Conversion to a pay in arrears system :: Association of Justice Counsel News
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June 21st, 2013
June 21st, 2013

Conversion to a pay in arrears system

On May 27th, 2013,  the AJC was informed for the first time of the federal government's decision to implement a change in the pay cycle that would result in a conversion to a pay in arrears system.  Payment in arrears for employees on a bi-weekly pay cycle occurs when the hours of work are completed first and the payment is made two weeks later.  As such, in order to effect the implementation of this decision, we expect that members will be paid for the ten days worked (from a Thursday to a Wednesday) that precede their actual pay day.  As it now stands, most federal employees are paid on a "current" basis, meaning that they are paid for the ten days just worked including Wednesday, their actual pay day.  

Public Works and Government Services Canada ("PWGSC") intends to recover the two-week advance payment from each employee over twenty-five pay periods starting January 29, 2014.  Accordingly, employees would be receiving smaller cheques for all but their first pay during 2014, with a resulting reduction in taxable income for 2014 equivalent to two-weeks' pay.  Full regular pay, i.e. without recovery, would resume in January 2015. Upon the cessation of employment from the federal organization (retirement or resignation), the departing employee would receive his or her final two-week pay. New employees would be placed directly on a pay in arrears system and informed as to when to expect their first pay.  

Since being informed of this decision to convert to a pay in arrears system, the AJC along with fellow bargaining agents have requested that PWGSC reopen the discussion in order to allow us to conduct an analysis and propose solutions on how best to lessen the financial burden on our members. For reference, we sought out and obtained from PWGSC a chart outlining the financial impact on a member at the LA2A level, at the top of his/her level:

Group    Typical Pay (Gross) 2013                Typical Pay with Recovery (Gross) 2014    Estimated Bi-Weekly Recovery Payment
              $5285.42                                                          $5074.00                                                         $211.42

This recent announcement came as a great shock.  In November, 2012, following some inquiries, Bargaining Agent leaders were told verbally and then in writing that there were no plans in the works to move employees to a "pay in arrears" system.  TB, in our view, has demonstrated a lack of good faith in their dealings with the Bargaining Agents and has failed to consult with us in any meaningful way before making their decision to convert to a pay in arrears system.

As with other recent TB announcements involving the public service,  the timing of this initiative is questionable with little being said on how the anticipated $9 billion in cash it will recover from employees' paycheques in 2014 will be utilized and reported.

The AJC will keep  you informed of the outcome of these anticipated exchanges.

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