ARCHIVED CD 2002-014
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April 5, 2002
SUBJECT: Daily Interest Calculation on PSAC Pay Equity Payments
1.1 The purpose of this directive is to inform the compensation advisors of the policy and procedures regarding the daily interest that will be processed on the Public Service Alliance of Canada (PSAC) Pay Equity (PE) retroactive adjustments previously issued.
1.2 A notice of information to employees on Additional Interest has been included with this Compensation Directive and will be posted to the following Web site,5 days after the publication date of this document: Internet -- PWGSC Government Portal.
1.3 This directive should be read in conjunction with Compensation Directive 2000-031 dated November 3, 2000, entitled "Interest Calculation and Payment--PSAC Pay Equity Agreement" as well as the Treasury Board Secretariat (TBS) Information Notice dated January 30, 2002, entitled "Pay Equity Interest Payment" .
1.4 In this text the use of the masculine is generic and applies to both men and women.
2.1 The PE Agreement as agreed to between TBS and PSAC on October 29, 1999, and approved by the Canadian Human Rights Tribunal (CHRT) on November 16, 1999, included interest payments on the retroactive adjustments for the affected groups. This agreement affects the Clerical and Regulatory (CR), Library Science (LS), Educational Support (EU), Data Processing (DA -CON), Secretarial, Stenographic and Typing (ST) and Hospital Services (HS) groups.
3.1 The original interest calculations were made semi annually on 90% of the total PE adjustment owing as of March 31 and September 30 of each year as per the Memorandum of Agreement.
3.2 TBS has identified that a daily interest process is required for the period from the interest due date (April 1 or October 1) previously paid up to the day prior to the actual date of the cheque.
4.1 The daily interest will be calculated on all PE transactions processed prior to May 1, 2002. This process will be implemented in the Regional Pay System and the supplementary cheques will be automatically produced on May 3, 2002. The historical information will be extracted from the Register Data Base (RDB) using the PE adjustment entitlement codes identified in the Compensation Directive 2000-031 . If a PE adjustment payment was subsequently cancelled the payment will be ignored. PE overpayments will be reduced from the adjustments previously paid for the same fiscal year based on the effective from and to dates reported on the original transactions.
4.2 The daily interest rate will be calculated by determining the annual interest rate for that period as identified in the above mentioned directive, divided by 365.
4.3 The interest rate for 2001 (interest due dates of September 30, 2001, and March 31, 2002) is 4.85%.
4.4 The daily interest will be calculated for each payment based on the gross amount owing on the interest due date immediately prior to the payment date. This gross amount will be multiplied by 90% which in turn will be multiplied by the daily interest rate and then multiplied by the number of calendar days from the previous interest due date to the day prior to the actual cheque date.
|Cheque Date||Gross||End of Retro Period||Most Recent Interest Due Date Paid||Additional Daily Interest Formula||Daily Interest Calculation|
|April 7, 2000||$9,563.00||July 28, 1998||April 1, 2000||Cheque gross x 90% x 0.011% (4.0% / 365) x 6 days (April 1 to 6 2000)||9,563.00 x 90% = 8,606.70 x .011% = 0.947 x 6 = $5.68|
|June 5, 2000||$3,741.00||June 7, 2000||April 1, 2000||* Gross owing as March 31 2000 x 90% x 0.011% x 65 days||2,998.00 x 90% = 2,698.20 x .011% = 0.297 x 65 = $19.31|
|Sept. 15, 2000||$1,367.00||March 1, 1989||April 1, 2000||Cheque gross x 90% x 0.011% x 167 days||1,367.00 x 90% = 1,230.30 x .011% = 0.135 x 167 = $22.55|
|Nov. 2, 2000||$819.00||Nov. 15, 2000||Oct. 1, 2000||* Gross owing as Sept. 30 2000 x 90% x 0.014% (5.05% / 365) x 32 days||549.00 x 90% = 494.10 x .014% = 0.069 x 32 = $2.21|
|April 11, 2001||$675.00||June 7, 2000||April 1, 2001||Cheque gross x 90% x 0.014% x 10 days||675.00 x 90% = 607.50 x .014% = 0.085 x 10 = $0.85|
* Daily interest is not calculated on adjustment amount owing from the most recent interest due date paid (April 1 or October 1) to the end of the retroactive period since this period ends after the most recent interest due date paid.
4.6 Interest adjustments paid to former employees, whose struck of strength (SOS) reason is "17 -- Death in Service", will not produce a message to the pay office and will be issued automatically.
4.7 Interest payments to non residents are taxable and the procedures mentioned in section 4.8 of Compensation Directive 2000-031 are to be applied.
4.8 If the total gross daily interest amount payable is less than $1.00 and the employee is currently active or temporarily struck off strength (T-SOS), the interest adjustment amount will be included with the next regular pay.
4.9 If the total gross daily interest amount payable is less than $1.00 and the employee is SOS then, the process is suspended and a cheque will not be produced.
4.10 If the total gross daily interest amount paid during the year is less than $1.00, the Statement of Investment Income (T5) and the Investment Income (Relevé 3) will not be produced as part of the year end processing. Employees are to be reminded that these amounts still need to be included as income when they file their income tax return.
4.11 If the total PE adjustment amounts paid during the current year that are applicable to previous years is less than $300.00 the Statement of Qualifying Retroactive Lump Sum Payments (T1198) will not be produced as part of the year end processing.
5.1 Any request for information regarding the foregoing should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.
Original Signed by
Government Operational Service
Reference: CJA 9015-29-3
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