Phoenix backlog remains as government works towards replacement

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The federal government is inching towards its goal of replacing the broken Phoenix pay system, but still hasn’t come close to clearing its massive backlog of transactions.

The government has been working towards replacing the plagued payment system, which was first launched in 2016, but one of the first hurdles in doing so will be to sort out a long list of pay issues. A new quarterly progress report, released Wednesday, showed that the government has resolved just 14 per cent of the net backlog that has built up.

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As of Aug. 28, the total backlog of transactions was at 408,000, compared to 400,000 in July and 416,000 in June.

“This is an area where there’s room for improvement,” said Alex Benay, associate deputy minister for Public Services and Procurement Canada, during a press conference Wednesday. “The net backlog has to go down further.” 

Benay said that the government’s priority is to clear nearly 19,000 backlog cases that it has identified as having a big financial impact on employees. He added that 5,000 of these cases have been cleared in the last few months.

Benay said the government doesn’t want any backlog older than a year being transferred into a new system, meaning there are more than 200,000 cases that will need to be cleared before that can happen. Of the unresolved issues at the end of August, 51 per cent (209,000) were more than a year old.

Over the past three months, Benay said that while the government had made significant progress, the volume of new cases remains high.

“It makes it harder to reduce the backlog and, as we clear cases, it means that new backlog cases can simply emerge,” Benay said.

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In the report, the government said it had been testing Dayforce, the likely candidate to replace Phoenix, by offering “user awareness sessions” to departments.

Problems with Phoenix began to occur almost immediately after its implementation and continue eight years later, leading to errors on employees’ paycheques and delays in payment. The government has worked to tackle these issues by hiring more than 1,100 compensation agents since September 2022 and using artificial intelligence.

While Phoenix was intended to save the government $70 million by consolidating pay systems across departments, it has since cost more than $3.5 billion.

Benay said estimates on how much more the government spend on the system “will be determined this year.” He said he expects the current and new systems to run in parallel for several years, noting that the government needs to figure out how much that will cost.

Amid the ongoing issues with Phoenix, the government has spent more than $150 million since 2018 looking into a new platform to replace it. A February 2024 report with results of initial testing found that Dayforce was a “viable option” for the next HR and pay system.

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The government expects to release an estimate of when and how Dayforce could be rolled out by the end of the fiscal year and doesn’t expect to start launching a new system until March 2026.

Before that can happen, the government is looking to standardize its roughly 30 different human resources systems that feed into Phoenix.

Benay said the government is working to eliminate the backlog of transactions at Shared Services Canada by March 2025 as it’s the first department that will be fed into Dayforce as a trial. Benay added that other departments will be integrated slowly.

“It’s cost us a lot to get it wrong last time,” Benay said.

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