Payment in arrears

From Public Services and Procurement Canada

Government of Canada employees receive payment based on an industry standard payroll practice called “payment in arrears.”

This page explains how payment in arrears works and how it may affect you as an employee.

Understanding payment in arrears

Payment in arrears is a payroll practice that ensures that you receive pay every second Wednesday for the 10 days of work that concluded 2 weeks previously, between Thursday and Wednesday. This way, your pay more accurately reflects the actual time worked and allows the compensation provider to avoid overpayments, so there are fewer adjustments to your pay.

The government officially implemented payment in arrears on April 23, 2014. This move was part of the Pay Modernization Project, undertaken in 2009 to replace a 40-year-old pay system with a modern pay solution (Phoenix) and to streamline business processes.

Affected employees

Not all federal employees were affected by the move to payment in arrears. The following employees did not transition to payment in arrears and did not receive the transition payment:

  • employees paid once a month
  • employees already paid in arrears
    • those who submit time sheets to cover the hours and days worked
  • employees paid monthly but who receive an interim payment in the middle of the month, such as teachers

Others experienced no noticeable difference and continued to receive pay every 2 weeks. Meanwhile, in making the change, employees received a transition payment. We will recover this payment when each employee leaves the public service.

Benefits of payment in arrears

By implementing industry-standard payroll practices, the Government of Canada improved pay services. Employees benefit from:

  • timelier processing of changes in their pay
  • consistent and efficient pay services
  • increased transparency and predictability in earnings

Payment in arrears generally reduces overpayments and increases the accuracy of payments. This in turn reduces the burden on employees, who need to pay back any amounts they were inadvertently overpaid.

Payment schedule for new employees

If all entries in the compensation system are complete, a new employee should receive their first payment within 4 weeks of starting work. For example, an employee starts work on Thursday, May 25, 2017, and compensation receives all documentation before June 6, 2017. The employee should expect to receive their first pay (for the 5 days from May 25, 2017, to the end of the pay period on May 31, 2017, inclusively) on Wednesday, June 14, 2017. The employee would receive their first full pay on June 28, 2017, and payments would continue every second week thereafter.

New or returning employees who do not receive a timely payment may seek an emergency salary advance, consistent with their terms and conditions of employment.

More information

Transition payments

All public servants working in 2014, who were paid on a bi-weekly basis under the previous payroll system, received a one-time transition payment, equivalent to their regular pay. Indeterminate, term, seasonal employees, casuals and students not yet paid in arrears, regardless of group or level, employer (core public administration, separate employer or Crown) and union affiliation, all received the payment. Employees received the one-time transition payment in the same manner as their regular pay, by direct deposit in most cases.

The transition payment ensured that no workers would experience financial hardship because of the transition to payment in arrears. This one-time payment was equal to an employee’s regular pay, or basic pay, received May 7, 2014.

The government will recover this payment when the employee leaves the public service. The recovered amount will include the standard deductions, as well as other deductions, if applicable to the individual employee.

Note: Payment in arrears does not have any impact on the 5 consecutive years of highest paid service for pension purposes. The transition payment does not affect an employees’ pensionable service.

Employee transfers and transition payments

If an employee transfers from the core public administration (where Treasury Board is the employer) to a separate public service employer, or vice versa, after receiving the transition payment, there would be no recovery of the transition payment. A change in employer does not constitute a departure for the purposes of payment in arrears. In these cases, employees would continue to receive their regular salary, or basic pay, every 2 weeks.

Transition payment recovery

Unlike new employees, employees working at the time of the transition did not have to wait 4 weeks to receive a salary payment. Those employees continued to receive a salary payment every 2 weeks. As a result, when they leave the public service, they will not receive a regular salary payment 2 weeks later. Instead, their final payment will cover only the difference between their salary at departure and the transition payment issued back in May 2014.

Employees hired after April 24, 2014, can expect to receive a regular salary payment 2 weeks after leaving the public service.

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