Update on progress: Government actions to stabilize the public service pay system

From Public Services and Procurement Canada

This page provides an update on the measures being taken to stabilize the public service pay system as of May 2018.

Read about our Priorities for 2018 to 2019. We will be tracking our progress quarterly on the government’s priority actions for 2018-2019.

Stabilizing the public service pay system

In November 2017, Public Services and Procurement Canada (PSPC) introduced an integrated series of measures to stabilize pay in four broad areas: accountable and informed decision-making, partnerships and engagement, improved processes and technology, and increased capacity and service. The goal of the plan 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.

Since then, progress has been made on several measures, which has allowed us to strengthen governance, provide better data for decision-making, increase our collaboration with departments and agencies, and improve support to employees.

We understand how frustrating this situation is for employees, and we are doing everything we can to resolve it as quickly as possible. 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.

Accountable and informed decision-making

Objectives

Engage with experts both within and outside the government to help challenge our current assumptions, identify the source of failures, and adjust our plans and priorities.

Establish a governance model that includes departments and agencies to ensure that we are making evidenced-based decisions relying on experiences and perspectives from across government.

Accomplishments

The work of the HR-to-Pay Integrated Team has been supported by a strong governance system that brings together views and experiences from across the public service.

The integrated team, consisting of senior officials from PSPC and the Treasury Board of Canada Secretariat (TBS), is leading efforts to stabilize the pay system, coordinating activities and tracking and reporting on progress.

In addition, a working group of ministers, a deputy ministers’ oversight committee, as well as interdepartmental assistant deputy minister and director general-level working groups continue to meet regularly to make decisions on priorities, provide feedback on proposals and new activities, and share information.

PSPC is also working with experts in various provincial jurisdictions who are sharing lessons learned on their experiences transitioning to new payroll systems.

Finally, dashboards are produced every pay period and provided to departments and agencies to help them understand the pay issues in their organizations, and take appropriate action to improve their processes and better support their employees.

Partnerships and engagement

Objectives

Provide senior officials, managers and unions with current, reliable information about pay and pay issues, which will allow employees to feel better supported within their organizations.

Minimize tax issues.

Provide employees who work in compensation with quicker, more efficient ways of working.

Accomplishments

We continue to work closely with unions to share information and seek guidance through regular union-management committees and sub-committees, which discuss both technical issues and communications with employees.

We also continue to collaborate with the Canada Revenue Agency (CRA) to minimize tax issues. Based on lessons learned from the 2016 tax season, improvements were implemented that included system changes to improve the accuracy of tax slips. More than 545,000 tax slips (T4, T4A, RL1 and RL2) for the 2017 taxation year were issued. PSPC, CRA and TBS provided ongoing communication to employees about taxes and tax support through the monthly Pay Bulletin, social media and information on websites.

The HR-to-Pay Integrated Team continues to provide information to the human resources (HR) community to better support employees by sending out weekly information about pay process changes and updates, system enhancements, and tips and tricks for working in Phoenix effectively. The department developed a web page for employees that explains the different sections of the pay stub and continues to update information on its website.

PSPC continues to host stakeholder forums where vendors, unions, the information technology community, and departments and agencies provide feedback, advice and guidance on improvements to processes and systems issues, capacity and change management.

Employees at the Public Service Pay Centre in Miramichi have been streamlining processes so that pay transactions can be processed more efficiently. For example, a new, streamlined process has been put in place to simplify and speed up the processing of new hires. These practices are also being shared with non-pay centre departments.

Departments and agencies are now receiving reports from the Pay Centre that show whether the information being received at the Pay Centre is timely and accurate. This will help them focus their efforts and resources on internal processes and procedures that might delay the transmission of information to the Pay Centre. In addition, mandatory training released in late 2017 has seen a take-up rate of 85% across the core public service, providing additional tools to staff regarding how to avoid issues with future pay transactions.

Improved processes and technology

Objective

Improve processes and technology, and assess and improve how the pay system interacts with human resources systems. This will reduce frustration for employees, managers and compensation staff alike who must input and process the data. Transactions will be processed more quickly, reducing the backlog and wait times.

Accomplishments

Technological solutions are being implemented to improve payroll processing and provide compensation advisors with better tools and reports. Additional automation has been introduced, such as the submission of pay information to group insurance companies. These solutions mean less time and effort for compensation staff to complete transactions, and more accurate and timely pay for employees.

An interdepartmental working group was created in the fall of 2017 to identify root causes of HR-to-pay issues. Following a review of documents and departmental input, the working group presented findings and recommendations across three major themes: system, business processes and change management. These have been prioritized and are being addressed. One thing we have discovered is that many current pay delays are the result of HR practices and processes that simply no longer work well with Phoenix. We are assessing new ways of handling common problematic transactions, such as employee transfers, acting appointments and terminations. PSPC will also address overpayments, which we know create frustrating situations and tax issues for employees. New processes and best practices will be implemented quickly across government.

In addition, the Pay Centre is redesigning work processes by organizing compensation staff into pods that will specialize in specific departments and agencies. The goal of the pilot project was to create greater efficiencies and allow compensation staff to provide more tailored support to employees, and it has been quite successful. Since December 2017, when the pilot began, the overall backlog for the three pilot departments was reduced by 24%, the number of employees with pay issues decreased by 11% and service standards for new incoming transactions were met 88% of the time using this new approach. Following the success of the pilot, the Pay Pod approach will be rolled out to the remaining Pay Centre departments over the next year, with 12 additional departments and agencies onboarding at the end of May.

On the technology and business process front, we conducted an analysis to assess problems between Phoenix and the patchwork of 32 HR systems in place across government. This work is helping to identify technical and business process conflicts between the systems that contribute to pay issues. System fixes and changes continue to be implemented to improve payroll processing through increased automation of transactions. We are also exploring an enhanced approach to how technical support is provided in order to improve how system fixes and improvements are managed and implemented.

Increased capacity and service

Objective

Increase Pay Centre capacity in order to process transactions more quickly, reducing the backlog and wait times. Employees will get better service and more useful information when they call for help.

Accomplishments

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.

As of April 2018, there were more than 1500 staff working in pay operations. This number includes:

Recognizing the need to provide more useful support to employees on all fronts, we have also enhanced our Client Contact Centre. Public servants are now available to answer calls and have direct access to Phoenix, as well as other systems. This allows employees to get detailed information about their pay files directly from public servants working at Centre.

Mandatory training materials tailored to specific HR systems have been developed for employees, managers and human resources and compensation staff.

In addition, we have realigned our existing contracts to enhance the IT support the department is receiving, moving to a managed service model which shifts the focus from tasks to outcomes, allowing us to resolve system issues more efficiently.

The government continues to take steps to provide assistance to employees experiencing pay issues. Additional flexibilities were introduced to repay overpayments. Employees who have incurred out-of-pocket expenses because they were underpaid, or whose government benefits were affected, can submit a claim and be reimbursed. Employees could also request a tax services allowance of up to $200 for the 2017 tax year.

PSPC launched an awareness campaign in early April 2018 to help employees and managers better understand the importance of training and timely entry and approvals of pay transactions.

For an update on our work, please visit Measures to stabilize the pay system.

Priorities for 2018 to 2019

Work identified in the suite of measures will continue with a focused effort on the government’s 2018-2019 priority actions to help stabilize the public service pay system:

Phoenix system improvements

We will continue to make system changes and fixes so that Phoenix works better. This includes greater automation of functions so that we reduce time-consuming manual work that slows down our ability to process transactions. We are also working with vendors to improve the way HR systems and Phoenix “talk” to each other to reduce data errors. Over time, employees will begin to see faster and more accurate processing of pay.

We are improving the Pay Action Request form from its current paper-based format to an e-form, and will simplify the form itself to reduce the number of errors and rejected forms. This is intended to speed up the processing of employees’ pay requests.

Streamlined and efficient processes

We will continue work on streamlining four HR processes that create the most common pay issues for employees: acting assignments, transfers, terminations and overpayments. Improving how we handle these pay transactions will accelerate our ability to process them.

Increased capacity

We are hiring and training more employees at the Pay Centre and satellite offices to speed up the processing of pay transactions and to better support employees. Budget 2018 committed funds to hire additional employees, which has brought our total complement to over 1,500 employees in Miramichi and our satellite offices. This additional capacity is helping us work through the queue of transactions.

We are enhancing the tools used by compensation advisors to enhance our ability to process transactions and reduce manual calculations.

The roll-out of the Pay Pod approach will increase our ability to meet service standards, reduce the queue and provide better service to departments and agencies served by the Pay Centre and their employees.

Improved timeliness and accuracy of HR data entry

To improve the timeliness and accuracy of HR entries into the pay system, we are working with departments and agencies to provide coaching on data entry and improve their internal practices. This will contribute to more accurate pay processing and fewer manual interventions by compensation advisors.

Ongoing engagement with stakeholders

We will continue to work collaboratively with departments, agencies, unions and experts to identify issues, develop solutions and create an environment for effective change management.

For instance, information and training is being provided to managers and employees so they can help prevent pay issues and delays. We will continue to provide information to employees through our monthly pay bulletin, our website and social media.

The path forward

In addition to the priorities identified for 2018 to 2019, we will review and adjust our existing governance structures to ensure we continue to engage colleagues and make informed decisions to stabilize pay. We will update and adjust our plan where necessary and as we assess the impact of our work, with a continued focus on reducing the backlog of transactions and supporting employees. We will continue to provide regular updates on our progress through the monthly dashboard.

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:

Updates on our progress will continue to be provided regularly.

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