Government actions to stabilize the public service pay system

From Public Services and Procurement Canada

This page describes the government’s continuing efforts to stabilize the public service pay system through additional measures that build on past actions.

Pay system background

In 2009, the Government of Canada approved the Transformation of Pay Administration Initiative to modernize how employees are paid. This involved the consolidation of compensation advisor positions from 46 departments at the Public Service Pay Centre in Miramichi and the implementation of new pay software, known as Phoenix, across government. 

Since then, the government’s own reviews and independent experts have noted serious flaws in the planning and implementation of the Transformation of Pay Administration Initiative, including a fundamental failure to assess and understand the scope and complexity of the project. The elimination of 700 experienced compensation staff before Phoenix was launched compounded these issues and made a return to the previous system impossible. As a result, shortly after Phoenix was implemented, significant pay issues emerged that continue to present challenges today.

Phase 1: Crisis management

Following the consolidation of compensation staff at the Pay Centre in Miramichi, Phoenix was fully implemented for 101 departments and agencies in two phases. The first rollout was in February 2016 and the second in April 2016. Early reports of pay errors were taken to be one-off issues, not unexpected with the implementation of a major information technology project. However, by June 2016, it became apparent that there were serious problems. Our efforts to address the increasing number of pay issues quickly outstripped our capacity to respond.

Pay Centre employees were unable to keep up with emerging pay issues while also addressing a backlog of 40,000 employee cases that predated Phoenix and the constant inflow of new pay transactions arriving every day. More compensation advisors were urgently needed. In response, the Government of Canada:

These measures helped address urgent issues. They reduced the occurrence of the most serious pay problems (employees receiving no pay at all). They also increased our capacity to process more cases, such as student hiring.

We significantly reduced delays in payments for two key transaction types, which unions asked us to prioritize: parental and disability leave. Today, the Pay Centre processes such transactions within 20 days of receipt, 95% of the time.

In departments and agencies not served by the Pay Centre, the steep learning curve to use Phoenix affected their ability to process pay transactions. Additional guidance and training was provided to these organizations during this period.

While these were important developments, major challenges remained. Staff at Miramichi struggled with a significant inventory of cases that were not resolved prior to the Phoenix implementation. As well, a large backlog of new transactions had formed at the Pay Centre. Subsequently, the government concluded 20 new collective agreements, some going back as long as four years. This meant that compensation staff had to process pay increases, signing bonuses and retroactive payments for some 184,000 employees, while still managing the backlog.

This additional work proved much more complicated than expected. For instance, it would not be unusual for an employee pay file to include many different actions over the span of four years, such as acting appointments and promotions. As a result, calculating retroactive payments required that data be pulled from the government’s former, now decommissioned, pay system for significant manual calculations.

This additional work has caused the backlog of transactions sitting at the Pay Centre to grow. As of October 18, 2017, there were 265,000 transactions with a financial impact waiting to be processed. When other requests, such as collective agreements and transactions with no financial impact (such as administrative changes and general inquiries) are included, about 520,000 transactions were at the Pay Centre. For employees, this means longer wait times and more missing money.

At this point, the Minister of Public Services and Procurement requested that the Auditor General of Canada examine the planning for, and implementation of, Phoenix.

Phase 2: Pay stabilization

As efforts were underway to manage the immediate pressures of the most serious pay issues and priority transactions, we were also starting to examine the root causes of problems and needed fixes. We conducted studies, and an interdepartmental team examined key technical and system issues. Unions, compensation staff and human resources (HR) experts from across government provided key input.

Two important realities emerged. First, because HR processes are inseparably linked to employee pay, it was essential to take an integrated HR and pay approach to addressing issues. Second, it was clear that Public Services and Procurement Canada (PSPC) alone could not identify and implement solutions. We needed to take a whole-of-government approach.

On this basis, the Government of Canada has begun implementing a series of measures focused on bringing the pay system to a point of stability. The aim is to eliminate the backlog of late transactions and to implement system and process enhancements so that new transactions can be processed as quickly as possible to minimize employee wait times.

Validated by feedback from employees, unions and departmental officials, our stabilization measures fall into four broad areas:

Accountable and informed decision making

An integrated team of senior officials from PSPC and the Treasury Board of Canada Secretariat are leading the work on these pay stabilization measures. Within the team, a dedicated project management office is coordinating activities, and tracking and reporting on progress.

A strong governance model that brings together views and realities from across the public service is supporting the integrated team’s work. This includes a working group of ministers, a deputy ministers’ oversight committee, and interdepartmental assistant deputy minister and director general-level working groups.

Planning is currently underway to establish an expert advisory panel to help further support, and challenge, the integrated team’s work.

In addition, enhanced performance measures are being developed so that improved, reliable data can be shared across government.

Phase 2: Pay stabilization What this means for employees

Engaging with experts both within and outside the government helps us challenge our current assumptions, identify the source of failures, and ensure that we are doing all we can to best support employees.

Partnerships and engagement

Union management committees have been holding regular meetings to discuss Phoenix-related issues and solutions. The integrated team will continue to work closely with unions to share information and seek guidance.

Better reporting and data analysis will be provided to departments and agencies. This will allow senior officials to have a complete and accurate picture of the pay situation in their respective organizations so they can make informed decisions, observe trends and identify areas that need attention.

Information is being provided to managers so they are better equipped to have informed discussions with their employees about pay, best practices, how to prevent pay delays, as well as roles and responsibilities. We will provide managers and employees with information needed to understand their pay stubs so they can more easily determine if they might have a pay issue.

The integrated team continues to work closely with the Canada Revenue Agency to minimize tax issues. This includes:

The integrated team will convene forums of HR, compensation, information technology and finance representatives to provide ongoing validation of activities and plans, and to report on progress. This will ensure that valuable expertise and insight continues to inform progress toward pay stabilization.

At the Pay Centre and across all departments and agencies serviced by Phoenix, opportunities to streamline processes, implement employee-generated innovations and share best practices are being pursued. All organizations involved in stabilizing the pay system are embracing a culture of continuous improvement.

Partnerships and engagement What this means for employees

Senior officials, managers and unions will have current, reliable information about pay and pay issues, so employees will be better supported in their organizations. Tax issues will be minimized. Compensation employees will benefit from quicker, more efficient ways of working.

Improved processes and technology

Identifying the root causes of HR-to-pay system problems is ongoing. We continue to implement processes and technical fixes as they are identified.

Many current pay delays are the result of common HR practices and processes that don’t work with Phoenix. We are launching pilot projects to test new ways of handling common problematic transactions, such as employee transfers, acting appointments and terminations. Pilot projects are also underway to address overpayments, which can create frustrating situations and tax issues for employees. New processes and practices that emerge from these pilots will be implemented quickly across government.

At the Pay Centre, we are preparing to redesign work by organizing compensation staff into pods that will specialize in certain transactions and focus on specific departments and agencies. This will create greater efficiencies and allow compensation staff to provide more tailored support to employees.

On the technology and business process front, we are conducting an analysis to assess problems between Phoenix and the patchwork of 32 HR systems in place across government. This work will identify technical and business process conflicts between the systems that contribute to pay issues.

Improved processes and technology What this means for employees

Pay Centre employees will provide tailored support for organizations with unique pay situations. Transactions will be processed more quickly, reducing the backlog and wait times.

Increased capacity and service

Additional capacity is needed to reduce the backlog and decrease wait times for employees. This is why the Government of Canada announced $142 million in May 2017 to hire additional compensation staff. Since that time, 380 employees have been hired, and we plan to hire up to 300 over the next several months. To encourage the hiring and retention of skilled workers, we introduced an incentive package to recruit and retain compensation advisors. These incentives were developed in collaboration with unions.

Recognizing the need to provide more useful support to employees, we plan to enhance our client contact centre by hiring up to 100 employees. These employees will have direct access to Phoenix and other systems, such as a new case-management tool currently in development. This will allow employees to get detailed information about their pay files directly from public servants working at the client contact centre.

Revised, mandatory training materials tailored to the specific HR systems in place in various organizations have been developed for employees, managers, and human resources and compensation staff. We continue to improve our online information to make it easier to navigate. Moving forward, we will produce and distribute new guidance documents and other materials in a coordinated, consistent and employee-focused manner.

We are also exploring an enhanced approach to how technical support is provided in order to improve how system fixes and improvements are managed.

Increased capacity and service What this means for employees

The Pay Centre will process transactions more quickly, reducing the backlog and reducing wait times. Employees will get better service and more useful information when they call for help. They will also have access to information about Phoenix that is easier to find and understand.

The path forward

We are doing everything we can to resolve this frustrating situation as quickly as possible. In 2018, employees should see the backlog of pending transactions decrease. At the same time, employees will also begin to feel more supported when they seek information, be it from the client contact centre, their departmental compensation unit, if they are not served by the Pay Centre, as well as their training materials or managers.

Although there is much work ahead and no quick solution, we will continue to take all necessary actions so that employees are paid accurately and on time.

For a summary of our work to date and what’s ahead, please visit Measures to stabilize the pay system.

We thank our employees for their unwavering dedication and commitment to service.

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