Federal public servants are facing legal threats to return money they were mistakenly paid during the problematic implementation of the Phoenix pay system nearly a decade ago, as per Radio-Canada. Private debt collection agencies have been authorized by the government to recover these funds from individuals, including some who have since left the public sector and were unaware of the overpayments, according to Canada’s largest federal public sector union.
The Public Service Alliance of Canada (PSAC) has highlighted cases where tax refunds, credits, and federal benefits are being withheld, with interest accruing on outstanding amounts. They are urging the government to cease the pursuit of overpayments that exceed a six-year limitation period. PSAC President Sharon DeSousa criticized the government for subjecting current and former members to additional distress through illegal recovery measures that contravene federal laws and set time limits.
In response, President of the Treasury Board Shafqat Ali acknowledged being recently informed about the issue and pledged to investigate and collaborate with union representatives to address the situation.
The troubled Phoenix payroll system, introduced in 2016, has resulted in payment discrepancies for numerous federal employees, leading to costs soaring to almost $4 billion. The government is now transitioning to a new payroll platform due to the persistent issues with Phoenix. Efforts to recover overpaid funds from public servants continue, with Public Services and Procurement Canada (PSPC) notifying individuals, including former employees, about outstanding payments dating back to 2015.
PSPC has engaged private collection agencies to pursue these debts, even though the agency retains ownership of the debts. PSAC condemned the use of private debt collectors, emphasizing that former public servants are being harassed and pressured to repay debts that are not legally enforceable.
The delay in seeking repayment was attributed to the initial focus on rectifying pay system errors during the Phoenix rollout. PSPC stated that efforts to reclaim overpayments intensified since October 2021, with more than 115,000 current and former employees owing a total of $495 million out of the $3.56 billion in overpayments made since the inception of Phoenix.
The government agency emphasized the importance of responsible fund management and highlighted support measures for individuals experiencing financial difficulties. While the Canada Revenue Agency specifies a six-year limitation period for collecting payroll debts, PSAC argues that certain overpayments now surpass this statutory limit for collection, citing the Crown Liability and Proceedings Act as grounds for discontinuing collection after the expiration of the limitation period.