Federal employees and former public servants are facing legal action over overpayments made during the error-prone rollout of the Phoenix payroll system nearly a decade ago. Many recipients were never notified of the excess payments.
The government has enlisted private collection agencies to pursue repayment. In some cases, tax refunds, benefits, and credits are being withheld, and interest charges are being applied. The Public Service Alliance of Canada (PSAC) is calling for a halt to recovery efforts for overpayments that exceed the six-year statutory limitation period.
Union president Sharon DeSousa emphasized that workers have already endured years of financial stress and uncertainty due to Phoenix payroll failures. Treasury Board President Shafqat Ali said he had only recently become aware of the situation and plans to work with union leaders to resolve it.
Since its 2016 launch, the Phoenix system has caused widespread payroll errors, affecting hundreds of thousands of federal employees. Total overpayments since its inception amount to $3.56 billion, with 115,000 employees still owing $495 million.
PSPC stated that while recovery was delayed to prioritize fixing payroll issues, efforts have intensified since 2021. Flexible repayment plans are being offered to those facing hardship. However, PSAC stresses that legal limits mean overpayments older than six years should not be pursued without consent.
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