Ottawa payroll proposal could clawback staff paycheques

Pay in arrears plan for federal workers violates collective agreements: Union

A proposal by the federal government to make changes to the payroll of its employees — with a potential to save Ottawa $9 billion in the process — is being met with hostility by unions and has even been called "wrong-headed" by one employment lawyer.

Public Works and Government Services Canada (PWGSC) floated the idea of changes to the pay system for federal employees in the 2013 federal budget. Public service employees are currently paid biweekly for the work they most recently completed — the paycheque an employee receives on payday is compensation for the 10 most recent days worked, including that payday.

This means paycheques are printed ahead of time, compensating employees for days they have not yet worked in order to provide paycheques in real time. The proposed pay system would delay paycheques by two weeks, allowing any transactions or changes that might occur — including sick leave or salary increases — to be accurately reflected.

PWGSC would implement the pay in arrears system by recovering two weeks’ pay from every public servant in 2014. The first two weeks’ pay would be withheld from new employees starting in 2014, while current employees would have reduced paycheques throughout the year, with an equivalent of two weeks’ pay recovered. After 2014, with the two week delay in place, pay would no longer be recovered and employees would receive regular paycheques. Employees will receive the two weeks’ withheld pay when their employment comes to an end.

Several unions representing public sector employees — including the Public Service Alliance of Canada (PSAC), which represents 140,000 workers — have spoken out against the proposed pay system and pledged to challenge the government legally should it proceed with the pay in arrears plan.

"We will do everything we can do to protect our membership and to ensure our membership does not endure undue hardship," said PSAC president Robyn Benson. "We will take the appropriate steps. We will not shy away from doing what we need to do to protect our membership."

Benson said she is disappointed PSAC wasn’t consulted before PWGSC announced its intentions to implement changes that drastically affect union members, especially after representatives from the Treasury Board of Canada reassured her no such plan existed when rumours of a new pay in arrears system first surfaced.

"The Treasury Board confirmed to me that there were no plans for pay in arrears. I made it quite clear at that point in time that if this was coming then there’s an obligation for consultation. I don’t believe we were consulted. My definition of consultation differs greatly from the Treasury Board if this is, in fact, what they would now pass off as consultation," Benson said.

She was shocked when the announcement for the proposed plan came not from the Treasury Board, but from PWGSC. While Benson feels the Treasury Board is attempting to avoid blame by implicating the
PWGSC, she is willing to continue working toward a solution.

"Our collective agreements, in our reviewing of them, are very clear that any actions that are going to affect our members’ employment have to be discussed," she explained. "Certainly had they engaged unions we would have looked at developing proposals to ensure that there wasn’t a negative impact. We’ve certainly suggested now a couple of ways they could alleviate this fear from the membership and assure that our members don’t suffer any undue hardship."

The majority of PSAC’s members are women, Benson said, and many are a part of what she calls the "sandwich generation." In addition to caring for their children, many are also financially responsible for one or more of their parents.

"This is not just about the unions saying ‘We were not consulted in a new pay system that’s being implemented.’ This is about individuals losing real money from their paycheque," Benson said. "In today’s economy, folks cannot afford to lose money off their paycheque and there really is no need for this to happen. Let me be very, very clear — there is no need for them to move to this pay in arrears plan."

The Treasury Board said the proposed plan is a necessary upgrade, but made it clear the pay in arrears plan is only a proposal.

"The government of Canada’s current pay system is outdated, inefficient and must be replaced so that employees are paid accurately and on time," said Matthew Conway, press secretary for the office of the president of the Treasury Board, Tony Clement. "No decisions have been taken in regards to the pay process."

The proposal is only one way in which the government has addressed the payment of its employees in its quest to reduce operational costs. It recently consolidated pay administration services for public servants into a single pay centre in Miramichi, N.B. When the Public Services Pay Centre building is completed in 2017, it will house 550 public service employees providing payroll for all federal employees. PWGSC said a more modern pay in arrears plan would further reduce operational costs.

"The proposed pay administration policy change is part of the government’s commitment, in Economic Action Plan 2013, to review and update its systems and processes to ensure they are modernized and in line with industry standards," said Pierre-Alain Bujold, spokesperson for PWGSC. "The government of Canada’s current pay system is more than 40-years-old and must be replaced so that employees continue to be paid accurately and on time. The new system is expected to generate significant savings once fully implemented in 2016. Government officials have engaged bargaining agents in discussions."

If those discussions dissolve, PSAC is one of several unions representing public service employees promising to seek legal remedy.

Howard Levitt, an employment lawyer for Levitt LPP in Toronto, said unions whose collective agreements would be violated by the pay in arrears plan could grieve and would very likely go on to win arbitration.

"I applaud the fact the government is taking steps to try and deal with its deficit," Levitt said. "That’s positive. This is probably as bad a device to achieve that goal as I can think of. Frankly, since they have to pay back the money anyway, it’s simply a two week extension of their economic obligation to the employees. In the scheme of things it’s not even a rounding error in terms of the government’s deficit. It seems for a whole variety of contexts — legal, practical and from a policy standpoint — entirely wrong-headed. Its accomplishments are so diminutive in any event, that you wonder why they’ve bothered."

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