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1992 Report of the Auditor General of Canada
Exhibit 7.9—Case 2—The Work Force Adjustment Policy: A "Voluntary Early Retirement Incentive Package"
Measures contained in the 1991 Budget Speech led some managers to believe that there was a significant risk of having to deal with another round of painful work force reductions in the coming fiscal year.
Management anticipated that the government would require a reduction of person-years to compensate for the estimated 1991 salary increase of three percent (equivalent to a reduction of some 140 person-years in this unit).
Managers also feared that the Work Force Adjustment Policy -- and its provisions for payments in lieu -- would come to an end on 31 March 1991.
In March, the unit contacted employees over 55 years of age and asked them if they might be interested in leaving their employment earlier than planned with a cash-out.
Employees were given until the end of March to decide and to leave. There were 266 employees who opted for payments in lieu; they left during the last week of March 1991.
Because of the government decision to freeze salaries instead, the anticipated person-year reduction did not materialize. In fact, the person-year allocation of that unit was increased by eight in 1991-92. In addition to unnecessary expenditures related to payments in lieu, management had to initiate staffing actions to replace many of the departed employees.
Most of the payments examined in this unit were judged to be without foundation.