We examined the government’s progress in fixing its pay system, called Phoenix, that was supposed to ensure government employees receive their correct pay and on time. What we found is that the government reacts to problems and has few permanent solutions. For instance, the number of public servants waiting for an adjustment to their pay to be processed is four times higher than when the system was launched. Errors in pay exceeded half a billion dollars by last spring, and this number reflects employees who were either overpaid or underpaid.
We also found that the number of outstanding pay requests is higher than the number reported. This is because Public Services and Procurement Canada excludes certain types of transactions including online and call centre contacts. Our testing found pay requests were much higher than publicly reported. In fact, 494,534 requests were outstanding. And that number continues to grow.
At the end of our audit, we found that many employees had been waiting more than a year for their pay request to be processed; 49,000 of them, to be exact. Two out of three of this affected group incurred a financial impact of more than $100 each. In addition, we found that payroll errors increased over the last fiscal year. By our calculations, by March 2017, more than half of payroll payments contained at least one error.
Public Services and Procurement Canada is trying to fix pay problems. It created many manual processes outside of Phoenix to deal with what should have been automated transactions. But at a more fundamental level, we found that the government does not understand the extent and causes of its pay problem. This leaves it in a reactive mode, trying to solve problems as they arise.
We recommend that the government and its partners conduct an in-depth analysis of the causes of pay problems to figure out a sustainable solution. In our view, this solution will take years to develop and cost more than the $540 million the government expects to spend over three years.