After nearly a decade of Phoenix pay system disasters, the federal government has announced its decision to move forward with Dayforce as the replacement for the troubled Phoenix pay system. On June 11, Minister Joël Lightbound confirmed that the government is entering the "final build and testing phase" of the Dayforce HR and pay solution.

While PIPSC welcomes any step toward finally resolving the ongoing pay crisis, we remain cautiously optimistic and have serious concerns about the implementation process.

Feasibility study reveals concerning gaps

The government's decision is based on a feasibility study with mixed results. Most alarming: the study found that the government's ability to actually operate the new system was rated as "insufficient." This is particularly troubling since operating the system day-to-day is crucial to ensuring our members get paid correctly.

The feasibility report itself acknowledges: "While the Project demonstrated that it is feasible to implement Dayforce, this should not be interpreted as readiness to implement now."

Still years of Phoenix ahead

The reality is sobering. Full implementation won't begin until March 2027, with a final deployment decision not occurring until Winter 2027. This means public servants could be suffering under Phoenix for nearly four more years if complications arise.

The next two years will focus on testing with just two departments and one agency: Public Services and Procurement Canada, Shared Services Canada, and the Canadian Nuclear Safety Commission - involving only about 30,000 employees out of the 431,000 total.

Dayforce won't fix existing Phoenix issues

A crucial point the government continues to ignore: Implementing Dayforce will not resolve the estimated 370,000 unresolved Phoenix transactions still clogging the system. These existing problems must be solved separately, meaning our members face ongoing Phoenix chaos plus years of Dayforce uncertainty.

This is the current Phoenix reality for our members:

• 500 PIPSC members still have open, unresolved complex files
• 32% of federal employees reported pay errors in 2023-24
• At least $3.5 billion spent on Phoenix since 2017
• Over $150 million spent just looking for a replacement

Data sovereignty crisis

Perhaps most concerning is that Canada's federal payroll data will be controlled by Dayforce, an American multinational corporation. At a time when Canada-U.S. relations are strained, critical questions remain unanswered:

• Will Canadian data be stored on U.S. servers?
• How will data be protected under American laws?
• Why wasn't preference given to a Canadian company?

The one-size-fits-none problem

Dayforce inherits Phoenix's fundamental flaw: forcing a single system to handle more than 100 departments with nearly 150 different collective agreements. Many experts argue that multiple specialized systems would be smarter than cramming this complexity into one platform.

Six years of government stonewalling

The government continues to refuse extending Phoenix damages compensation beyond March 2020. After six years since the 2019 compensation agreement, they haven't even provided a rationale for this refusal. The solution is simple: extend the existing compensation framework for another five years to cover ongoing harm.

Our demands

We demand the government:

1. Achieve excellence, not "adequate": All system capabilities must be fully functional before launch
    
2. Resolve Phoenix backlog: Address all 370,000+ outstanding transactions before implementing Dayforce
    
3. Protect data sovereignty: Keep Canadian data in Canada under Canadian control
    
4. Extend compensation: Cover all Phoenix damage regardless of when it occurred
    
5. Full cost transparency: Disclose complete implementation costs beyond the initial $16.9 million

Looking forward

PIPSC remains committed to working with the government to solve this crisis. However, we will not compromise on our members' rights, privacy, or fair treatment. We've learned from Phoenix that good intentions without proper execution lead to devastating consequences.

Our members deserve better than promises and pilot projects. They deserve a pay system that works, compensation for harm endured, and confidence that their employer can fulfill its most basic obligation: paying them correctly and on time.

The decade of disaster must end. We'll continue to hold the government accountable every step of the way

For more information on Phoenix issues and PIPSC's advocacy efforts, visit our Phoenix resources page. Members experiencing ongoing pay issues should contact member services.

OTTAWA, ON, Feb. 27, 2025 — For nine years, the Phoenix Pay System has stood as a stark warning about the true costs of outsourcing critical government services. What began as a $5.8 million contract with IBM has now ballooned to over $650 million through more than 50 contract amendments - all while failing to deliver its basic function of paying public servants correctly and on time.

As a result, workers are going into debt as a result of ongoing financial insecurity and years of incorrect and unpredictable pay. Their futures are being impacted as their credit scores plummet – some have even lost their homes. Pay errors are also repeatedly reported on T4 and other financial reports, causing difficulties with the CRA and provincial tax agencies, tangling the web even further.

"The government's obsession with outsourcing has created a costly spiral of failure," said the Professional Institute of the Public Service of Canada (PIPSC) President, Sean O’Reilly. "After spending hundreds of millions on IBM for Phoenix, we're now watching history repeat itself by once again choosing costly outsourcing for the new pay system, instead of leveraging in-house expertise.”

“Meanwhile, nearly 300,000 pay transactions remain unprocessed, and that number is only rising.” he continued. “With two-thirds of these cases being over a year old. This is not value for money - this is throwing good money after bad."

The mounting costs extend far beyond direct contracts. The 2024 budget includes another $135 million investment for HR improvements and the next generation pay system. This is on top of the $517 million allocated in 2023 and $521 million in 2024 just to maintain staffing at the Pay Centre to handle the ongoing backlog. The government has also spent millions more on consultants, including $27.7 million to McKinsey to "help improve" a system that fundamentally doesn't work.

"Public servants deliver essential services that Canadians rely on every day, yet for nine years, they've been fighting just to receive their basic pay," noted the Canadian Association of Professional Employees (CAPE) President, Nathan Prier. "From day one, we warned about the risks of outsourcing such a critical system. A rush to find the cheapest option has now cost Canadians more than $3.5 billion and counting. We urged consultation and stressed the importance of maintaining internal expertise. Instead, the government eliminated 1,200 experienced pay advisor positions and replaced them with 550 positions at a centralized location.”

“The results speak for themselves,” he continued. “Thirty percent of public servants continue to experience errors in their basic pay, and thousands wait years for proper processing of promotions, transfers, and retirement benefits. We are long overdue for a renewed damages agreement to compensate our members, which the Treasury Board has been promising but intentionally stalling."

The Phoenix Pay System demonstrates what happens when governments prioritize outsourcing over investing in their own workforce. Public servants have the expertise, dedication, and understanding of complex government operations that external contractors simply cannot match. After nine years and billions of wasted taxpayer dollars, it's time for the government to recognize that strong public services require investment in public servants, not an endless cycle of expensive external contracts that fail to deliver.

About CAPE

With more than 25,000 members, the Canadian Association of Professional Employees (CAPE) is one of the largest federal public sector unions in Canada, dedicated to advocating on behalf of federal employees in the Economics and Social Science Services (EC) and Translation (TR) groups, as well as employees of the Library of Parliament (LoP), the Office of the Parliamentary Budget Officer (OPBO) and civilian members of the RCMP (ESS and TRL).

About PIPSC

The Professional Institute of the Public Service of Canada (PIPSC) was founded in 1920.  With over 75,000 members, the Institute is the largest union in Canada representing scientists and professionals employed at the federal and some provincial and territorial levels of government.

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Media contacts:

Canadian Association of Professional Employees (CAPE), Media@acep-cape.ca

Professional Institute of the Public Service of Canada (PIPSC), jfillion@pipsc.ca