People and Places

Burned by Phoenix — How did things get so bad? + Stories of Ottawans affected

Stories of federal workers losing their homes and wiping out their savings because of the Phoenix pay system are now legendary in this city. Thousands have been affected and continue to be so. It remains a mystery why a system with such deep flaws was implemented — and why these flaws haven’t been fixed — but we know that repairs to Phoenix have now cost more than its $309.5-million purchase price.

How did things get so bad?

Illustration: Fred Sebastian
Illustration: Fred Sebastian

Zero Faith in the System

The prime minister called it a “steaming pile” dumped by the previous government. The Conservatives blame the Liberals. And IBM, the folks who profited from the sale, defend their software, saying the problems aren’t with the system but with the implementation.

Federal public servants and their unions don’t care who is at fault — they just want to be paid, on time and for the correct amount.

Initiated by the former Conservative government to save money, with a contract for the software awarded to IBM back in 2011, the Phoenix pay system was rolled out in 34 government agencies in February 2016, a few months after the Liberals were elected. Problems were immediate and widespread, but Phoenix was soon expanded into 67 more departments and agencies. Public service unions opposed it, urging the government to do more testing and not rush implementation.

In July 2016, Marie Lemay, deputy minister of Public Services and Procurement Canada (PSPC), announced that more than 80,000 federal public servants (out of an estimated 300,000 on the payroll) were experiencing pay disruptions — underpayments, overpayments, or no pay at all. Over 40 per cent of permanent federal workers live in Ottawa-Gatineau, and by that time, there were already reports of local public servants maxing out credit cards, extending lines of credit, and depleting savings.

Illustration: Fred Sebastian
Illustration: Fred Sebastian

Employees with pay problems who called for help in those first months found they couldn’t get through because there weren’t enough pay clerks to handle the massive workload caused by Phoenix.

More pay clerks were added later in 2016. But Phoenix glitches are triggered by any change in an employee’s status, so as the weeks went by and more people came back from leave, changed jobs, or acted in a superior’s position, the contagion spread.

Early in 2017, one union asked for a parallel pay system to be set up while Phoenix was being repaired. Another challenged the government to create a $75-million fund to help the situation. But the budget released in March 2017 didn’t contain any money to fix Phoenix. It didn’t mention Phoenix at all. Public servants were stunned.

Tax time came and incorrect T4s were mailed out, creating turmoil in the ranks. Robyn Benson, president of the Public Service Alliance of Canada, the largest public service union, lashed out. Benson urged her members not to forgive and forget Phoenix when it came time to vote in the next federal election. A similar payroll system, purchased by the Australian government from IBM in 2007, had malfunctioned terribly, and some attributed the fall of their Labour government in 2012 to that fiasco. Would Canada’s sitting Liberal government also be burned by Phoenix?

Illustration: Fred Sebastian
Illustration: Fred Sebastian

In the spring of 2017, public safety minister Ralph Goodale announced the creation of a high-level Phoenix working group, which includes Ottawa Centre MP and environment minister Catherine McKenna, as well as Gatineau MP Steven MacKinnon, who suggested any public servant not being paid properly should just “raise their hand.”

In mid-May, PSPC put out an all-hands-on-deck Phoenix-related call for “hard-working, passionate” current or retired public servants interested in “a new challenge helping your public service colleagues.” A week later, the working group announced that over the next two years, in addition to staff already hired, 230 new pay clerks would be added. At that point, fixing Phoenix had wiped out the $70-million annual savings Phoenix was supposed to generate. (At press time, fixes to the system totalled more than its $309.5-million purchase price.)

At a press conference in June, deputy minister Lemay announced a big change: trans-action numbers would no longer be reported. This was the number of pending transactions she usually highlighted at press briefings as a way to prove that her department was whittling away the backlog of incorrect pay files. However, the effect was lost — for example, the number mushroomed to 345,000 in May from 265,000 the previous month — partly because new collective agreements came into force that affected the pay of thousands of public servants. As other collective agreements are ratified, the backlog will increase.

Lemay also promised a new way of approaching the fixes: pay clerks would make all the repairs on person’s file at once. “This is something employees have been asking for,” Lemay said.

Illustration: Fred Sebastian
Illustration: Fred Sebastian

How long will it take to get the Phoenix pay system working properly? [As of August 8, news reports have stated that nearly half of public servants paid through the Phoenix pay system have an issue with their pay, suggesting that the government is still nowhere near fixing the issue.]

In the meantime, exactly how much is this fiasco hurting our local economy?

There are still no definitive answers to those questions, but with more than 100,000 public servants living in Ottawa-Gatineau, it is clear the vitality of our region is linked to the health of the public service, which hasn’t grown significantly in decades. It has a greying workforce, and the average age of a new hire in a permanent position is 37. After Phoenix, will younger Canadians still move to Ottawa to work for the government?

To restore confidence, the feds need to demonstrate they’ve learned from this mess. And they need to show they’ll apply that knowledge to future big-ticket software deals so that a Phoenix situation never happens again.

That’s cold comfort to the many employees who can’t find a way out of their payroll problems. Brendan Koop, a public servant who has been trying to get the government to take back a lump sum of $11,000 he received last year, summarizes the current mood succinctly: “I have zero faith in the system right now.”

Illustration: Fred Sebastian
Illustration: Fred Sebastian

1. What the eff is going on? — Brendan Koop

Brendan Koop is working flat out on a special project the federal government claims is one of its key priorities. But, he notes bitterly, “It’s just not a high enough priority for them to pay me properly.” Koop is one of thousands of public servants affected by Phoenix.

When the 36-year-old policy analyst returned from paternity leave in May 2016, his first paycheque, which he had to wait 10 weeks for, was missing two weeks’ salary.

While awaiting that first paycheque, he received two emergency salary advances — not enough to pay the bills, which were piling up because of a home reno. Koop says he coped by borrowing heavily on a line of credit.

A few weeks after he returned from leave, Koop left Immigration, Refugees and Citizenship Canada, his home department, on loan to an important project in another department he would rather not identify. On his first pay day for that gig, in August 2016, he received his regular paycheque — plus an $11,000 lump sum, which was much more than he was owed in back pay, so he knew it was a mistake. He knew he had to get in touch with the pay centre.

After many attempts and hours spent on hold, he was finally able to get through, and they decided to act on his pleas to take their money back. In March 2017, they began emailing him: in all three emails regarding the overpayment (including the ominously titled Final Notice), a dollar sign followed by five Xs had been inserted in the “amount owing” field.

Koop kept calling the pay centre, but after many weeks, his file had not been updated. “Finally, a pay centre clerk was able to give me an amount to repay, which didn’t match either the net or gross amount I’d received.”
Koop contested the amount and is still waiting for his case to be resolved.

To add to his confusion, Koop has trouble deciphering his pay stubs. “Under the old system, your annual salary was displayed. Under Phoenix, there’s a biweekly rate that doesn’t match any of the amounts in our collective agreement, and there are weird lines of code that are impossible to understand.” And because most human resources staff have been moved out of department offices, there’s no one around to tell Koop and his colleagues what that code means.

Koop says there is a lot of anxiety in his office leading up to pay day. “Every second Wednesday it’s like a lottery. Someone will announce they got paid an amount that looks vaguely correct and we’re all happy for them.”

Koop says he now takes Phoenix into consideration when contemplating career changes. “I am reluctant to change jobs again or go for a promotion for fear of further payroll disruptions.”

“I became a public servant to make a difference, to be part of something bigger than myself. Dealing with this pay issue has put me behind in my work and makes me feel as though I’m not doing as much as I could to help the government deliver on an important objective.”

Koop, who has been with the feds since 2008, admits: “There isn’t always a lot of sympathy for public servants. We are paid well and have good benefits. But we do deserve to be paid properly — I think most people would agree with that.”

Illustration: Fred Sebastian
Illustration: Fred Sebastian

2. Baby and me, and Phoenix makes three — Julie Larose Douglas

Days before Julie Larose Douglas went into labour, she depleted the charge on two cordless phones and made hundreds of calls on her cellphone to the Miramachi pay centre, determined to resolve her pay problems before her third child arrived. But she couldn’t get through.

The Cumberland mom was calling the main pay centre in Miramichi because, despite having submitted all the correct forms, she received full paycheques rather than the employment insurance and employer top-up she was expecting. She’d heard about Phoenix and knew she had to correct this mistake right away.

While response times have improved since the summer of 2016 when she made those calls, her pay situation has deteriorated.

Douglas, who blogs about personal finance in relation to Phoenix and other miscellany, says she had no access to her online pay records while on leave, but she monitored her bank account and kept calling the pay centre. Her salary stopped after she was assigned a compensation adviser who reviewed her pay stubs and tried to help. (The services of compensation advisers — human resource specialists within each department who handle employees’ pay issues — were not supposed to be needed under the new self-serve Phoenix system.)

By November, there was an overpayment of $15,000 showing on her file. According to her own bank records, Douglas had been overpaid about $10,000. “I figured that represented the gross amount rather then the net, but I didn’t want my income over-reported on my 2016 T4, so I paid the $15,000 early in December.”

When her T4 arrived, she was shocked to see that while the $15,000 overpayment had been dealt with, an additional $8,000 overpayment was showing. “I gave them what they wanted, although it was much more than I owed, and my T4 was still wrong.” She was instructed to file her taxes with the incorrect T4, which she did.

“Then I filed a request for an adjusted T4 and tried to stop losing sleep over it,” says Douglas. “I could only fight them so hard while on maternity leave. I had to remember that taking care of my new baby was most important and the rest would have to be worked out later.”

Douglas, 32, grew up in Kirkland Lake. She moved to Ottawa for university and landed a job as a page in the House of Commons, then joined the government. She is currently an administrator at Veterans Affairs Canada. Her husband is an occasional teacher whose work is sporadic, and their children are six, five, and one. The family relies on her steady income.

She loves her job and her co-workers, but she’s concerned about ever getting back the money she’s owed and about the overall impact of Phoenix on our region.

“There are so many thousands of federal public servants affected, so much uncertainty. That’s cars not purchased, houses not renovated, dollars not spent. If we do poorly, Ottawa–Gatineau suffers too.”

Illustration: Fred Sebastian
Illustration: Fred Sebastian

3. “I just Don’t Understand” — Shanin Albon

Since Shanin Albon went on leave without pay a year ago to care for her young children, she’s been on the run. In hot pursuit? Her employer, the federal government, brandishing paycheques she’s not owed.

“The person who prepares our tax returns suggested I close my bank account to stop the direct deposits. I changed banks but couldn’t escape. They delivered my cheque by Canada Post. They took the time to see that the payment into my bank account bounced back. They took the time to issue me a paper cheque. But they couldn’t see I am on leave and shouldn’t be paid. I just don’t understand.”

Federal employees are entitled to five years of unpaid leave to care for their preschool-aged children. It’s a sweet deal that’s been in place for decades, but one that the Phoenix pay system doesn’t seem able to accept in her case.

Albon, 32, says the biweekly payments toward her $70,000-plus annual salary as a project manager have thrown a massive wrench into her life. She can’t spend the money because it doesn’t belong to her, but those deposits have meant she no longer qualifies for child benefits — and her husband cannot claim her as a dependant on his income tax.

These overpayments are bitterly ironic because of her previous payroll history: when she returned to work after her second maternity leave, Albon wasn’t paid at all for almost four months.

“I only call the pay centre in Miramichi once a month now, and every time I have to start all over again telling my story from the beginning,” Albon says. “At what point does it become the federal government’s legal responsibility to stop paying me? At what point are people just going to give up and take the money?”

She and her husband live on the Uplands base. Her husband is a soldier whose deployments take him far from home. His pay hasn’t been disrupted because the Department of National Defence did not roll out Phoenix for their military personnel. But Phoenix has still been hard on their relationship. “My husband keeps asking if I’ve called the pay centre. I tell him that of course I have. It’s hard for him to understand I’m doing everything I can about my pay situation and it’s not getting fixed.”