After months of waiting, retired and former PSAC members finally have access to Phoenix general damages.
Any former member, legal representative of a former member or estate of a deceased member who worked for the federal public service between 2016 and 2020, and is eligible, can now claim the maximum lump sum of $2,500. This includes compensation for the late implementation of collective agreements during those years due to the Phoenix pay system. Entitlement to compensation is as follows:
To be eligible to claim each year of the financial compensation, a worker must have been a PSAC member, had their pay processed by Phoenix, and been on strength for at least one day in the applicable fiscal year. To clarify, “on strength” means an employee who was actively working, on leave, on assignment, on long-term disability or otherwise not active, but remained employed.
To receive the amount you are entitled to, you must submit a claim, either online or by mail. Once the claim is evaluated, and you have agreed the government’s calculation of monies owed is correct, the amounts will be paid in one instalment. Please note that general damages payments are subject to overpayment recovery.
The Treasury Board Secretariat announced that claim compensation for severe impacts, a claims process for losses and damages related to the Phoenix pay system, is now available to PSAC members under the Phoenix damages agreement negotiated by PSAC in October 2020.
PSAC members having suffered personal or financial consequences due to Phoenix, whether they be current or former employees or the estate representative of a deceased member, can now make one or several claims for severe impacts.
You are eligible if you were a PSAC member and incurred severe damages between April 1, 2016 and March 31, 2020 as a result of Phoenix pay issues.
Depending on the type of claim, a minimum threshold of $1,500 may apply. This means that you are eligible for compensation if the total amount of your claim exceeds $1,500. This minimum threshold will only be applied once for all claims submitted through this process.
These claims can include:
financial costs or lost investment income due to delays in pay;
leave taken because of health issues;
severe damages and personal hardship, including mental anguish.
We are working to ensure retired and former PSAC members are compensated as quickly as possible for general damages caused by Phoenix. The Treasury Board indicated that the claims process for retired and former PSAC members will be launched in December 2021. We continue to press for specific dates and quick settlement.
Please keep your contact information up to date via the member portal to get the latest news. For more information about Phoenix damages, please check out our FAQ.
Last week, Treasury Board announced they would begin a new Phoenix overpayment recovery process for a number of PSAC members they believe were overpaid by the Phoenix pay system in 2016 and 2017.
PSAC has serious concerns with the new recovery plan because it significantly changes the way that PSAC and other bargaining agents negotiated how overpayments would be recovered. Typically, an employee’s whole pay file needs to be reconciled before any recovery takes place to ensure the amount owed is correct.
Affected employees may receive a letter from the Pay Centre asking them to acknowledge in writing that they were overpaid by Phoenix and to select an option for repayment. Employees will be given four weeks to respond. Otherwise, the Pay Centre will begin the overpayment recovery immediately.
National President Chris Aylward has repeatedly intervened to put a halt to this recovery process, and we are looking into our legal options to contest it.
Although we believe that employees who know they have been overpaid should acknowledge their debt and pay it back with a repayment plan that works for them, tens of thousands of PSAC members have been paid inaccurately by Phoenix and may not know if they were overpaid or underpaid nearly six years ago. Employees should not be compelled to acknowledge an overpayment – especially one they may not have the information to confirm is actually owed – under threat of immediate recovery if they don’t respond.
PSAC has repeatedly urged the government to hire and train enough workers to fix Phoenix errors as quickly as they can and to deal with older errors first. There should no longer be any unaddressed pay errors from 2016-2017.
In the meantime, if you receive a letter asking you to acknowledge and overpayment the union recommends that:
If you are convinced you owe the overpayment amount stated in the letter, you can acknowledge that you owe the government the debt, and choose one of the repayment options that are provided to you in your letter, or request alternate arrangements if the payment options will result in financial or other hardship. We note that, in acknowledging that you owe this amount, you will likely waive any defence that may be available if the government exceeds the six year deadline for starting recovery of this amount.
If you are not certain you owe the government the amount set out in the letter, respond to PSPC within 4 weeks and write:
“I have not been provided with enough evidence to convince me that I owe this money to the government because of an overpayment in (date).”
If you continue to experienced errors in your pay in either of the above circumstances, you should also write:
“I continue to experience errors in my pay. I request that the recovery of any overpayment be deferred until such time that my pay file has been reconciled and I have received the correct pay for three consecutive pay periods.”
Regardless of which of the above three options you choose, add either of the following if they apply to you:
a. “I was previously assured that the payments I received were correct and relied on these assurances to my detriment. I should not have to repay these amounts.”
b. “I was previously unaware that I had received an overpayment and understood that my pay was correct. I relied on that understanding and have suffered hardship as a result and should not have to repay these amounts.”
If you choose either of the second, third or fourth options, or if you have any other concerns not addressed above, or require any assistance with the above please contact us with your response by submitting a general inquiries form. Select Phoenix Pay Issues from the What is your inquiry about? drop down menu.
The federal government has updated its Phoenix general damages webpage with new timelines for current PSAC members and former and retired members:
PSAC members working for the federal public service who did not receive general damages as part of their March 3 pay can expect to receive the full lump-sum payment in September 2021.
Former and retired PSAC members will have access to the claims process for general damages in December 2021. The government will provide more details closer to the launch.
Taxability of Phoenix general damages
PSAC maintains that general damages paid to all employees for “stress, aggravation, and pain and suffering” for the impacts of the Phoenix pay system and the late implementation of collective agreements are non-taxable, contrary to the opinion issued by the Canada Revenue Agency. To ensure a prompt resolution of this dispute impacting thousands of members, PSAC has proposed to CRA that both parties jointly request that the dispute be resolved by the Tax Court. This would expedite the process and avoid a vast number of individual appeals. We will provide updates as they become available.
Out-of-pocket expenses and severe losses
As part of the Phoenix damages settlement, the government must provide a new claims process for current and former members who experienced out-of-pocket expenses and severe personal and financial impacts due to Phoenix. Though we are disappointed that a process is not yet available, we expect a new timeline shortly and will update you accordingly.
Please be sure to keep your contact information up to date via the member portal to receive all the latest updates on PSAC’s Phoenix settlement.
After months of waiting, the Canada Revenue Agency (CRA) has rejected our request to review the taxability of Phoenix damages. This is directly due to Treasury Board’s refusal to provide CRA with a joint statement of facts which corrects CRA’s understanding of the purpose of our damages settlement agreement.
In an April 27 letter from the CRA, the Agency states:
As discussed in our meeting on February 3, 2021, we consented to reconsider our position only if the Employer and PSAC provided us with an agreed-upon statement of facts. As this did not happen, we have not considered any of the assertions in your draft statement of facts.
After numerous requests for Treasury Board’s cooperation, and direct appeals to Minister Duclos, they have refused any and all cooperation on the matter.
“It’s clear they’re still angry that PSAC forced them to deliver a better deal for our members,” said PSAC President Chris Aylward.
“They’re frustrated that they have to honour the top-up clauses signed with the other unions to match our general damages agreement, and now they’re taking it out on PSAC members by sabotaging attempts to get a positive tax ruling.”
Our union carefully worded the agreement to reflect a wide range of impacts suffered by PSAC members, including for “stress, aggravation, and pain and suffering” and for the late implementation of collective agreements. There is a strong precedent of damages for those purposes being deemed non-taxable by CRA. The tax treatment of the general damages should reflect the purpose of that compensation as outlined in the agreement.
It is unacceptable that Treasury Board refuses to affirm these facts. Instead they informed CRA that the agreement’s purpose is to resolve a policy grievance between the employer and the union – something that may be true for other unions, but not for PSAC’s damages agreement.
We will not let this stand without a fight.
While we continue to explore every legal avenue to appeal CRA’s decision, please take a moment to join our efforts by sharing your outrage directly with Minister Duclos and the Prime Minister.
Our goal is to ensure all PSAC members receive the full compensation they deserve and that we avoid any time consuming and complex tax disputes for individual members. We are also pushing Treasury Board to expedite the availability of the claims process for all former members and retirees who are still waiting to receive their Phoenix general damages.
We will provide additional updates to members about this ongoing work as we move forward.
Retired or former employees who meet the eligibility criteria will receive financial compensation for each fiscal year in which they are eligible. However, you will not receive compensation automatically. To receive Phoenix general damages, retired or former employees will have to file a separate claim form through Treasury Board. This will include the estates of deceased employees.
Despite numerous requests by PSAC, Treasury Board has yet to set up this claims process. We are continuing to press them for information on the implementation plan and will post the information on our website and social media accounts once the form is available.
PSAC members will receive their Phoenix general damages in one lump sum payment on March 3 with their regular pay and it will be taxed at source. PSAC is deeply disappointed with the government’s decision to move ahead without a decision from CRA on taxability and continue to pursue the issue with CRA directly. We have also raised the recurring issue of not separating special payments from regular pay – as was recently the case with retro payments.
Individual details about your Phoenix general compensation payment will be available in MyGCPay (only available on the Government of Canada’s internal network).
If you have any questions about your Phoenix damages payment amount, please first contact your Human Resources specialist for the payment breakdown. If members still have concerns, they can reach out to the Client Contact Centre. For other information about Phoenix general damages, please visit our frequently asked questions.
Current PSAC members who were granted compensatory time under another union’s Phoenix settlement agreement may not receive the full amount ($2,500) on March 3 and may receive additional payments at a later date. Consult the federal government’s webpage for more information on how your Phoenix damages payment may be calculated if you were under multiple bargaining agents or an excluded employee during any of the fiscal years of the Phoenix agreement.
PSAC will monitor the situation closely to ensure that all our members receive complete and detailed information about the settlement implementation.
PSAC has been informed that the federal government plans to move forward with taxing Phoenix general damages on March 3rd and that they will not provide the Canada Revenue Agency (CRA) with information they requested in order to revisit their initial opinion on taxability.
It is completely unacceptable for Treasury Board to deny CRA the information they need to provide a revised opinion before issuing the general damages payments. Their own letter to PSAC confirms that CRA is willing to work with them to revisit their opinion based on the facts raised by PSAC – information that CRA was not provided by Treasury Board originally. This is a crass attempt to interfere with the review by CRA and to expedite the claw back of the Phoenix damages settlement.
On the very week of Phoenix’s 5th anniversary, the government has found yet another way to hurt PSAC members impacted by years of pay problems.
CRA relied on information from Treasury Board when it issued an initial opinion about the tax implications of the Phoenix settlement. The opinion contained a number of errors and when these errors were pointed out by PSAC, particularly with regards to general damages for pain and suffering, CRA agreed to re-issue an opinion if Treasury Board joined us in clarifying the facts. Treasury Board has refused to cooperate, denied that they even understood this mutual agreement between the three parties, and are openly stating to members that general damages are to be taxed – despite the fact that they are blocking CRA’s ability to revisit their opinion.
If their disregard for our members continues, it could ultimately lead to thousands of unnecessary tax challenges and lengthy retroactive payments.
Next steps: Going to CRA directly
With the government refusing to cooperate, we have decided to submit our own declaration of facts to CRA directly, along with case law addressing the awarding of damages and those damages not being subject to taxation. CRA traditionally only engages with employers to provide opinions of taxability, but it is possible that they may choose to consider the new facts that we provide them.
We will report back to the membership as soon as we have an update to share on this front.
Why wasn’t taxability negotiated in the settlement itself?
The short answer is: we can’t do that.
The union and employer, the parties to the agreement, cannot dictate to CRA how it interprets tax laws. The taxability of damages is determined by what the money is intended to compensate for. The parties added specific language in the agreement to specify that the general damages were for “stress, aggravation, pain and suffering” in recognition of the impact on members lives. There is a strong precedent of damages for those purposes being deemed non-taxable.
What if CRA maintains its opinion in light of the government’s actions?
In the coming weeks, if CRA refuses to issue a new or different opinion due to the government’s inaction, members will have to force an official ruling from CRA by making individual appeals.
PSAC is doing everything we can to avoid this outcome as it puts the burden on our members to file the appeals, but if it becomes our last option, we will develop streamlined systems to support members in making the claims quickly and easily.
It is our top priority that PSAC members receive the full compensation that we negotiated, and which they deserve. We will continue to update members as we work to bring this to a conclusion.
Treasury Board has provided PSAC with a letter from CRA setting out its preliminary view that the general damages in the Phoenix settlement agreement are taxable. This letter, which was prepared at Treasury Board’s request and without PSAC’s input, is not a formal tax ruling and PSAC is contesting this conclusion.
PSAC maintains that general damages paid to all employees for “stress, aggravation, and pain and suffering” and for the late implementation of collective agreements are non-taxable, as CRA has acknowledged other specific damages in the settlement should be treated.
We carefully negotiated an agreement that reflects a wide range of impacts suffered by PSAC members, including the significant emotional toll that the implementation of the Phoenix Pay System had on them. The tax treatment of the general damages should reflect the purpose of that compensation. The letter from CRA contains numerous critical factual errors and misapplies the relevant income tax principles on this issue.
We have communicated with both Treasury Board and the CRA about our concerns and will continue to work to resolve these issues. Our goal is to ensure PSAC members receive the full compensation they deserve and that we avoid any time consuming and complex tax disputes for individual members.
The resolution of these issues is of extreme importance to PSAC and we will continue to update members as we work to bring this to a conclusion. We will also update members as soon as we receive a projected timeline from Treasury Board as to when members can expect to receive their payments.
The Public Service Pay Center has restarted its work to recover new overpayments caused by the Phoenix pay system. Back in April, due to the pandemic, the Pay Centre announced it would pause the recovery process for new overpayment cases to help alleviate financial hardship caused by the spread of COVID-19. Members who already had a repayment plan in place were unaffected.
In addition to restarting the recovery of new overpayments, the government will also start collecting pension arrears. When the Phoenix pay system first launched in 2016, it delayed pension plan enrolment for numerous employees. The Pay Centre was unable to process pension arrears until spring 2020, however the spread of COVID-19 delayed the recovery process until now.
PSAC has fought for a clear and fair policy that determines when the government can recover any overpayments from public service workers. The government can only recover payments when all three of the following conditions are met:
all monies owed to the member have been paid;
the member has received 3 consecutive correct pay cheques;
a recovery agreement has been established with the member.
All public service workers have the option to pay the outstanding amount in one lump sum if they do not wish to implement a payment plan. Any member experiencing financial hardship can also request an overpayment recovery plan that is less than 10% of their gross bi-weekly pay.
All overpayments will continue to be taxable, therefore members who have an overpayment identified by the Phoenix pay system will be issued a new tax slip for the corresponding year. Please note, PSAC’s victory to ensure that members only have to reimburse the net pay, rather than the gross amount, still stands.
If you are experiencing Phoenix pay issues, please follow our step-by-step guide to access help available to you from both the union and your employer.
