Pay in Arrears: Implementation of the New SystemWill Not Penalize Current Members of the Public Service

October 17, 2013

The Office of the Chief Human Resources Officer (OCHRO) has finally responded to the pressure exerted on Treasury Board by the various federal public service unions, including CAPE, concerning implementation of the new pay in arrears system. The OCHRO has agreed to changes that will eliminate the new system’s negative impact on public service workers.

The introduction of this new system as previously announced would have meant skipping one pay at the point of transition or taking a deduction over a number of pay periods until the two weeks in question had been fully withheld. Neither of these approaches was considered acceptable by the 18 federal bargaining agents.

To resolve this problem, the employer has decided to carry the required withholding of two weeks’ pay forward to the end of the employee’s career. Consequently, current employees will see no difference in their pay cheques when the new system is implemented.

Here are the key elements and principles that will be observed by the employer in transitioning to the new system, as confirmed by Chief Human Resources Officer Daniel Watson:

"Pay in arrears" or the payment of salary and benefits two weeks after they are earned

1) The full payment of public servants' salary and benefits will continue uninterrupted and will not be affected by this transition. To be clear, public servants will receive their full salary and benefits in each pay period and this transition will not result in the reduction of salary or benefits that they are entitled to be paid. The measure that the employer is adopting will ensure that public servants receive their full pay and benefits during what would otherwise have been a transitional two week waiting period. Because existing employees who have benefited from this transitional measure will have received all salary payments to which they are entitled, they will not receive a salary payment two weeks after the “struck off strength” date as will be the case for new employees who will be placed on pay in arrears upon hiring. New Employees who start their employment after the implementation of the new system will receive their first pay at most four weeks after their start date. They will receive their final payment at the latest two weeks following departure – upon retirement or termination of employment.

The treatment of statutory deductions and the equalization of monthly deductions

2) Statutory deductions such as CPP and EI will continue on the same basis as in the past. Employees will not notice any changes to these deductions as a result of the transitional measures. Certain monthly deductions (such as those for union dues and the PSCHP) will continue to be equalized but this will be done in a more transparent and a less complicated manner than is currently the case. The total deductions will remain the same and little change will be noticed in any given pay period.

Various allowances dependent on a minimum number of hours or days having been worked

3) Several allowances are paid in accordance with the terms of various collective agreements that set a minimum number of hours or days of work before a public servant becomes eligible to receive them. While we may wish to explore options for modernizing the way in which these allowances are paid, until the collective agreements are amended, these allowances will continue to be paid on the same basis as in the past and no changes will be made to the way that they are dealt with.