Feds forgo $140 million savings on new payroll system

OTTAWA — Federal civil servants will be reimbursed for hiring tax accountants to sort through their pay problems and departments will be allowed to re-hire laid-off payroll employees, the federal government said Thursday as it tried to bail out its sinking Phoenix pay system.

A high-powered cabinet committee is also being created to fix the pay process, although a statement from the Prime Minister’s Office didn’t provide a deadline for achieving that goal.

In announcing the measures, the government acknowledged it will have to forgo $140 million it expected to save over the next two years from implementing the new electronic payroll system — and that it could take that long to finally resolve all of the pay issues.

A cabinet working group, led by Public Safety Minister Ralph Goodale, will work to bring Phoenix to a so-called “steady state,” Prime Minister Justin Trudeau said in a statement.

The group includes Finance Minister Bill Morneau, Treasury Board President Scott Brison, Ottawa-area MP and Environment Minister Catherine McKenna and Natural Resources Minister Jim Carr, also currently the acting minister of Public Services and Procurement.

“This working group will bolster the actions we have already taken and ensure that we fulfil our commitment to the public service to fix the issues that have impacted employees,” Trudeau said in his statement.

As tens of thousands of improperly paid civil servants face a tax filing deadline this weekend, they are being assured that any costs they incur as a result of pay issues will be covered. “Employees who encountered Phoenix pay issues may seek up to $200 in reimbursement for tax advisory services in relation to their 2016 or 2017 income taxes,” the Treasury Board Secretariat said.

That amount could go higher if government workers can provide receipts for tax services in excess of $200, a government source said.

The government began sending income tax slips to its more than 290,000 employees across 98 federal organizations in the last month. But as many as 50,000 of those tax slips had to be reissued for 2016 because of Phoenix-related problems.

The pay problems began shortly after the new system was launched nearly 15 months ago, initially affecting 82,000 civil servants who were either underpaid, overpaid or not paid at all — in some cases for months. But as of April 5, the department overseeing the system said pay transactions still needing to be processed stagnated at 284,000 from the previous month, with no end in sight to the problems.

Trudeau has accused the previous Conservative government of setting the pay modernization program up to fail by cutting corners on training and eliminating payroll system jobs.