In the fall of 2021, the Public Service Pay Centre launched the recovery process for Phoenix overpayments for thousands of PSAC members they believe were overpaid by the Phoenix pay system in 2016. Because of the six-year limitation period for the government to begin recovering these overpayments, the employer is rushing to send overpayment recovery letters to many PSAC members now.

Members receiving overpayment letters must respond promptly, as they are given four weeks to do so. If they do not respond within that timeframe, the Pay Centre will begin the overpayment recovery immediately by default.

PSAC recognizes that some members owe these overpayment debts. When they have been overpaid, have been provided with the necessary information to validate its accuracy, and where they don’t need to challenge the overpayment based on the grounds identified below, they should pay the debt back.

However, there are instances where overpayments should not be repaid right away. These instances are identified in 3.a to 3.d below. If you meet any of these conditions, we suggest responding to the overpayment letter stating that you dispute the overpayment, providing a clear rationale. You should also contact your union local to file a grievance if you clearly meet any of the conditions identified in 3.a to 3.d. Please note that not all members should file a grievance, and that a case-by-case assessment will take place.

The employer has waited an inordinate amount of time – nearly six years in most cases – to recover overpayments. All of this is causing our members a huge amount of stress, especially where a member was not made aware they owed an overpayment until now, or where their financial situation has changed.

It was the employer’s failure to manage pay that caused the overpayments, and members received them through no fault of their own. PSAC is looking into legal avenues to challenge the recovery of these overpayments in certain situations, which include filing grievances where appropriate.

If you have received an overpayment letter, please read the below recommendations on how to respond. Make sure to respond to the letter within the deadline provided. If you dispute the overpayment, you can file an individual grievance if one of the potential grounds applies to you. If you do decide to file a grievance, be mindful of the deadline to do so under your collective agreement.

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:
  1. are confident that the overpayment calculation is correct; and
  2. do not wish to challenge the recovery of the overpayment on any of the grounds listed below. 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.

PSAC’s guidance for filing an individual grievance:

1. File the grievance within the collective agreement timelines: For most federal public service workers represented by PSAC, that deadline is 25 days after the date on which the grievor is notified or on which the grievor first becomes aware of the action or circumstances giving rise to the grievance. Please be sure to check your collective agreement for the applicable timelines.
2. Include all potential grounds in the grievance: You may have multiple grounds to challenge the overpayment and should be sure to include all potential grounds in your grievance.
3. Consider the following potential grounds for an individual grievance:
   1. Was your overpayment calculated incorrectly? You should carefully review the calculation of the overpayment and ensure it is correct. If you are at all uncertain about the accuracy of the calculation, you should file an individual grievance on this basis, even if you have not yet received all information and records to verify the calculation.
   2. Were any overpayments made more than six years before the date of your letter? You should carefully review the breakdown of the overpayment and ensure that all payments were issued no more than six years before the date of the letter. If any payments occurred more than six years before the letter, you should file an individual grievance based on the expiry of the limitation period in the Crown Liability and Proceedings Act.
   3. Did you rely on the correctness of your pay to your detriment? There are two general categories that may meet this standard:
      1. The employer or Pay Centre assured you that your pay was correct, or that you had no overpayment, and you relied on that assurance in some way. For example, you may have taken on a significant new expense such as the purchase of a home, which you now cannot afford, or you may have chosen to retire based on the amount of savings you had accrued, which is now impacted by the overpayment recovery.
      2. You were unaware of the overpayment until the time of the employer’s letter and relied on the accuracy of your pay in some way; for example, by taking on a significant new expense, or choosing to retire based on the amount of savings you had accrued.

d. Will the recovery of the overpayment cause you financial hardship? If you will experience financial hardship because of the recovery of the overpayment, you may argue that the recovery is unreasonable in the circumstances. This hardship could arise because of taking on significant new expenses or choosing to retire based on the amount of your savings, or it could arise because your financial circumstances have changed since the time of the overpayment.

If you believe that any of these four situations apply to you, contact your union local, regional office or component right away so they can assess whether filing a grievance is appropriate. Please note that filing the grievance will not halt the recovery of the overpayment.

If you have any concerns or require any assistance with the above, please contact PSAC’s Phoenix team for help by selecting Phoenix Overpayment from the What is your inquiry about? dropdown menu.