ARCHIVED CD 2008-020

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October 30, 2008

SUBJECT: Recovery of Entitlements and Net Overpayments from Supplementary Payments

1. PURPOSE

1.1. The purpose of this directive is to provide information concerning changes to the way compensation advisors may recover entitlements when the recovery accompanies a payment.

1.2. In addition, changes have been made to ensure that statutory deductions are being withheld correctly when the Regional Pay System (RPS) must recover a "net" overpayment from a supplementary payment.

2. BACKGROUND

2.1. Presently, when compensation advisors are retroactively ceasing an allowance in addition to reclassifying or promoting an employee, the retroactivity on the basic salary is paid as supplementary payment at the difference between the two basic pay rates and the pay transaction to recover the allowance must be input as a regular pay recovery.

2.2. The Pension Data Correction Project has identified that this process creates additional work as it requires further investigation regarding discrepancies in pension contributions. Often, allowances are overpaid and subsequently, entitlements must be recovered later. This also adds to the compensation advisor's workload as they must explain this process to the affected employee. Therefore, this enhancement will improve the administration of effected recoveries.

2.3. Furthermore, when there is an amount in the "Net(OP)" field (Master Employee Record (MER) elements Net OP current year 953 or Net OP previous year 954 to be recovered) and a supplementary payment is made, the RPS may not be able to withhold the correct statutory deductions (Canada/Quebec Pension Plan (CPP/QPP), Employment Insurance (EI), Quebec Parental Insurance Plan (QPIP), and Public Service Pension Fund (PSPF)) from the payment, if there are insufficient funds to both recover the overpayment and withhold the deductions.

3. POLICY

3.1. Recovery of Overpayments

The Treasury Board policy concerning the recovery of any overpayment of salary or entitlements directs that such amounts must be recovered in full from the first available funds payable to the employee. In extenuating circumstances, there is a provision for the deputy head of a department or the head of an agency to allow recovery over an extended period of time, but in no case, at less than 10% of the employees gross pay.

NOTE: Cases of hardship, which MUST be certified by the deputy head or head of an agency, are the only reasons permitted for reducing the recovery.

3.2. Withholding of Statutory Deductions

The regulations governing the withholding of deductions for CPP, QPP, EI, QPIP and PSPF require that, where there are insufficient funds available, these amounts should be recovered from future payments.

3.2.1. In cases where a net overpayment resides on the MER in the Net OP current year element 953 or Net OP previous year element 954, the system will recover this amount to the fullest extent possible from any money being paid to that account, prior to withholding statutory deductions.

3.2.2. The statutory deductions that should normally be withheld from the payment may be deficient when all or most of the net overpayment is applied to the payment.

4. PROCEDURES/INSTRUCTIONS

4.1. Recovery of Overpayment from Supplementary Payments

Until now, compensation advisors were unable to make a recovery of an overpaid entitlement from a concurrent payment being issued as a result of a staffing action.

4.1.1. Effective November 18, 2008, the RPS will allow a compensation advisor to indicate, when creating a transaction to recover an entitlement (pay action code (PAC) 18R/ENR), that they wish the recovery to be made from the accompanying supplementary pay adjustment. Compensation advisors should verify that the recovery does not exceed the amount of the supplementary payment, because the remaining amount will be fully recovered from the next regular pay. In addition, they should ensure that both pay transactions are processed in the same update.

4.1.2. In order for the RPS to make a recovery from the supplementary pay, the compensation advisor must enter the code "OV" in positions 3 and 4 of field 71 for batch input or in the new field in on-line pay as shown below, which will appear at the bottom of the on-line pay input screen.

*** COMPLETE IF RECOVERY IS TO BE MADE FROM SUPP***
ENTER OV IF TO BE RECOVERED FROM SUPP:

4.1.3. Any value other then "OV" will reject the transaction with the following message:

"R83 INVALID CODE"

4.1.4. When the value in the new field indicates recovery is to be made from a supplementary payment, but no corresponding payment is found, the PAC 18R/ENR transaction will be rejected with the following message:

"R84 SUPP PAY 18R NOT ACCOMPANIED BY A PAYMENT"

4.1.5. The recovery of entitlements from supplementary pay is restricted to codes other than basic pay or equivalent codes. The following message will be produced if a PAC 18R/ENR transaction is input with a basic pay code:

R85 ENT CODE MUST BE OTHER THAN 001, 002, 027, 077, 127, 132, 216, 217, 218, 219 OR 232

4.1.6. If a PAC18R/ENR open period transaction is entered with the OV indicator, the ongoing PAC18R/ENR transaction will be rejected with this new message:

"R86 INDICATOR OV CAN ONLY BE ENTERED ON A CLOSED PERIOD"

4.1.7. Example

An employee is promoted effective August 20, 2007, from a CR-04 at $43, 286 plus bilingual bonus of $800 to an AS-02, non-bilingual position at $48, 252. The pay transactions are being processed for Pay Period 20, September 20 to October 3, 2007.

Total retroactive period is 23 days for the salary adjustment and 13 days for the recovery of the bilingual bonus (the employee worked more than 10 days in the bilingual position in August).

Input required

PPIM 4-4-06 / On-line 14-4-1

PAC 06/PRO 001 – Effective From (Field 63): 20/08/07 1, Basic Pay Rate (Field 65): 9, New Rate (Field 66): 48,252

Old Rate (Field 69): 43, 286, Number of H/D/W: 23 days

PPIM 4-4-18-6-1 / On-line 14-6-3

PAC 18S/ENS 141 – Effective From (Field 63): 01/09/07, New Rate (Field 66): 800, Overpayment amount (Field 69): 39.87*

*Field 69 is not to be completed when processing in the On-line pay system. This only applies to the batch transaction.

PPIM 4-4-18-4-1 / On-line 14-6-4

PAC 18R/ENR 141 – Effective From (Field 63): 01/09/07, End Date (Field 64): 19/09/07, Basic Pay Rate (Field 65): 0, New Rate (Field 66): 39.87, insert OV in the 3rd and 4th spaces of Field 71, left justifed, if recovered from a supplementary payment.

On-line – Enter OV if to be recovered from supplementary payment.

The system will generate a basic pay adjustment of $437.82 and will recover bilingual bonus of $39.87.

4.2. Recovery of Net Overpayment - Deficiencies Generated

When a "net overpayment" amount has been generated by the RPS and placed into one of the "NET OVERPAYMENT" elements (either 953 Current Year or 954 Previous Year) on the MER, any payment made through the system will be reduced by the amount in the element. In some cases, the overpayment amount is large enough that there is not enough money available to recover the overpayment and all the required statutory deductions from the first pay.

In these cases, the RPS has calculated the amounts owing for the statutory deductions and produced a "Calculate Detail Statement" to the pay office reflecting the amounts calculated, but not deducted. The remaining amounts that were calculated, but not deducted, are to be processed manually by the pay and pension agent for collection from a subsequent regular pay.

4.2.1. The new process will result in the RPS automatically generating a PAC 17C / ARR pay transaction to collect the remaining amounts that were calculated, but not deducted. These amounts will be posted to the MER A/D block for recovery from the next regular pay for the following deductions:

Deduction	Code
CPP NON WAGE LOSS	730
CPP WAGE LOSS	575
EI NON WAGE LOSS	656
EI WAGE LOSS	654
PSSA LOW	760
PSSA HIGH	761
QPIP	5C5
QPP	576
RCA	783

4.2.2. A warning message will be produced to the client department/agency as follows:

"PDWT2 CALCULATED DEDUCTION NOT RECOVERED - PAC 17 CREATED"

4.2.3. Pay Office Responsibility - Year End Rollover

As you aware, CPP/QPP, QPIP and EI deficiencies have yearly maximums. If any PAC 17 for these deductions remain on the MER at year end, they will automatically be dropped when the calendar year end processes are run.

Also, PSSA deficiencies have yearly maximums. The low rate deficiency codes will automatically be changed to the high rate code when the calendar year end processes are run.

Because the pay office is still responsible for the recovery of these deficiencies, two new reports entitled "Year End Report Listing" will be produced at year end that will identify these deficiencies.

One report will be for CPP/QPP, QPIP and EI deductions and the other for PSSA deductions. These reports will be produced in two plies. Each report will be forwarded to the responsible pay office who will provide the Pay Accounting Division with a copy.

Year end report listing for all PAC 17 (575, 576, 654, 656, 730, 5C5)

Active Accounts

A PAC 17C794 will be created for each of the deductions being dropped (codes 575, 730, 576, 654,656, 5C5). The appropriate master element will be updated automatically. No action will be required by the pay office for active accounts.

Inactive Accounts

There will be no PAC 17C794 generated and no master elements will be updated for the inactive accounts. The report will list the deductions which were dropped. Therefore, the pay office will need to update the free form text (FFT) so that the appropriate actions are taken upon retaken on strength (RE-TOS) or struck off strength (SOS) of the account (i.e. when a PAC 17C/77 794 is being input).

Year end report listing for all PAC 17C760 changed to PAC 17C761 and PAC 17C605 changed to PAC 17C581

Active and Inactive Accounts

Code 760 (PSSA2 LOW) will be automatically changed to code 761 (PSSA2 HI), and code 605 (PSSA LOW) will be changed to code 581 (PSSA HI).

5. INQUIRIES

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

Brigitte Fortin
Director General
Compensation Sector
Accounting, Banking and Compensation

Reference(s): CJA9015-18; CJA9001-13; CJA9006-1