendix A - Entitlement Codes

Following is the table that contains the entitlement codes for processing payments under the DCTE in the Regional Pay System:

Refer to PPIM 9-5-2 and Appendix C of the DCTE for additional details.

Code Title DCTE Authority Description
108 Eligible - Lump Sum Payment in lieu of the executive continuing to work during the notice period Appendix C Element 1 Deputy head can authorize a lump sum payment of up to 52 weeks of the executive’s substantive weekly salary. (some exceptions apply)
051 Non-Eligible – Lump Sum Payment in lieu of the executive continuing to work during the notice period Appendix C Element 1 Deputy head can authorize a lump sum payment of up to 52 weeks of the executive’s substantive weekly salary. (some exceptions apply)
365 Eligible – Lump Sum Payment for Foregone Employee Benefits Appendix C Element 2 A lump sum payment in lieu of lost benefits of up to 10% of substantive annual salary to enable the executive to purchase comparable private insurance coverage for medical and dental expenses.
366 Non-Eligible – Lump Sum Payment for Foregone Employee Benefits Appendix C Element 2 A lump sum payment in lieu of lost benefits of up to 10% of substantive annual salary to enable the executive to purchase comparable private insurance coverage for medical and dental expenses.
367 Eligible – Lump Sum Payment to Offset Pension Reduction Appendix C Element 3 A lump sum payment of up to 30% of substantive annual salary to offset pension reduction. Only available to executives between ages 50 and 54 who are eligible for an annual allowance under the Public Service Superannuation Act (PSSA).
368 Non-Eligible – Lump Sum Payment to Offset Pension Reduction Appendix C Element 3 A lump sum payment of up to 30% of substantive annual salary to offset pension reduction. Only available to executives between ages 50 and 54 who are eligible for an annual allowance under the Public Service Superannuation Act (PSSA).
250 Eligible – Lump Sum Payment in Lieu of Financial and Outplacement Counseling and other outplacement benefits Appendix C Element 4 A lump sum payment of up to 15% of substantive annual salary. This amount is available when the executive foregoes financial counselling, job search benefits, outplacement counselling, training, travel, relocation benefits and all other non-cash elements.
This amount cannot be provided in combination with a lump sum payment in lieu of lost benefits or a waiver of actuarial pension reductions.
279 Non-Eligible – Lump Sum Payment in Lieu of Financial and Outplacement Counseling and other outplacement benefits Appendix C Element 4 A lump sum payment of up to 15% of substantive annual salary. This amount is available when the executive foregoes financial counselling, job search benefits, outplacement counselling, training, travel, relocation benefits and all other non-cash elements.
This amount cannot be provided in combination with a lump sum payment in lieu of lost benefits or a waiver of actuarial pension reductions.
230 Salary Maintenance 2.2.4 If the executive accepts an appointment to a position with a lower maximum salary, he or she may become subject to Salary Maintenance. Future salary revisions will be made as bi-weekly lump sum payments equivalent to the percentage increase to the salary maximum of the employee's new position and applicable only for the duration of the period covered by the increase.