Overpayment recovery FAQ

The employer launched its Phoenix overpayment recovery plan last year. Since then, many current and former PSAC members have received letters of overpayment. While we recognize that some members owe overpayment amounts, the rushed process produced major errors.

If you have received an overpayment letter, please refer to the FAQ section below before taking any action.

1. Help! I’ve received an overpayment letter. What do I do?

Know that you’re not alone. In 2022, the government sent out nearly 10,000 overpayment letters, and in 2023, it’s expected to send out over 37,000. 

Here are the steps we suggest you follow:  

  • First, read the letter over carefully. 
  • Check if there are any problems with the overpayment letter: 
    • Check if any of the overpayments were made more than 6 years before the date of your letter. If so, it’s possible the limitation period applies to them and the employer cannot compel you to repay these amounts.  
    • Confirm if the overpayment amount is correct.  
    • Confirm if you need to ask for more information in order to understand the overpayment. 
    • Check if you’ve already repaid the overpayment (sometimes a duplicate overpayment letter is issued in error).
  • If you identify any of these problems, make sure to reply to the overpayment letter by filling out Annex B and choosing Option 2 to contest the letter. 
  • Fill out your Annex B – this is where you say whether you agree or disagree with the overpayment. Make sure to respond to the letter within the deadline given for response, to avoid automatic recovery. If you disagree, make sure to explain why.
  • Send in your Annex B. 
  • Consider whether you want to file a grievance – see question below: Should I file a grievance to challenge my overpayment? 
  • Once you’ve sent in your Annex B, if you disputed the overpayment, a Compensation Advisor will be in touch with you to discuss further. Wait for the Compensation Advisor to contact you.
2. I’m getting deductions taken off my pay, but I haven’t received an overpayment letter. What should I do?

You are entitled to an overpayment letter that outlines in detail the overpayment, and provides you with an option to dispute or accept the overpayment and repayment options. 

If you haven’t received a detailed overpayment letter, contact the Client Contact Centre and advise the agent that an overpayment recovery has started and you have not been provided with an overpayment letter, the chance to review, or options for repayment.

3. What are my options?

On the last page of the overpayment letter, you will find Annex B with the options for replying to the letter. 

You can either check off Option 1 – “I acknowledge the overpayment from X calendar year as detailed in Annex A of this letter dated Y” or Option 2 – “I acknowledge the letter dated Y, but disagree with the validity and/or amount of the overpayment as a result of (provide or attach details).” If you pick Option 2, you must fill in information as to why you disagree, or else the employer may commence recovery. 

4. Are all overpayment letters wrong?

Many overpayment letters PSAC has seen fall outside the six-year limitation period for recovery, have had errors, have included overpayments that have already been repaid, or have had insufficient information.

However, not all are invalid.   

If you know that your overpayment is valid, and none of the below situations in the next question apply to you, you will have to repay the overpayment.  

5. Should I dispute the overpayment?

There are certain situations in which you can dispute the overpayment. These include if:

  • You haven’t received enough information to understand the overpayment.  
  • You believe the overpayment is a mistake / has been incorrectly calculated.  
  • You believe the overpayment has already been repaid.  
  • It is past the 6-year limitation period.  
  • The employer has promised you don’t have an overpayment or that it’s been repaid and you relied on that promise to your detriment.  
  • You were unaware until now that you had an overpayment, and you relied on the correctness of your pay to your detriment. 
  • You would suffer severe hardship if you had to repay it.  
6. How do I fill out the Options page (Annex B)?

In your overpayment letter, you should have two options:  

  • Option 1 (I acknowledge the overpayment)  
  • Option 2 (I acknowledge the letter but disagree with the validity and/or amount of the overpayment)   

If you dispute your overpayment, check off Option 2 and write in the blank lines the reasons for your dispute (you can also attach a separate page if you need more space).  

Make sure you are very specific. Do not just write, “I disagree with the overpayment” or leave it blank. If you are not specific, the Pay Centre will commence recovery.  

Examples of information you can write in the blank lines:  

Example: I believe I have already repaid this overpayment because I already repaid an overpayment for that period on X date...  

Example: I believe that the overpayment amount is wrong because I never actually went on leave from X date to Y date. I cancelled my leave prior to taking it but the paperwork wasn’t submitted properly to the Pay Centre by my manager...  

Example: I do not understand the information provided in Annex A. The amounts for X and Y don’t add up. Also, could you please provide me with the dates of the pay stubs on which I was paid this alleged overpayment so I can cross-check my records? 

Example: If the overpayment is beyond the 6-year limitation period, you should include this paragraph: 

The alleged overpayment $___ contains amounts ($____) that are outside of the limitation period provided for under the Crown Liability and Proceedings Act because I received the overpayment letter on Insert date, but the overpayment is from Insert date (i.e. it is more than 6 years old). I believe that the Employer is statute-barred from collecting this overpayment, per my union PSAC’s information: https://psacunion.ca/phoenix-overpayment-letter-update.  

Please provide me with a written confirmation of whether this debt will be deleted/adjusted from my pay file.  

You also have the right to file a grievance if you dispute your overpayment. Your local or component can help you with filing a grievance.  

7. Should I file a grievance to challenge the overpayment? 

It may be a good idea to file a grievance if: 

  1. Your overpayment was calculated incorrectly, or is a duplicate. 
  2. Any part of the overpayment is past the six-year limitation period
  3. You relied on the correctness of your pay to your detriment. For example, the employer assured you that your pay was correct or you were unaware of the overpayment until now, and you made significant life decisions on that basis, or 
  4. You would experience serious financial hardship if you had to repay the overpayment. 

Be mindful of the deadline for filing a grievance: 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. 

Note that filing a grievance does not automatically stop recovery, so you should also make sure to fill out your Annex B.

8. Does filing a grievance automatically stop recovery of the overpayment?

Unfortunately, no. The best way to ask for a stop in recovery is by filling out your Option 2 and stating why you disagree with the overpayment and need recovery stopped.

9. What’s the point of filing a grievance if it doesn’t automatically stop the recovery?

The grievance can be very useful. If your overpayment is incorrect or beyond the limitation period, your department may be able to resolve these issues or obtain clarification during the grievance process.  

A grievance can also be useful in getting you compensation for your troubles “after the fact” – for example, if the employer mistakenly recovered an overpayment from you and this caused you financial troubles, you may be able to get a reimbursement of any amount incorrectly taken from you plus damages through your grievance.  

10. What do I do if none of these situations applies to me, but I don’t want to repay my overpayment because it was the employer’s fault for introducing Phoenix?

Unfortunately, unless your overpayment is older than six years old or you have a specific concern with your overpayment or a legal basis to challenge it, you have a legal duty to repay the overpayment. However, you still have the right to ask for a lower repayment rate if the proposed rate would cause you hardship. We agree that this is frustrating, because you didn’t ask for this overpayment and it’s a waste of your time and energy to deal with it.   

If you’ve had extensive Phoenix issues that have interfered with your ability to live your life, we would strongly encourage you to make a severe impacts claim application.

11. I can’t afford the 10% recovery rate. What do I do?

The default recovery rate is a deduction of 10% of your gross biweekly pay.

However, you can ask for a 5% recovery rate. You should check off Option 2, and write in the lines that you cannot afford the proposed recovery and it would cause you hardship. Normally, there is no problem with 5% recovery being approved.  

12. I’m not sure if my overpayment is past the limitation period.

Go to the Contact Us section of our website and select the option “Phoenix – Overpayments.” A member of our Phoenix team will normally be in touch with you within 24 to 48 hours. They will review your overpayment letter and help.

13. I need help with filling out my Annex B. Who do I contact?  

First read our instructions for how to fill out Annex B with the above question How do I fill out the Options page (Annex B)?.

If you have any further questions or need help figuring out what to write in the blank lines, contact the Phoenix team via the Contact Us section of our website and select the option “Phoenix – Overpayments.”  A member of our Phoenix team will normally be in touch with you within 24 to 48 hours. 

14. Can the employer forcefully recover the overpayment from me if I don’t respond?

If you ignore the overpayment letter or dispute it without providing any information, the employer will usually commence recovery. The employer, being the Federal Government, has several ways to recover the overpayment. 

PSAC has seen the employer recover overpayments from former employees through the Canada Revenue Agency (from your tax refunds), through your pension, or from money owed to you upon retirement/when you leave your job (severance pay or Phoenix general damages).  

For current employees, the employer will make the recovery of the overpayment from your salary or from any money due to you, such as retroactive pay.  

15. Why am I being asked to repay an overpayment, when the employer actually owes me more money?

This is a frustrating situation. The employer is currently doing the “overpayment recovery project” by year, going through employees’ accounts and identifying overpayments (starting in 2016, then 2017, etc.).    

The employer is not automatically reconciling your entire pay file before it asks you to repay an overpayment because they’re looking at one year, and one set of pay transactions, in isolation.  

It’s very possible that, looking at your pay file in its entirety, there are some unprocessed pay transactions that the employer owes you money for, which would reduce or eliminate your overpayment debt, or which would result in the employer owing you money.    

If you believe that the employer owes you money, you can ask them to reconcile your entire pay file.    

If you agree with the overpayment, but want to repay it once your file has been reconciled:

If you are a current employee, choose Option 1 (I acknowledge the overpayment). Under Repayment Options choose “After all 3 conditions are met (flexibilities are applied).” If you pick this option, the employer will not commence recovery until the following three conditions are met: (a) they’ve paid you all outstanding monies owed to you; (2) you’ve received three consecutive correct paycheques; and (3) you’ve established a recovery agreement.

If you are a former employee, you will not have the same repayment options in your overpayment letter. If you agree with the overpayment but want to repay it only once your file has been reconciled, you should choose Option 1 (I acknowledge the overpayment) and add in a note somewhere on the page that you want your file reconciled before you are required to pay back the overpayment, as you believe the employer owes you money. 

If you disagree with the overpayment:

You can choose Option 2 (disagree with the overpayment) and write in detail why you disagree with it. Add in that you also want your entire pay file reconciled because it is the employer that owes you money.   

* Note that disagreeing with the overpayment solely on the basis that the employer owes you money for a different period does not normally stop the recovery of the overpayment. In order to pause recovery, you will need to include specific details about why the overpayment listed in the letter is incorrect or past the limitation period. 

PSAC believes that it is wrong for the employer to demand you repay an overpayment before they’ve reconciled your pay file in its entirety and paid out any underpayments they owe you. We are challenging this heavy-handed approach through our policy grievance

16. This has been a huge mess. How can I get compensation for all of my Phoenix-related losses?

If you’ve had serious losses and impacts to your life and health due to Phoenix, we strongly encourage you to make a severe impacts claim

In addition, all current employees automatically received general damages on their paycheque in March 2021. If you’re a former employee, we strongly encourage you to apply for up to $2,500 in damages you may be entitled to, as former employees did not have general damages sent to them automatically.

17. Who do I contact?

You can reach out to your local or component for assistance with filing a grievance.

You can also contact our Phoenix team for help with how to respond to your overpayment letter. We normally respond within 24 to 48 hours from Monday to Friday. We are here to support you through this. 


March 8, 2023