PIPSC Advises a Senatorial Committee on Phoenix Overpayments

On June 6, 2019 Institute Vice-President Stéphane Aubry and PIPSC Economist Ryan Campbell appeared before the Standing Senate Committee on National Finance regarding Bill C-97, which seeks to implement provisions of the March 2019 federal budget.

The Senators were particularly interested in what the Institute had to say about “supporting employees who must reimburse a salary overpayment to their employer due to a system, administrative or clerical error”.  This was likely a direct consequence of the PIPSC submission earlier this year to the Department of Finance about proposed new measures to help correct the critical issue of tens of thousands of our members having to repay the gross instead of the net amount of a salary overpayment caused by Phoenix. 

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.

Finance Canada is proposing new measures to address this problem.

Our representatives reminded the Committee of the terrible impact that this flawed pay system has had on PIPSC members. For the past three years, they have been subjected to a pay system that is unable to pay them on time or correctly.  They have received too little, too much or sometimes simply no pay. 

Yet they continue to show up to work despite all this.  Why? Because they are dedicated public servants.  Because they are professionals. And they deserve to have their employer, the federal government, take the necessary steps to spare them the consequences of the incredible failure that is Phoenix.

The Institute’s overall position is that the proposed legislative amendments will assist its members with some of the negative tax consequences they have faced resulting from overpayment.  Vice-President Aubry nevertheless took the opportunity to outline some of the Institute’s concerns with the amendments.

We understand that the Canada Revenue Agency will be publishing additional guidance in the near future to assist employers in the implementation of the proposed amendments.

While this will certainly be helpful, we cannot overemphasize how important it is for the government to make sure all its departments and agencies are aware of the “net vs. gross” overpayments policy and that they apply it correctly for our members.

Our members have suffered enough because of Phoenix.  Let’s make sure they are treated well, and effectively, when it comes to repaying overpayments that occurred through no fault of their own.