The federal government is extending the contracts of hundreds of term employees at the Public Service Pay Centre in Miramichi, N.B., until the end of 2026 to address an expected surge in pay issues as thousands of public servants are set to leave the federal public service. Public Services and Procurement Canada (PSPC) is spending $36 million on this surge capacity to process exit packages and severance amid Prime Minister Mark Carney's spending review, which aims to cut about 30,000 jobs.
Contract Extensions and Surge Capacity
Mario Morneau, a PSPC spokesperson, confirmed that between 750 and 800 term employees at the pay centre, which manages the troubled Phoenix pay system, will have their contracts extended. These workers are primarily compensation advisors who directly handle pay cases. Their new contracts will expire at the end of December 2026.
The $36 million allocation was announced in the spring economic update in late April. Earlier, Alex Benay, the former associate deputy minister at PSPC overseeing government payroll, indicated that the pay centre was offering a "white glove service" to meet the demands of early retirements and layoffs.
Impact on Phoenix Pay System
In early May, parliamentary budget officer Annette Ryan warned that the spending review could further strain the Phoenix pay system, which has been plagued by issues for years. PSPC spokesperson Nicole Allen stated that the department is focused on maintaining surge capacity to support workforce reduction measures, including the Comprehensive Expenditure Review and voluntary departure initiatives.
Many departments and agencies began workforce adjustment processes in the winter, informing thousands of public servants that their positions might be eliminated. Workforce adjustment aims to find alternative employment for permanent workers who lose their jobs, including opportunities for alternation with employees who wish to leave.
Early Retirement Incentives and Backlog
The government has offered early retirement incentives to eligible public servants to reduce layoffs. Thousands have applied since late March, with a deadline of July 24. All severance packages and related issues will be processed through PSPC's pay centre.
As of April 22, the pay centre had a backlog of 214,000 unresolved cases, including 88,000 complaints older than one year. The extended contracts aim to address this backlog and the anticipated surge in cases from workforce reductions.
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