Phoenix pay errors continue to haunt public service a decade after launch

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OTTAWA — Errors stemming from the federal government’s Phoenix pay system continue to plague thousands of public servants, 10 years after the system’s launch.

Karine Chawla, who works for Transport Canada, told The Canadian Press she has been informed she still owes $35,000 for overpayments dating back to 2017.

Chawla said most of the money owed dates from prior to the six-year limitation period for overpayment recovery and the total includes sums she already has paid.

She said she was warned in June that more unpaid Phoenix bills are coming her way, leaving her feeling unsettled and trapped. Chawla said her case has also been referred to the Canada Revenue Agency, which has amplified her stress.

“In the past year, since receiving the overpayment letter, I’ve been up at 3 a.m. most nights, haunted by the prospect that there’s more to come and that they won’t provide the full information that I need to verify the amounts,” she said.

Taxpayers have spent about $5 billion to launch and fix the Phoenix system, which has paid some federal public servants incorrectly and sometimes not at all.

Ottawa announced last year it had awarded a 10-year, $350.6 million contract to the system’s replacement Dayforce and implementation is set to begin in 2027.

Chawla said she took an extended period of unpaid leave more than 10 years ago to care for a critically ill family member. She said she followed that with part-time work and shorter periods of unpaid leave so that she could continue to provide care.

Chawla said her return to work coincided with Phoenix’s rollout and argued the system was not equipped to deal with “non-cookie-cutter cases” like hers.

“Phoenix errors have already disproportionally impacted vulnerable families like mine dealing with caregiving and critical illness,” she said. “This feels like the federal government kicking down people like me who are already down.”

The federal government said last year it would expand its use of artificial intelligence to clear a backlog of Phoenix pay system transactions as it transitions to a new platform.

Despite its efforts, the Government of Canada website says the backlog of transactions stood at 233,000 as of Jan. 28 and that 45 per cent of those cases are more than a year old.

The government has said it doesn’t want any backlog older than a year being transferred into the new system.

Jeremy Link, a spokesperson for Public Services and Procurement Canada, said last week that public servants “deserve to be paid accurately and on time” for their work and the department is committed to improving pay operations.

“While meaningful progress has been achieved, PSPC acknowledges that some employees continue to experience pay issues,” Link said. “Addressing those cases remains a priority.”

At a news conference in Ottawa last week, the Professional Institute of the Public Service of Canada released a report about Phoenix and its failures over the past ten years.

The union’s president Sean O’Reilly pointed out that the government is working to reduce the size of the public service through workforce adjustments, early retirements and transfers — the types of cases that Phoenix has struggled to process accurately.

“The coming surge will increase the volume and complexity of pay transactions and risk pushing the system that’s been teetering on the brink over the edge,” he said.

O’Reilly said the government risks “adding insult to injury” by miscalculating severance or pension payments for people who have been let go.

The government plans to cut the number of public service jobs by about 40,000 from a peak of 368,000 in 2023-24.

A spokesperson for Public Services and Procurement Canada would not say whether staff at the government’s pay centres will face any job cuts.

Link said the department is committed to ensuring the pay centre is “appropriately resourced to deliver timely and reliable pay services.”

He said “any longer-term adjustments will reflect evolving business needs.”

“Regardless of whether an employee remains within the public service or departs from it — whether due to resignation, retirement, or workforce adjustment — the necessary adjustments to their compensation will be made, and all amounts owing to them will be issued accordingly,” said Link.

This report by The Canadian Press was first published March 3, 2026.

Catherine Morrison, The Canadian Press