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Flexible recovery of overpayments, emergency salary advances and priority payments

From: Public Services and Procurement Canada

In order to relieve the financial stress and hardships of employees experiencing overpayments in Phoenix, the government has made changes to the Directive on Terms and Conditions of Employment. These changes will help employees by providing significantly more flexibility for the recovery of overpayments, emergency salary advances and priority payments. 

Employees with overpayments greater than 10% of their gross biweekly pay, eligible for flexibility measures, will receive a letter advising them of the amount owing, the cause of the overpayment and the flexible repayment options available to them. Only if the employee returns the acknowledgement letter within the deadline specified in the overpayment letter and chooses to access the repayment flexibilities, recoveries of these amounts will start when:

If the acknowledgement letter is not returned within the deadline specified in the overpayment letter, the flexibility measures will not apply and the recovery at the default rate will start immediately.

The following questions and answers provide further information and clarifications on this initiative.

Questions and answers

Scope of application

Question 1: To what types of overpayments do these flexibilities apply?

These flexibilities cover overpayments, emergency salary advances and priority payments received by employees due to issues arising as a direct result of Phoenix.

They do not apply to recoveries of amounts owing arising from routine pay transactions, which include, but are not limited to, the following:

  • overpayments of less than 10% of an employee’s gross bi-weekly pay
  • periods of leave without pay of 5 days or less
  • overdrawn leave (vacation/sick) upon termination of employment (for reasons other than incapacity/illness and layoff)
  • cancellation of a leave with income averaging agreement by the employee, where the leave has been taken
  • amounts advanced on behalf of employees for union dues
  • maternity/parental allowance, where the employee has not fulfilled their obligation as set out in their collective agreement or terms and conditions of employment
  • amounts owed to public service health insurance plans, pension, supplementary death benefit or disability/long-term disability due to periods of leave without pay
Question 2: Will these flexibilities apply to employees leaving the public service?

The new flexibilities do not change the management of recoveries associated with termination of employment, end-of-term or casual contracts without further extension or renewal.

Question 3: I am leaving the public service shortly and have been told I have an amount owing, how do I repay?

Employees whose employment ends will have any amounts owing recovered in full from first available funds, as per the Terms and Conditions of Employment.

A letter will be sent to the former employee requesting payment of the remaining amount owing and providing details as to how to submit payment and the ramifications of not paying within the allotted period of time.

If the former employee’s department is not serviced by the Public Service Pay Centre, they should follow their departmental procedures.

Question 4: Are students entitled to these same flexibilities?

No, however human resources or compensation advisors are asked to work with students in order to devise a repayment plan that is reasonable.

Commencement of recoveries

Question 5: When will I have overpayments deducted from my pay?

If you return the acknowledgement letter within the deadline specified in your letter and choose to access the repayment flexibilities, recoveries of these amounts will start when:

  • all of your outstanding transactions have been addressed
  • you have received 3 consecutive correct pay cheques
  • a recovery agreement has been established
Question 6: Why wait for 3 pay periods prior to having a recovery commence?

Delaying recoveries until employees have received payments for 3 consecutive pay periods ensures that the employees’ pay has stabilized prior to recovery.

Question 7: Why are emergency salary advances and priority payments no longer being recovered from first available funds?

As a result of the Government’s changes to the Directive on Terms and Conditions of Employment, emergency salary advances and priority payments are no longer considered advances pursuant to the Accountable Advance Regulations. Rather, these payments are for services rendered for which employees have not yet been compensated. To ensure that all recoveries are managed on a consistent basis, recovery of these payments is to be handled in a similar manner as for salary overpayments.

Question 8: If I am off on extended leave without pay (that is, 6 days or more), how long will recovery of the amounts owed be delayed?

If you are off on an extended period of leave without pay, and choose to access the flexibilities, repayment of any amounts owed may be delayed until:

  • you have returned to work,
  • all your outstanding transactions have been addressed
  • you have received 3 consecutive correct pay cheques
  • a recovery agreement has been established

Note that in order to benefit from these flexibilities, employees must return the acknowledgement letter in the prescribed timeframe. However, depending on the duration of the leave without pay, recovery of the overpayment may be initiated sooner, as per section A.3.15 of Appendix A of the Directive on Terms and Conditions of Employment.

Management of recoveries

Question 9: Who is responsible for informing employees of their overpayments? How will this be done? What if there are questions regarding the legitimacy of the overpayment?

Departmental Compensation Services or the Public Service Pay Centre will provide you with a letter advising that there is an amount owing on your account (for example, overpayment, emergency salary advance or priority payment). This letter will provide details on the cause of the overpayment and information on the acknowledgement process. If you return the signed acknowledgement letter within the prescribed timeframe, Compensation Services or the Pay Centre will then focus on a full reconciliation of your account prior to any recovery action occurring.

Once all transactions on your account are processed and you have received 3 consecutive correct pays, another notification will detail the final overpayment amount and inform you of when the recoveries are expected to start.

If you have any questions as to whether an overpayment is legitimate, contact the Client Contact Centre or complete a Phoenix feedback form.

For departments that are not served by the Public Service Pay Centre, recoveries will be coordinated through departmental compensation services.

Question 10: What steps should an employee take if they have an overpayment, priority payment or emergency salary advance recovered from their pay cheque without being informed?

If you notice that a recovery of your overpayment is not done in accordance with payment flexibilities and you have already returned the acknowledgement letter within the prescribed timeframe, contact the Client Contact Centre or complete a Phoenix feedback form.

Note: Use MyGCPay (accessible only on the Government of Canada network) to view status of pay-related cases with the Public Service Pay Centre.

If your organization is not served by the Public Service Pay Centre, you should follow your organization’s procedures.

Question 11: How much flexibility will I have to determine my repayment schedule?

You will be provided all reasonable flexibility with respect to the repayment timeframe and the rate to be paid. The default rate of recovery for amounts owing is equivalent to the amount of pay periods over which the overpayment occurred. For a hardship situation, the default rate is 10% of an employee’s biweekly pay.

In general, repayment should be completed within 3 years of a plan being established, or earlier for employees departing the government.

Question 12: If I have a recovery plan already in place, can I change it based on these new flexibilities?

If you are experiencing financial hardship, but have already agreed to a recovery plan before these current measures were put in place, you can have your recovery plan modified in order to benefit from these new measures.

To change your recovery plan, contact the Client Contact Centre or complete a Phoenix feedback form.

Note: Use MyGCPay (accessible only on the Government of Canada network) to view the status of pay-related cases with the Public Service Pay Centre. 

If your organization is not serviced by the Public Service Pay Centre, you should follow your organization’s procedures.

Question 13: What could a sample recovery plan for an employee look like?

In the scenario provided below, the employee is in an AS-03 position and is paid a gross salary of $2,371.00 every 2 weeks. The overpayment amount due to pay system issues is $5,000.00 and the employee has agreed to a recovery plan of 10% of their gross pay. It will take 22 pays to recover the overpayment.

Note: If the gross pay changes, the recovered amount will not be changed unless requested by the employee.

Number of payments Bi-weekly gross pay Overpayment recovered (10% of gross pay) Overpayment balance
- - - $5,000.00
1 $2,371.86 $237.19 $4,762.81
2 $2,371.86 $237.19 $4,525.63
3 $2,371.86 $237.19 $4,288.44
4 $2,371.86 $237.19 $4,051.26
5 $2,371.86 $237.19 $3,814.07
6 $2,371.86 $237.19 $3,576.88
7 $2,371.86 $237.19 $3,339.70
8 $2,371.86 $237.19 $3,102.51
9 $2,371.86 $237.19 $2,865.33
10 $2,371.86 $237.19 $2,628.14
11 $2,371.86 $237.19 $2,390.95
12 $2,371.86 $237.19 $2,153.77
13 $2,371.86 $237.19 $1,916.58
14 $2,371.86 $237.19 $1,679.40
15 $2,371.86 $237.19 $1,442.21
16 $2,371.86 $237.19 $1,205.02
17 $2,371.86 $237.19 $967.84
18 $2,371.86 $237.19 $730.65
19 $2,371.86 $237.19 $493.47
20 $2,371.86 $237.19 $256.28
21 $2,371.86 $237.19 $19.09
22 $2,371.86 $19.09 -

Other

Question 14: Who has the authority to approve a modified recovery plan?

For departments served by the Public Service Pay Centre, compensation advisors at the Public Service Pay Centre will have the authority to approve recovery plans. For departments that are not served by the Public Service Pay Centre, the departmental compensation advisor or other designated departmental personnel will have authority.

Question 15: Will I have overpayments recovered from amounts I may be owed outside of regular salary (for example, revision amounts due to signing of a collective agreement)?

Active employees:

No, amounts will be recovered from your regular salary unless you request amounts be to recovered from other lump-sum amounts that you may be owed.

If you wish to have overpayments recovered from pending amounts owed, or if you would like to repay any amounts owing through other means, contact the Client Contact Centre or complete a Phoenix feedback form.

Note: Use MyGCPay (accessible only on the Government of Canada network) to view the status of pay-related cases with the Public Service Pay Centre.

If the employee’s department is not served by the Public Service Pay Centre, you should follow your organization’s procedures.

Terminated employees:

Yes, employees whose employment ends will have any amounts owing recovered in full from first available funds, as per the Terms and Conditions of Employment.

Question 16: How will my overpayment from a previous year be treated if it is recovered in another year?

Under the tax legislation implemented on January 15, 2019, by the Department of Finance Canada, your employer can adjust certain tax withholdings at source to reduce the overpayment amount owed by an employee if the overpayment is recorded in Phoenix within the 3 calendar years following the year during which the payment was made.

If the overpayment is recorded in Phoenix no later than 3 calendar years after the year during which the overpaid funds were paid, the overpayment will be created as a net overpayment; gross overpayment less applicable withholdings. The earnings and applicable withholdings will be adjusted on the tax slips.

If the overpayment is recorded in Phoenix later than 3 calendar years after the year in which the payment was made, the overpayment will be created as a gross overpayment.

Question 17: Who should employees contact once they have established a retirement date to ensure their pay is stopped on time (in order to prevent an overpayment situation)?

The first point of contact is an employee’s immediate supervisor who will initiate the process and necessary paperwork. The employee will be required to submit a formal letter indicating their intention to retire. If employed by a department/agency that is not served by the Public Service Pay Centre, necessary paperwork will be sent to their departmental human resources team for action. If employed with a department/agency that is served by the Public Service Pay Centre, the necessary paperwork (including pay action request form) will be sent to the Public Service Pay Centre for action.

Retirees

Question 18: What should I do if I received an overpayment while I was working that has not been recovered, but I have since retired from the public service?

If you were subject to an overpayment prior to your departure, and you don’t already have a repayment agreement in place, you will receive an acknowledgement letter to inform you of the overpayment, as well as instructions and options for recovery. The letter will be sent from either your departmental human resources team (if you were formerly employed with a department/agency that is not served by the Public Service Pay Centre) or from the Public Service Pay Centre (if you were formerly employed with a department or agency that is served by the Public Service Pay Centre).

It is your responsibility to return the signed acknowledgement letter. If the acknowledgement letter is not returned within the deadline specified, the overpayment will be recovered immediately at 10% on your gross monthly pension benefit.

Former employees should contact the Client Contact Centre for any further information.

Question 19: Who do I contact if I have retired from the public service but continue to receive my regular pay? How will the overpayment be recovered?

If you have retired from the public service, but continue to receive pay, you should immediately contact either your former supervisor or departmental human resources team.

Once your pay file has been reconciled, you will receive a letter from the Public Service Pension Centre indicating the overpayment amount and instructions and options for recovery. Generally, employees who retire from the public service will have the overpayment recovered from their pension entitlement. The Public Service Pension Centre’s default recovery plan is 10% of the gross monthly pension amount. If you are experiencing hardship, you will need to advise the Public Service Pension Centre of these issues and work out a more accommodating recovery plan.

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