Pay system: Committee of the Whole—August 12, 2020

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Phoenix overall queue and backlog decrease

Context

This note focuses on the ongoing reduction of the overall queue and backlog, implementation of collective agreements, taxes, overpayments and underpayments.

Notes

Suggested response

If pressed on the tentative agreement with the Public Service Alliance of Canada:

If pressed on overpayments:

If pressed on taxes:

Background

Queue and backlog

In total, as of July 22, 2020, there are approximately 301,000 transactions ready to be processed at the Pay Centre, including 121,000 with financial impact beyond the normal workload.

As of July 22, 2020, the overall queue of transactions waiting to be processed has decreased by 52% since its peak in January 2018, representing a reduction of 332,000 transactions (from 633,000 to 301,000).

Over the same period of time, the backlog of transactions with financial implications has decreased by 68%, representing a reduction of 263,000 transactions (from 384,000 to 121,000).

While we expect the general downward trend of the last 2 years to continue, the number of transactions processed each month varies based on a variety of factors, such as the complexity of cases, collective agreement implementation and seasonal trends. Large reductions will, at times, be followed by slower progress or even increases.

2020 tax-filing season

The 2019 year-end tax plan included clear direction on robust testing, completion of dry runs, quality and integrity verification of data, implementation of the tax updates, as well as communication of year-end information to the compensation community and employees. Tax slips for 2019 were released to federal employees on a staggered schedule by the legislated deadline of the end of February 2020.

PSPC continues to actively work with departments and agencies to communicate with employees who may receive amended tax slips because of outstanding issues with their pay file.

Preparations for the 2018 tax year successfully avoided T4 amendments related to Phoenix system issues. As of May 2020, there were approximately 45,000 amended tax slips produced for 2018, none of which were pay system related. In comparison, approximately 213,000 T4 amendments were issued for 2017.

Under current legislation, the Canada Revenue Agency (CRA) ceased to automatically review amended T4s for 2016 in January 2020. Employees will need to request reassessments, which CRA has agreed to facilitate. Communications for employees were sent and more are being developed.

Overpayments

As the Phoenix pay system cannot segregate true overpayments from administrative overpayments, it is not possible to accurately provide specific figures for true overpayment, which represent money owed to the government.

Administrative overpayments are part of the system’s design and are not a technical issue. They have no impact on employees considering that refunds are automatically generated and netted out in the next pay period. Administrative overpayments are created to ensure employees receive the pay to which they are entitled.

In recognition of extraordinary challenges due to the backlog, recovery of most overpayment balances will not begin until: all of the employee’s outstanding pay transactions have been processed; the employee has received 3 consecutive accurate pays; and the employee has indicated their preferred repayment option.

To note, these flexibilities do not apply to routine operations—for example, leave without pay (LWOP) of 5 consecutive days or less is recovered from first available funds.

It is important to note that when PSPC reports a balance of overpayments, the figure includes both true overpayments and administrative overpayments. True overpayments represent employees receiving pay that they are not entitled to, whereas administrative overpayments are part of the system’s design and have no impact on employees.

Underpayments

Employees who have been underpaid can request emergency salary advances or priority payments from their departments.

Unpaid amounts owed to employees can be related to several factors. They can result from regular pay transactions such as overtime and acting pay that are not yet processed or due to errors.

Underpayments are not automatically tracked in the Phoenix pay system because it is impossible to obtain these figures accurately until all backlogged pay related transactions are processed by compensation advisors.

Collective agreement implementation: 2014 and 2018 contracts

With regard to the 2014 round, there are currently 126 TBS and separate employer’s agreements and salary rate updates that have been processed, representing more than $2.4 billion in payments to employees.

To ensure retroactive payment amounts are accurate, PSPC is conducting a manual review of almost 180,000 accounts. This manual work is on track to be completed in Fall 2020.

In August 2019, the first of the 2018 round of collective agreements were signed. The implementation of a number of these collective agreements is underway.

Lessons learned from the implementation of the 2014 round of bargaining allowed PSPC to collaborate with departments and agencies, and bargaining agents to simplify processes, improve accuracy of payment and reduce the need for manual work.

We expect that only 5% of the 2018 round of collective agreement transactions will need manual intervention, resulting in a reduction of hundreds of thousands of manual transactions.

In comparison, the 2014 round required compensation advisors to manually process and validate more than 60% of collective agreement transactions.

TBS is responsible for engagement with PSPC, employees and unions on collective and compensation agreements. PSPC is working with TBS to identify options that will ensure the next round of collective agreements is processed in an efficient and timely manner.

Issue: Phoenix IBM and systems upgrades

Context

This note focuses on vendor support on the Phoenix file (IBM / innovation challenge) as well as the Phoenix pay system software upgrade (PeopleSoft 9.2).

Note

All questions related to Next Generation Human Resources and Pay solution should be directed to the Minister of Digital Government.

Suggested response

If pressed on the invitation to qualify for pay system in-service support / Application managed services contract:

If pressed on the upgrade to the Phoenix system:

Background

IBM contract and amendments

In June 2011, IBM was awarded the contract for the new pay system through an open and transparent bidding process. Since then, there have been 48 amendments to the original contract, for a total contract value of $447 million (taxes included). Amendments are a regular part of the contract management process and were anticipated at the time of contract award.

The most recent amendment was issued in March 2020, and was required to exercise options for software maintenance and to continue support services essential for pay stabilization and PeopleSoft version 9.2.

In service support: Re-procurement

The current application managed service contract with IBM Canada Ltd. will end on March 31, 2021. It has an option year until March 31, 2022, which provides the Government of Canada a transition period towards a future state.

Application managed services is an outcomes-based agreement where the contractor is responsible for delivering services based on our requirements, and ensuring the government of Canada receives what it needs for a fixed price.

On May 8, 2020, PSPC issued an invitation to qualify (ITQ) on BuyandSell.gc.ca to qualify suppliers interested in providing the application managed services for 24/7 operational (functional and technical) support for pay, once the current contract with IBM Canada Limited ends. An independent fairness monitor has been engaged to observe and report on the procurement process to ensure its integrity.

We will need to rely on Phoenix until we are ready to transition to a new pay system. The backlog of existing pay issues must also be addressed to allow for a smooth transition to any new pay system. This is the main reason why the Government of Canada is still investing in Phoenix—so that employees continue to be supported and to ensure that we are well prepared to transition to a new pay system when the time comes.

Notice of proposed procurement

PSPC launched a procurement process in August 2018 to engage the private sector in innovative solutions to help stabilize the pay system.

Industry has been consulted in several areas identified as key to reaching stabilization. These are:

Phoenix system upgrade (PeopleSoft 9.2)

The upgrade to PeopleSoft 9.2 will ensure that PSPC continues to receive software patches, fixes, and tax rate updates that Phoenix requires to generate payroll accurately.

The PeopleSoft 9.2 upgrade consists of implementing a new version of the PeopleSoft application with limited impact and disruption to operations and users. The scope of the project is limited to the pay system (Phoenix) and does not include upgrading the departmental HR systems. Extensive testing is currently being performed with departments and agencies to ensure that employees’ pay is not impacted when the upgrade is launched.

PSPC estimates that the overall upgrade is expected to take approximately 24 months (including the planning phase) with a target go live in spring 2021. Through budget 2018, the department has secured $22.1 million in funding for the upgrade to PeopleSoft 9.2.

Update on Phoenix stabilization planning, investments and employee support

Context

This note focuses on the efforts and progress to stabilize the Pay System, support employees, as well as financial investments in Phoenix.

Notes

Suggested response

If pressed on specific measures for COVID-19:

If pressed on support to employees:

If pressed on the 2020 to 2021 Supplementary Estimates (A):

Background

COVID-19 measures

Services related to pay are considered essential and measures are in place to ensure that operational requirements are met. Following the recommendation of the Public Health Agency of Canada, PSPC asked all its employees, including those at the Public Service Pay Centre and the CCC, to work from home if possible, while ensuring the delivery of essential services.

The Pay Centre continues to deliver all of its pay services which include regular pay, new hires, return from leave, maternity and parental leave, as well as disability insurance.

Supporting employees and eliminating the backlog remain our top priorities and we continue to see progress. From June 24 to July 22, 2020, the backlog of transactions with financial implications has decreased by 4,000, and now stands at 121,000. Overall, the backlog has been reduced by 68% since the January 2018 peak, when it stood at 384,000 transactions.

The CCC remains the first point of contact for current and former federal public servants looking for information or help with compensation and benefits, and for technical issues when using the Compensation Web Applications or MyGCPay. Clients may, however, experience increased wait times when calling the CCC.

We are working closely with all our partners, including employees, unions, members of Parliament offices, departments and their representatives from human resources (HR) and pay, to provide support during this challenging time.

Total investments to deliver pay and respond to pay issues is $1.177 billion:

2020 Supplementary Estimates: Public information

The investment for the pay system announced on June 2, 2020, in the Supplementary Estimates (A) 2020 to 2021 represents $203.5 million.

PSPC sought this additional funding to continue efforts to eliminate the backlog of pay issues for public servants, maintain measures to deliver pay and support employees, and stabilize pay for the Government of Canada.

To do so, we will sustain employee capacity, increase our processing rate and increase the automation of as many transactions as possible through system enhancements.

Since the launch of Phoenix, PSPC implemented a series of measures focused on stabilizing the pay system.

These include increasing the compensation workforce, providing employees with greater support through our CCC, introducing the pay pods model, implementing a backlog reduction strategy through our Strategic Engagement Sector, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions.

As a result, since its peak in January 2018, the Pay Centre's backlog of transactions with financial implications has been reduced by 68% (from 384,000 to 121,000) as of July 22, 2020.

PSPC has also met service standards 70% of the time on average so far this year, compared to a 57% average over 2018 to 2019.

On average, in 2020 to date, parental and disability leaves have been processed within service standards 99% of the time (as of July, 2020).

In addition to efforts underway, we are working closely with all stakeholders, including experts, federal public sector unions and the private sector for innovative solutions to accelerate pay stabilization.

We continue to regularly share information on progress with employees and Canadians through various platforms and tools.

[Redacted]

MyGCPay

MyGCPay is a web application developed by PSPC to help rebuild federal government employees’ confidence in the integrity of their pay. It provides employees with a centralized and simplified view of their pay and benefits. It helps employees identify pay issues earlier and allows them to monitor their open cases with more detail.

The application allows employees to:

2019 Public Service Employee Survey results

Media coverage and union communications reported the Public Service Employee Survey (PSES) 2019 results negatively, especially regarding 74% of respondents indicating that they have been affected by pay issues since the launch of Phoenix in 2016. The 2019 survey highlighted engagement, leadership, workforce, workplace well-being, and compensation. Over 182,300 public servants responded to the survey in 86 federal departments and agencies. The results of the survey allow departments to make continuous, evidence-based improvements, shaped by the voices of public servants.

Compensation results highlight:

Office of the Auditor General Commentary on the 2018 to 2019 Financial Audits and House of Commons committee reports

The Office of the Auditor General (OAG) issued its Commentary on the 2018-2019 Financial Audits in December 2019, following the Government’s tabling of Public Accounts. The commentary observations state that there has been limited improvement with respect to pay errors. Despite this, the OAG states that pay expenses were presented fairly in the Government of Canada’s 2018 to 2019 consolidated financial statements. The OAG also recognizes that pay is a complex and shared responsibility across government.

The report focusses on a few key elements, including:

In addition to 2 dedicated performance audit reports on Phoenix in 2017 and 2018, the Office of the Auditor General analyzes progress and provides feedback and recommendations on multiple aspects of HR-to-Pay on a yearly basis. Both performance audits came with recommendations, which the department and TBS have accepted and are implementing through management action plans.

The department is also implementing a series of measures related to pay transactions and processes, as well as information technology (IT) tools and infrastructure, in response to the observations made as part of the financial audits.

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