In April 2014, the Government of Canada is implementing payment in arrears, an industry standard payroll practice, which will improve pay services to employees through timelier processing of changes in their pay, increased transparency and predictability in earnings. The questions and answers below will explain payment in arrears and how it may impact you as an employee.
Question 1: What does payment in arrears mean?
Question1 - Answer 1:
Today, employees receive their pay on Wednesday for work completed up to and including that Wednesday end of day (i.e. the pay day). In other words, they are paid on a "current" basis. Employees’ pay is calculated and processed in advance of the work being performed and, therefore, the pay often does not reflect recent changes in the employees’ situation, such as leave without pay, or even salary increases.
Adopting payment in arrears means that employees will be paid on Wednesday for the ten days worked (from a Thursday to a Wednesday) that concluded two weeks prior to the pay day. Employees’ pay will more accurately reflect the actual time worked. Overpayments, which must be recovered from employees, will be avoided, resulting in a reduction in the number of adjustments to employee’s pay on subsequent payments.
Question 2: Why is the Government moving to payment in arrears?
Question2 - Answer 2:
The Government of Canada (GC) will replace the more than 40-year-old pay system with a modern pay solution and streamlined, modern business processes. In doing so, it will revise long standing and costly pay processes and adopt industry standard payroll practices, which align with the Government’s agenda to modernize its common services and improve pay services to employees.
Question 3: What are the benefits of making these changes?
Question3 - Answer 3:
By implementing industry standard payroll practices, the Government of Canada will improve pay services to employees through timelier processing of changes in their pay, increased transparency and predictability in earnings reduction in the number of adjustments to employee’s pay on subsequent payments and a decrease in overpayments (that would need to be recovered from employees).
Question 4: How will this benefit employees?
Question4 - Answer 4:
Moving to payment in arrears will ensure consistent, timely and efficient pay services. It will significantly reduce overpayments and will increase the accuracy of payments reducing hardship on employees from having to pay back the amount of salary dollars they were overpaid.
Question 5:When do you plan to make the change to payment in arrears?
Question5 - Answer 5:
The Government will officially implement payment in arrears in April 2014.
Question 6:How does payment in arrears affect new employees?
Question6 - Answer 6:
All new employees not on the payroll on April 23, 2014 will be automatically placed on payment in arrears; they will receive their first payment, within four weeks from their start date. They will receive their final payment, at the latest, two weeks following departure. Employees hired on or after this date will not receive the transition payment as they will be put on payment in arrears when they are hired and they will not be impacted by the transition to payment in arrears.
Question 7:How does payment in arrears affect existing employees?
Question7 - Answer 7:
Existing employees will continue to be paid every two weeks.
Question 8: Will implementing payment in arrears mean existing employees have to pay back any amounts?
Question8 - Answer 8:
Existing employees will continue to be paid their "regular" salary every two weeks. When payment in arrears is implemented (end of April 2014), Public Works and Government Services Canada (PWGSC) will make a one-time transition payment(May 21, 2014) to existing employees and from that point forward employees’ salary statements will indicate the period ending two weeks prior to the date the payment is received. Unlike new employees, existing employees will not have to wait four weeks to receive a salary payment when the transition to payment in arrears occurs (end of April 2014). Existing employees will continue to receive a salary payment every two weeks, therefore, they will not be entitled to a "regular" salary payment two weeks after they depart from the public service. Instead, a final payment will be made to cover the difference between their current salary at departure and the transition payment which was issued in May 2014.
Question 9: Why can't we introduce payment in arrears for new employees only?
Question9 - Answer 9:
It would not be cost-effective to limit payment in arrears to new employees. The Government of Canada wants to modernize and improve pay services for all employees, therefore, payment in arrears will be the standard for all employees.
Question 10: What is determined to be a departure from the public service for the purposes of payment in arrears?
Question10 - Answer 10:
A departure for the purposes of this initiative will be defined as a resignation; retirement; end of specified term; termination of employment; dismissal; rejection during probation; layoff or death. (Note that a change in employer from TB to a separate agency or vice versa does not constitute a departure for the purposes of payment in arrears.) Upon departure, the final payment will be based on the difference between the transition payment made in May 2014 and the final salary payment.
Question 11: What is the transition payment and who will receive this payment?
Question11 - Answer 11:
The transition payment is a one-time salary payment that will be paid to all public servants that are paid every two weeks on a "current" basis. This includes indeterminate, term, seasonal employees and those casuals and students not currently paid in arrears (varies by department/agency), regardless of group/level, employer (core public administration or separate employer) and union affiliation. The transition payment is being made to avoid any financial hardship to employees as the Government transitions to payment in arrears. This one-time payment will be in the same amount as the "regular" pay (i.e. basic pay) received May 7, 2014.
The following standard deductions will be taken from the payment:
Income Tax (Federal and Provincial)
Canada Pension Plan/Quebec Pension Plan
Employment Insurance/Quebec Parental Insurance Plan
Other deductions, such as union dues, Canada Savings Bonds, Public Service Health Care Plan, Public Service Management Insurance Plan, Government of Canada Workplace Charitable Campaign etc., will be taken from the payment (if the deduction applies to the employee).
Question 12: Will payment in arrears impact the employees’ five consecutive years of highest paid service for pension purposes?
Question12 - Answer 12:
No, payment in arrears will have no impact on the five consecutive years of highest paid service for pension purposes.
Question 13: Can employees opt out of the one-time transition payment?
Question13 - Answer 13:
No. All employees paid on a bi-weekly "current" basis will receive the transition payment.
Question 14: Will the transition payment create any negative impact on employees’ pensionable service?
Question14 - Answer 14:
Question 15: Will the one-time transition payment be deposited directly in the employee’s bank account?
Question15 - Answer 15:
The one-time transition payment will be made in the same manner as the employee’s regular pay.
Question 16: Will new employees be entitled to an emergency salary advance if they are unable to wait up to four weeks for their first payment?
Question16 - Answer 16:
There is no change to the current policy on emergency salary advance.
Question 17: What happens when employees leave the public service if there is insufficient money to cover the adjustment for the transition payment?
Question17 - Answer 17:
In very rare cases, employees may earn less salary when they leave the public service than when the transition payment was issued in May 2014. For example, employees may work part-time prior to their departure, and therefore, may owe money to the Government. In these cases, the money will be taken from first available funds including the last salary payment, overtime, etc. or their pension (if they will receive a pension). Otherwise, employees must provide a money order or certified cheque payable to the Receiver General for Canada.
Question 18: What happens when employees transfer, after the transition payment is received in May 2014, from the core public administration (where Treasury Board is the employer) to a separate employer (or vice versa) and both organizations are considered part of the Government of Canada and are paid by PWGSC?
Question18 - Answer 18:
Employees will continue to be paid their "regular" salary (i.e. basic pay) every two weeks. Two weeks after they leave the public service, they will receive a final payment covering any salary increase since the transition payment was received in May 2014.
Question 19: What happens if the employee retires in June 2014 shortly after the transition payment is received?
Question19 - Answer 19:
Let’s assume the employee retires on June 4, 2014, two weeks after receiving the transition payment on May 21. Assuming the employee’s salary remains the same, a final payment two weeks after departure will not be received as the employee will have received the full amount of salary for the period of time worked.
Question 20: If the employee receives a salary increase (e.g. promotion, acting, salary increment) or salary decrease (e.g. demotion, full-time to part-time hours) in the first week of May 2014, when will the change be reflected on the salary payment?
Question20 - Answer 20:
With the transition to payment in arrears occurring the end of April 2014, normally, the salary change will be reflected on the regular pay of June 4, 2014 and a supplementary payment, if applicable, will be received shortly thereafter for any salary owed for the period up to and including May 7, 2014.
Question 21: If an employee has two part-time jobs in the same department, will he/she receive the transition payment in both positions?
Question21 - Answer 21:
The employee will receive one transition payment only, which will cover the "regular" salary (i.e. basic pay) for both positions.
Question 22: If an employee has two part-time jobs in two different departments, will he/she receive the transition payment in both positions?
Question22 - Answer 22:
The employee will receive two transition payments – one from each department to cover the "regular" salary (i.e. basic pay) in each of the positions.
Question 23: An employee is on leave with income averaging or pre-retirement transition leave when the transition to payment in arrears occurs in April 2014. What impact will this have on the employee?
Question23 - Answer 23:
The employee will receive the transition payment in the amount of the reduced salary based on the approved leave with income averaging or pre-retirement agreement.
Question 24: An employee is on an interchange agreement to the private sector when payment in arrears is introduced. What impact will this have on the employee?
Question24 - Answer 24:
If the employee is paid by the Government of Canada during the interchange, which started prior to the transition to payment in arrears (April 2014), the employee will receive a transition payment.
Question 25: How does the transition payment affect employees’ income tax slips?
Question25 - Answer 25:
Employees will receive the same income they would have received if payment in arrears was not implemented. All money earned and all deductions taken during the 2014 calendar year will be reported on their 2014 tax slips.
Question 26: When employees depart from the public service and the adjustment is made to the last salary payment, how will this affect the tax slips?
Question26 - Answer 26:
All money that was earned and all deductions taken during the applicable calendar year will be reported on the tax slips for that applicable calendar year.
Question 27: An employee’s collective agreement approved new rates of pay effective June 21, 2015; when will the revised rates of pay be reflected on the employee’s pay?
Question27 - Answer 27:
The revised rates will be on the regular pay of July 15 covering the period June 18 to July 1, 2015.
Question 28: The employee receives a salary increase on May 1, 2014. How will this impact the transition payment?
Question28 - Answer 28:
Changes in salary that come in effect between April 24, 2014 and May 7, 2014 will not be reflected on the transition payment paid on May 21, 2014. The transition payment will be based on the employee’s salary prior to the increase on May 1, 2014. The salary increase will be included in the employee’s regular pay of June 4, 2014, and shortly thereafter a supplementary payment will be received covering the retroactive period May 1 to May 7, 2014.
Question 29: Will public servants continue to be paid bi-weekly or are there plans to move to semi-monthly pay (twice per month)?
Question29 - Answer 29:
There are no plans to move to semi-monthly pay.
Question 30: Are there employees that will not be impacted by the move to payment in arrears?
Question30 - Answer 30:
The following employees will not be impacted by the transition to payment in arrears and will not receive the transition payment:
Employees currently paid once a month;
Employees currently paid in arrears:
who currently submit "time sheets" to cover the hours/days worked
others, for example, casuals (those employed for 90 days or less in a calendar year) and students often.
Those employees who are paid monthly but receive an interim payment in the middle of the month (e.g. teachers);
Question 31: Will there be communications to employees regarding the transition payment?
Question31 - Answer 31:
Employees will receive an official notification of the transition payment, which will occur in May 2014.
Question 32: Will employees receive the transition payment if they are on leave without pay at the time the transition payment is issued?
Question32 - Answer 32:
Employees will receive the transition payment if they are on any type of leave without pay (maternity/paternity; educational leave; off-season periods or disability leave) however, this payment will be received shortly after their return to work from their leave without pay. Two weeks after they leave the public service, a final payment will be made to cover the difference between their current salary at departure and the transition payment which was received shortly after they return to work.
Question 33: Will employee receive two payments on May 21, 2014 when the transition to payment in arrears occur?
Question33 - Answer 33:
No, employees will not get a regular pay on May 21, 2014. Instead, they will receive a one-time transition payment that will be in the same amount as their regular pay.