For nearly a decade, PSAC members have been living with the fallout from the Phoenix pay system. Now, some former federal public service workers are facing new hardships as the government attempts to collect years-old Phoenix overpayments — some dating back 10 years — by referring the cases to the Canada Revenue Agency (CRA) and private collection agencies.

PSAC is increasingly hearing from former members, many who left the public service years ago, who have received letters warning that Phoenix overpayments will be reported to the CRA and added to their tax accounts for recovery. Others are being harassed and intimidated by private collection agencies, with threats to their credit scores for debts they cannot confirm they owe and are not legally required to pay.

This is a stressful and unexpected situation with real consequences for workers, including seized tax refunds, reduced tax credits, and impacts on child and disability benefits. In most cases, these overpayments date back more than the six-year legal limitation period to recover, and individuals had no prior knowledge that they existed.

“In a cost-of-living crisis, people are fighting just to stay afloat. The last thing they need is to receive a letter out of nowhere claiming they owe for a payroll mistake they knew nothing about that the government has no legal authority to pursue,” said PSAC National President Sharon DeSousa. “The government has a legal obligation to collect these overpayments within six years. If they miss that deadline, they can’t resort to intimidation tactics to bend the law.” 

What is a statute-barred debt?

Under the Crown Liability and Proceedings Act, the federal government has a six-year window to recover a debt. Once that period expires, the debt becomes statute-barred. That means departments and the Public Service Pay Centre no longer have the legal right to collect the overpayment unless current or former employees sign a new agreement clearly acknowledging they owe the money.

That limitation period already gives the federal government far more time than most provinces and territories allow. In many regions, the limit is two to three years.

Despite this, some departments are still sending these statute-barred overpayments to the CRA to enforce the Individual Refund Set-Off program, which allows the CRA to apply or “set-off” an individual’s tax refunds and certain federal, provincial and territorial tax credits against debts owed to the Crown.

Additionally, some departments are referring statute-barred overpayments to private collection agencies.

How PSAC is taking action

PSAC has formally called on Minister Shafqat Ali, President of the Treasury Board, and Minister François-Philippe Champagne, Minister of Finance and National Revenue, to stop referring statute-barred Phoenix overpayments to the Canada Revenue Agency and private collection agencies and to put in place a verification process to ensure any overpayments fall within the six-year limitation period before recovery begins.

If you've received a letter like this, or noticed deductions you weren’t informed about, reach out to PSAC immediately. We can help assess your situation and advise you on the next steps, including filing a grievance where appropriate. Select “Phoenix – Overpayments” on the Contact Us page or consult our detailed FAQ on overpayments for more information on your rights and what to expect.

We will continue to fight back against unfair and unlawful attempts to make workers pay for errors they did not create.