Federal government settles Phoenix pay class-action lawsuit

Centre Block and the Peace Tower are seen past a metal fence along the lawn of Parliament Hill, in Ottawa, on Thursday, Sept. 5, 2024. (THE CANADIAN PRESS/Justin Tang)

A settlement in a class-action lawsuit has been reached for non-unionized and casual federal public servants affected by payroll issues connected with the embattled Phoenix pay system.

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The out-of-court settlement, which is pending approval by the Quebec Superior Court, could see affected public servants employed between February 2016 and March 2020 receive up to $850 in compensation.

The affected categories includes casual employees, student staff, term employees of less than three months, part-time workers and employees appointed by the Governor in Council (GIC).

The lawsuit filed by Sarailis Avocats in 2017 sought to bring compensation for employees affected by the Phoenix pay system debacle that has plagued the public service since 2016.

The failure of the pay system has so far cost the federal government $3.5 billion as of July, a number that could grow as the government continues to tackle a massive backlog of errors and problematic cases.

Phoenix was introduced in 2016 to replace dozens of antiquated pay systems. Instead, the system was riddled with errors and created massive and costly upheaval across the public service.

"The Phoenix pay system caused major issues for thousands of federal employees. The Government of Canada was a tough opponent in this case," said attorney Christian Sarailis in a news release on Wednesday.

"However, the negotiations have resulted in a fair and equitable settlement for class members to compensate for the moral damages they endured. Without this class action and the sustained efforts since 2017, non-unionized employees would have had little chance of receiving compensation for their moral damages. This is, in our view, a compelling example of justice achieved."

Affected employees will be able to submit a claim by internet or mail once the settlement is approved. The maximum amount for the 2016-2017 fiscal year amounts to $350 (February to March) and the maximum amount for the 2017-2018, 2018-2019 and 2019-2020 is $175.

In 2019 and 2020, the Government of Canada and a number of public service unions finalized an agreement to compensate unionized employees, current and former, who were paid through the Phoenix pay system. The compensation was a lump-sum payment of up to $1,000 for fiscal year 2016 to 2017 and up to $500 for each of the following three fiscal years, according to the federal government.

Unions have been asking the federal government to provide additional damages for workers, citing "stress, aggravation, pain and suffering."

"The Government of Canada is committed to ensuring that members who worked for the government are paid properly. The settlement provides for individual payments to class members based on the number of eligible fiscal years in which they worked," the Treasury Board of Canada Secretariat said in a statement. 

"The Phoenix pay system has caused pay issues and the Government of Canada will continue taking action to ensure all employees are paid correctly."

Casual and part-time public servants who already received compensation for issues related to Phoenix will not qualify. Workers can also choose to opt out of the compensation.

A hearing with the Superior Court of Quebec is scheduled for Feb. 18.

With files from The Canadian Press