Phoenix pay system debacle highlights need for replacement

It’s been over a decade since the previous Conservative government began to implement the now-infamous Phoenix pay system for public servants. What was initially supposed to be a cost-saving measure for future governments has now ballooned completely out of control.

In 2009, as part of that government’s Transformation of Pay initiative which sought to both modernize and streamline public servant pay systems while saving the government money, a $122 million project was approved to centralize pay administration for most federal departments, with another $186 million to create a new payment system. It was a reasonable goal. Governments for decades had examined streamlining public service payroll systems to save themselves, and by extension taxpayers, money on administrative costs. The implementation of Phoenix was expected to save $70 million by eliminating positions that would be made redundant and automating pay processes. In 2016, the current government launched Phoenix in full, despite concerns shared with Public Services and Procurement Canada at the time from an independent analysis from consulting firm Gartner Canada about the viability of the system. As of today, Phoenix has had the opposite of saving the government money.

Phoenix issues have ballooned its cost to an exorbitant $2.4 billion as of April 2022, and obviously more today. As of this April, there were over 200,000 unresolved transactions related to Phoenix pay systems. For many public servants, Phoenix has become a topic of regular water cooler jokes, and most public service employees, over 50 percent by the most conservative estimates, have had a personal issue with the system in one form or another. The reality of the situation, however, is no laughing matter. Many employees have been underpaid, or had paycheques delayed or deferred. Others have received paycheques well into retirement that negatively affected their taxes and pension income. Some employees have received zero-dollar paycheques. Others have had to file taxes multiple times in the same year because their T4s did not accurately show their earnings. And still others were overpaid, and when discrepancies were discovered or pointed out, wages were garnished to compensate for mistakes not caused by the employees themselves.

These problems are starting to be addressed, although in ways many public servants likely would forgo for economic stability. In 2019, the Treasury Board of Canada Secretariat (TBS) and various public sector unions have come to an agreement to compensate those employees affected by Phoenix pay issues. This includes correcting any mistakes and compensating those employees who have been affected the most severely. Included in the agreement is additional days of paid leave, including two days for those who worked through fiscal years 2016 and 2017, and one day for those working each fiscal year since, up to a maximum of five additional leave days. This resulted in public servants receiving a total of 4.3 million hours of leave as compensation for eight years of dealing with Phoenix-related issues, but some public servants are still dealing with the fallout and are still waiting for compensation for issues that occurred years ago.

This year’s budget included $52 million for Shared Services Canada to work on a permanent replacement for Phoenix. Ceridian was chosen among three competing companies in 2021 as the replacement for the troubled software. TBS is now tasked with dealing with human resources and pay issues. These are clearly the next steps that need to be taken to ensure the problems with Phoenix are rectified, but the devil will be in the details.

In his 2018 report, former Auditor General Michael Ferguson gave a scathing grade to both the previous and current governments for the lack of appropriate oversight for the Phoenix rollout and implementation. It’s important to have independent analysis completed of the software being used to replace Phoenix to ensure that we don’t end up with another boondoggle that wastes money and doesn’t deliver on the basic premise of a simplified, unified system that reflects the needs of Federal workers.

Those workers deserve to know that their paycheques are stable, that delays won’t happen, and that they can access information about their pay and benefits without it being a massive hassle and ensure that taxpayers’ money is no longer wasted.