Phoenix overpayments: more letters expected this year, and how PSAC is taking action

We are in the second year of the government’s aggressive and heavy-handed plan to recover overpayments caused by Phoenix. The government’s rushed overpayment plan took more than 10,000 federal public service workers by surprise last year and has caused incredible hardship for workers. Over the next few months, we expect more than 37,000 more current and former public service workers will receive an overpayment letter, asking for repayments for the year 2017.

The Pay Centre is racing against the clock to recover these overpayments because there is a six-year limitation period for overpayment recoveries, after which they have no legal right to recover the funds.

Overpayment letters are one of the most common reasons why PSAC members reach out to our Phoenix team for support.

It may seem like a simple issue; if you have an overpayment, you have to pay it back. However, our members who have received an overpayment letter know how devastating receiving an overpayment letter – and the employer’s mishandling of the recovery – can be.

Government to blame for overpayments

As rising inflation continues to impact workers, with many Canadians living paycheque to paycheque, an unexpected bill from 2017 demanding $10,000 can be devastating. Receiving an overpayment letter can be stressful, especially because these letters are often unclear, lack specific details about the overpayment and are on top of existing Phoenix pay issues workers are dealing with.

Let us be clear: no PSAC member caused these overpayments in any way. The blame for overpayments is entirely on the shoulders of this government, who underpaid and overpaid hundreds of thousands of federal public service workers through Phoenix.

PSAC takes issue with the fact that the government is focusing on overpayment recovery and reassigning compensation advisors to claw back overpayments when these resources would be better spent addressing the backlog of 418,000 unresolved pay issues.

PSAC calling for changes to overpayment recovery

PSAC is a vocal advocate for members who receive overpayment letters. We’ve been regularly meeting with senior Treasury Board officials, the PSPC Pay Centre and other bargaining agents to voice our opposition and demand change to Treasury Board’s egregious approach to overpayment recoveries.

We’ve called on the government to completely overhaul the overpayment recovery process for federal public service workers by providing more detailed information about the recovery, improve communication by allowing workers to speak directly to a compensation advisor about their case, and clearly outline workers’ obligations around the six-year statute of limitations to pay back the overpayment.

PSAC’s recommendations on how to respond to the employer’s letter:

  • Respond by the deadline provided in the letter: All employees that receive a letter should be sure to provide a response within the four-week timeline provided in that letter to avoid immediate recovery of the overpayment by default.
  • Do not select “Option 1” if you wish to challenge the recovery in any way: The only circumstances in which you should select “Option 1” in Annex B is if you:
    • are confident that the overpayment calculation is correct; and
    • do not wish to challenge the recovery of the overpayment on any of the grounds listed. If you wish to challenge the validity or accuracy of the overpayment in any way, you should select “Option 2” in Annex B.
  • Request additional information or records if necessary: If you are unable to verify the accuracy of the overpayment calculation, you should request all information and records from the employer that are necessary to determine if the calculation is correct.

As a further step, PSAC has filed policy grievances against Treasury Board, Parks Canada and the Canadian Food Inspection Agency for their heavy-handed mismanagement of the overpayment process.

We also encourage members to file an individual grievance.

PSAC will continue to help members affected by this complex process. If you have any concerns or require assistance, please contact our Phoenix team for help by selecting "Phoenix Overpayment" from the "What is your inquiry about" dropdown menu.


February 20, 2023