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

Government of Canada employees are paid in arrears. This means that you are paid for your work during your first 2 week pay period, 2 weeks following, at the end of the second 2 week pay period. Pay periods are 2 week time frames that start on a Thursday and end on the second Wednesday. The purpose of this practice is to provide more time to report the pay transactions that come into effect in the current pay period. It allows your pay to more accurately reflect the time worked, so there are fewer adjustments to your pay.

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

Benefits of payment in arrears

By implementing this payroll practice, the Government of Canada improved pay services. Benefits include:

  • timelier processing of changes in your 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 that they were inadvertently overpaid.

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 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

Others experienced no noticeable difference and continued to be paid every 2 weeks. However, in making the change, some employees received a transition payment. The Government of Canada will recover this payment when each employee leaves the public service.

Payment schedule for new employees

You should receive your first pay within 4 weeks of starting work.

For example, if your start date is January 14, 2019, you are entitled to your first pay on February 6, 2019 (for the 8 days you worked in the January 10 – 23 pay period). You will receive your first full pay on February 20, 2019, and payments will continue every second Wednesday after that.

New or returning employees who do not get paid on time can request an emergency salary advance.

Transition payments

If you were a public servant prior to April 23, 2014, and were paid on a bi-weekly basis under the previous payroll system, you would have received a one-time transition payment equivalent to your 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, received the payment. This one-time transition payment was paid in the same manner as your 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 your regular pay, or basic pay, and was issued on May 7, 2014.

The government will recover this payment when you leave the public service. The recovered amount will include all applicable deductions.

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 employee’s pensionable service.

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 on May 7, 2014.

Employee transfers and transition payments

If an employee transfers between the core public administration (where Treasury Board is the employer) and a separate public service employer 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 continue to receive their regular salary, or basic pay, every 2 weeks.

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