Federal government must collect $500M in overpayments to public servants: AG

More than a quarter of federal public servants still experienced pay problems due to the troubled Phoenix pay system, Canada’s auditor general says.

Twenty-eight per cent of employees had an error in their basic or acting pay during the 2021-22 fiscal year compared to 47 per cent the prior year, the auditor general’s office said in its commentary on the 2021-22 financial audits.

In addition, the number of outstanding pay requests went up last year. As of March 31, there were more than 310,500 pay action requests, up from 254,500 the previous year.

“Despite the pay centre’s significant efforts since 2016, the level of outstanding requests has started to rise,” the auditor general’s report said. “This indicates that more efforts are needed, particularly to process requests that have remained outstanding for several years.”

The report also found the federal government still has to collect about half-a-billion dollars in overpayments that happened because of the problem-plagued pay system, and it might be running out of time.

As of June 30 of this year, about $500 million in overpayments to more than 100,000 employees had yet to be resolved, the pay centre estimated.

About half of those requests had been outstanding for more than three years.

The auditor general’s report said the government needs to take steps to recover those overpayments “in a timely manner” because there are legal limitations on some recovery mechanisms.

“The government could have fewer options to recover the amounts owed, which may eventually result in the amounts being written off,” the report said. “The risk of such losses will persist until the pay centre can process all pay action requests on a timelier basis.”

The problem-plagued Phoenix system was launched in 2016 to consolidate pay systems from more than 45 different government departments. It has led to compensation problems for hundreds of thousands of government workers and has cost the government more than $2 billion.

The government is developing a new system, the Next Generation Human Resources and Pay system, which is being piloted in several departments.

The auditor general also noted that the federal government fairly presented pay expenses in its financial statements for 2021-22 because overpayments and underpayments to employees continued to offset each other, and some year-end accounting adjustments were made to improve their accuracy.

"However ... these adjustments did not correct the pay errors for the employees who were overpaid or underpaid," the report said.