A longtime federal public servant says she’s become “collateral damage” as her department clears its backlog of Phoenix payroll issues so it can test replacement software — and in doing so introduced an error to her file, refused to fix it and is now clawing back hundreds of dollars per paycheque.
“I feel very disappointed in my employer,” said Kristen Ouellette, a manager at Public Services and Procurement Canada (PSPC). “You really feel crushed.”
Ouellette says the government is forcing her to pay for a Phoenix pay clerk’s error — all to ensure her department’s clean migration to Dayforce, the replacement payroll system slated to begin testing this fall.
After launching in 2016, the error-plagued Phoenix pay system overpaid and underpaid thousands of public servants. A decade later, the backlog of pay claims remains at 216,000, and both current and former employees continue to suffer the effects.
PSPC is one of three federal institutions chosen to pilot Dayforce alongside Shared Services Canada and the Canadian Nuclear Safety Commission. Testing can only begin once they have completely cleared their backlog of pay problems, however.
The government says it’s processing about 19,900 “priority and backlog cases” involving PSPC employees, and was about 78 per cent complete as of March 11. Shared Services has less than 200 cases in its backlog.
In January, Ouellette received a letter alleging an overpayment of $3,219.84 that she “received in error and did not earn.”
“I was in shock because I’d never received an overpayment,” Ouellette said.
She has since discovered that a mistake was introduced in her file in 2020 — a “net zero” cheque mistakenly added when Phoenix recalculated a few months’ worth of pay she had received for performing a higher-level job.
Ouellette says her file was reopened late last year as PSPC worked to clear its backlog.
According to the overpayment statement, the government had sent EI contributions on her behalf to the Canada Revenue Agency (CRA) due to that ghost cheque from 2020, leaving PSPC “with a deficit.”
Instead of collecting the money from the CRA, however, PSPC decided to claw back that $3,219.84 from Ouellette’s paycheques, putting the onus on Ouellette to recoup her pay.
“Please request a reassessment of income tax return … and the CRA/RQ will issue the refund to you accordingly,” her employer advised.
But while the CRA confirmed she had overpaid her EI premiums, a three-year statutory window had closed, so the department couldn’t issue her a refund.
According to an email from a PSPC pay adviser in February, the department couldn’t help.
“This is a CRA policy and not something PSPC can override,” the adviser wrote, acknowledging the situation “feels unfair” for Ouellette. “No one should feel they are paying out of pocket for issues that originated from system errors.”
But Ouellette says her multiple requests for help “fell on deaf ears,” and says both PSPC and CRA have been unhelpful.
“[They’re saying it] doesn’t matter that you’re paying for it. That hurts,” she said.
Starting this month, Ouellette’s employer began clawing back $510.59 per paycheque.
“It doesn’t matter that I’m footing the bill for … a Phoenix pay clerk’s mistakes. Dayforce has to roll out and they’re not listening,” Ouellette said. “It’s heartbreaking.”
Last week, Canada’s Auditor General Karen Hogan presented her latest report and flagged risks with Dayforce’s expedited timeline.
Her audit found a large backlog of Phoenix pay transactions still exists, and warned existing errors could be carried over to Dayforce and undermine the new system’s effectiveness from the start.
Hogan also raised concerns about the government’s decision to prioritize the three departments that are piloting Dayforce, while Phoenix-related backlogs also remain elsewhere.
On Wednesday just two days after the auditor general’s report, PSPC’s top corporate payroll official Alex Benay suddenly announced his departure. Benay was in charge of overseeing the transition to Dayforce.
University of Ottawa politics professor Geneviève Tellier says it’s good that the departments are taking stock of outstanding cases ahead of Dayforce testing, but said Ouellette’s case is troubling.
“What’s more concerning for me in that case is that it seems that there is no solution to [Ouellette’s] problem,” Tellier said. “This person is kind of left alone.”
Tellier said the government should have some mechanism or team in place to address these kinds of problems.
“You should be prepared and be willing to make the corrections that are necessary, and that’s the part that I don’t see,” she said. “That’s worrisome.”
The president of the Professional Institute of the Public Service of Canada (PIPSC), Ouellette’s union, said her case is concerning but unsurprising.
“This is not a new type of case. We’ve heard of overpayments being created, the departments telling them to go back to CRA. It’s very troubling,” said Sean O’Reilly.
“Now we’re going to be taking cases that are still problematic and move them into Dayforce? Why are we not dealing with them?” he asked.
Ouellette says she feels defeated.
“I’ve been waking up at night wondering, why am I still working here? Am I valued?” she said.
She’s also concerned about her colleagues, and says she’s noticed a shift within her department. Some are turning down temporary promotions or avoiding retirement because they’re worried it will mess up their pay.
“Everyone’s worried,” Ouellette said. “The government should do better.”
The Treasury Board of Canada Secretariat (TBS), which oversees the federal public service, deferred most of CBC’s specific questions to PSPC.
But it wrote in a statement that “departments are responsible for reviewing each situation” against the Financial Administration Act and the Debt Write-off Regulations.
Debt may also be deleted under a “remission order” when collecting it would be “unreasonable, unjust, or not in the public interest,” added the TBS spokesperson.
PSPC declined an interview and said it won’t comment on Ouellette’s case, citing privacy.
The department said via email that as it migrates to Dayforce, “it may lead to overpayments being discovered” and that it recognizes recovery “can be stressful” for impacted employees, though there are flexible repayment options.
“While timely processing is important, the quality and correctness of every pay transaction will always be our top priority,” PSPC wrote.
PSPC says it remains committed to its Dayforce rollout plan. Government-wide testing “is underway in 2026” starting with the three departments followed by phased implementation starting next year. It says deploying Dayforce will be done incrementally, with departments joining in waves.
The CRA said it would look into Ouellette’s case, but didn’t send an update by Monday evening.
