Workers affected by Phoenix pay woes to get $350 million in compensation

OTTAWA – At least another $350 million will be added to the $2.6 billion cost of the badly mismanaged Phoenix pay system, as the government has reached a deal to compensate public servants for the stress and uncertainty the flawed payroll program caused.

The deal announced Friday with the Public Service Alliance of Canada (PSAC) will see 140,000 public servants receive a lump sum payment of $2,500 in compensation.

The payroll software, launched in early 2016, has been mired with technical problems ever since, public servants went unpaid, sometimes for months at a time and the system struggled to handle basic payroll functions, like maternity leaves or overtime.

There were widespread reports of public servants being unwilling to pursue promotions because of fears Phoenix would wreck their pay.

PSAC president Chris Aylward, said even people who got paid on time were hit by the system.

“All of our members have been affected by Phoenix even if your pay was not interrupted. You still woke up on pay week wondering if you were going to get paid or not,” he said. “You put off promotions and acting assignments and stuff like that because you didn’t want your pay to change.”

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Treasury board president Jean-Yves Duclos was unavailable for an interview Friday, but in a statement said he was pleased the government had reached a deal.

“PSAC will receive compensation for the toll that the Phoenix pay system has had on their lives. This is a testament to our commitment to reaching fair and equitable agreements, mindful of today’s economic and fiscal context.”

The government also settled a broader agreement with 84,000 PSAC members. That three-year deal will see employees get a total raise of 6.64 per cent and also includes new rules for parental leave and 10 days leave for people experiencing domestic violence. The deal still needs to be ratified.

The Phoenix system was initially pegged as a cost-saving measure, but the parliamentary budget officer determined last year, by 2023, the government is likely to spend $2.6 billion dealing with the broken system, well above the initial projections and significantly more than the old system was costing.

In 2018, the auditor general called it an “incomprehensible failure of project management and oversight.” The auditor also concluded managers had prioritized getting the system launched on time and on budget over making sure it actually worked.

“In our opinion, the decision by Phoenix executives to implement Phoenix was unreasonable according to the information available at the time. As a result, Phoenix has not met user needs, has cost the federal government hundreds of millions of dollars, and has financially affected tens of thousands of its employees,” read the 2018 report.

The system was designed and implemented under Stephen Harper’s Conservative government and turned on when the Liberals took office, despite warnings of problems. It replaced a 40-year-old payroll system and was set up to pay some 290,000 federal workers across the country.

The government had offered PSAC five days of paid leave in Phoenix compensation and several other large government unions took that offer, but PSAC rejected it.

Aylward said that offer was fundamentally unfair because the leave would have a different value depending on an employee’s salary. He said someone making $50,000 a year would receive much less if they cashed in that leave than someone making $80,000 even if they both suffered through the payroll system.

The $2,500 lump sum is prorated based on how many years someone has been working with the government, but anyone who has been on the job since 2016 will receive the full amount.

Aylward said Phoenix is working better than it once did, but the system continues to cause problems.

“The number of pay issues have decreased but every single payday there’s still issues.”

The deal also includes a process to allow public servants to be compensated if their lack of pay caused other problems, like late payment charges or fines.

Several other unions have previously settled with the government over Phoenix, agreeing to the five days paid leave in compensation, but they negotiated a clause that saw them able to take part in a better deal if one was reached.

Debi Daviau, president of the Professional Institute of the Public Service of Canada, who signed the paid leave deal, said they were still assessing what it would mean to them.

“We are waiting for more details about this agreement to determine if and how it will impact our members, she said in a statement.

If those other unions opt to take the $2,500 lump sum instead of the paid leave it will add tens of millions to the cost for government.

The Liberals are working through a process to replace Phoenix completely with testing underway on one proposed supplier but no set date for launch of the new system. Aylward said when the then Conservative government decided to create Phoenix they forgot to actually ask the people who would use it.

“There was no consultation with the unions. There was no consultation with the employees who were doing pay work.”

He said so far the Liberals have moved more cautiously with Phoenix’s replacement.

At the peak, the government had over 260,000 Phoenix related pay issues in its backlog as of May that number is down to 137,000 problems and the government is processing more problems than new ones are coming in.

Twitter: RyanTumilty
Email: rtumilty@postmedia.com