Tories reverse plans to hold back pay

Move to new payroll system will be done without changes to public servants’ paycheques

The Conservative government is giving up plans to claw back four per cent of public servants’ paycheques next year as it moves to a modernized pay system.

Treasury Board President Tony Clement said the government reversed the decision when it was brought to his attention that Public Works and Government Services Canada, the federal paymaster and receiver-general, wanted to recover two weeks’ pay from every public servant’s paycheque for 2014 beginning in January.

“When it came to our attention, this government did what was fair and reasonable for its employees,” said Clement in an email.

“As we transition from the 40-year-old computer pay system to the new system employees will not see any interruption in the biweekly pay cycle.”

Clement met with union leaders last week about the new “pay in arrears” system and assured them the government had found a way to proceed without a claw back.

Details will be announced this week.

Gary Corbett, president of the Professional Institute of the Public Service of Canada, said he was pleased the unions could reach such an amicable compromise with the government.

The government has come down hard on the public service with changes to pensions and a planned overhaul of sick leave and disability.

“What matters to our members is that they are not going to be out of pocket and their total compensation isn’t going to change one iota. They are going to change the system without the pain of a four-per-cent reduction in pay,” said Corbett.

The government faced major blowback from unions after Public Works briefed them on plans to recover two weeks’ pay from all employees. The unions agreed in a meeting in Montreal last month that stopping the clawback was a top priority.

They complained to Treasury Board, demanded to see a business plan to support the change, and talked about launching a legal challenge if the government went ahead with the plan. They also questioned whether the government was exploiting the new system as a way to recover billions from payroll to help pay down the deficit.

Public Works had wanted to recover the pay as part of what it called the “transitional two-week waiting period” in moving to the new system. Now, public servants will receive their full pay and benefits during the transition but will not receive a paycheque two weeks after they leave the public service. Employees who join the public service after the new system is introduced will not receive a paycheque for up four weeks but will receive a final cheque up to two weeks after they leave or retire.

Under the original Public Works’ plan, employees would have received a full paycheque for the first payday in 2014, but the next 24 payments would have been reduced until the equivalent of two weeks’ pay was collected.

Robyn Benson, president of the Public Service Alliance of Canada, said that would have been hard for many public servants, especially for those who live from paycheque to paycheque. A mid-level clerk would lose $74 on every biweekly paycheque and a higher-paid IT worker would lose about $150 a paycheque.

“Pay in arrears was going to be a financial hardship for people working if they had to take money off their paycheques next year. They were forced to make choices like between food and rent and that’s just wrong,” said Benson.

Public servants are currently paid every two weeks and the cheques they receive cover the 10 days just worked including the payday Wednesday. This means paycheques are calculated and processed before the work is actually done, so they don’t reflect transactions or changes that may have occurred, such as leave without pay, resignation, termination, salary increases if promoted.

Under the new plan, the government will pay bureaucrats two weeks after the work is done. Public Works says this is the industry standard and it means employees will be paid for 10 days worked from a Thursday to a Wednesday that was completed two weeks earlier.

Public Works said it had few options to collect the money for the changeover, and concluded spreading the recovery over a year was the least disruptive and posed the least hardship to employees.

The move to a “pay-in-arrears” system is among the “industry standard” payroll practices the government will be adopting under its new modernized pay system. It is touted as providing better, timelier and more accurate processing of changes in pay rates. It would also reduce overpayments that the government has to then recover from employees.

The Conservative government built a $300-million pay centre in Miramichi to replace its 40-yearold pay system with a new one by 2015-16. The move is also part of the government’s plan to upgrade its aging IT system and it is supposed to transform and streamline how cheques are processed and people are paid.

The government has the largest payroll in the country, handling 300,000 employees and transactions worth $17 billion a year. The old system was bogged down by so many complicated pay rules that public servants complained they waited months, even years, for raises or overtime payments and sometimes for regular pay.