Salary overpayments caused by Phoenix: the government finally takes a step in the right direction
The federal government has just announced that it is proposing new measures to help correct the wide-ranging issue of employees having to repay the gross instead of the net amount of a salary overpayment caused by system, administrative or clerical errors. This is particularly significant for PIPSC members: tens of thousands of you have experienced this problem first-hand thanks to the calamitous Phoenix system.
This is a significant move on the government’s part, and a direct result of the persistent pressure applied by bargaining agents, including PIPSC, over the past two years. It proves that the government is willing to listen to us, and that by working together, we can realize victories for our members and for all Canadians.
Current legislation requires employees who have been overpaid in the previous year to reimburse their employer the gross amount of the overpayment. They must then seek reimbursement from the Canada Revenue Agency (CRA) for the excess income tax, Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums that were deducted when the overpayment was made. This is patently unfair and places an undue financial burden on affected employees.
Following a period of public consultation (in which the Institute will participate) in the weeks ahead, the government plans to introduce draft legislation that would correct this situation by allowing employees to repay only the net amount of the overpayment. The CRA would be tasked with directly refunding the employer the tax, CPP and EI that had been withheld – thereby relieving employees of this problem. Quebec has announced that it will align itself with these legislative changes.
We will keep you updated on the progress of these important legislative changes in the weeks ahead.
Members who require assistance with pay issues should contact our specialists at email@example.com.