Archived - Guide to Auditing the Management of Workforce Adjustment

Program review and general resource reductions have created the need for Departments and Agencies (henceforth referred to as "Departments"), to reduce their total expenditures. In most cases, public service workforce reduction (WFA) is an inevitable consequence. To facilitate the achievement of resource reductions, the government established special programs called the Early Departure Incentive (EDI) and the Early Retirement Incentive (ERI), in effect for a three year period ending June 22 and March 31, 1998 respectively. The test of cost effectiveness for Departments taking advantage of these special departure programs is a twelve-month pay back on the total expenditures associated with the programs. Pay back refers to the period of time necessary to recoup the expenditures through savings in the organization's salaries and benefits. To ensure that departments will achieve their overall reduction targets and to ensure that the special programs are being appropriately employed, Treasury Board is asking that Departments complete an internal audit of their workforce reduction around the mid-point of the three year period, i.e. 1996. This guide is intended to assist Departments to carry out the mid-point audit, but it could also be used for an audit at the end of the reduction program if one is warranted or desired.

This audit guide has three main sections: Planning and Infrastructure, Program Management, and Policy Compliance. This structure reflects the relative priorities which should be assigned to audit activity. As a minimum, all audits should address the Planning and Infrastructure and Program Management sections.

The Policy Compliance section provides detailed audit questionnaires and worksheets dealing with all the key issues which might be subject to compliance testing.

Objective 1: Planning and Infrastructure

The auditor's objective concerning planning and infrastructure is to ensure human resource reductions have been well planned and implemented within the context of:

• resource reduction targets,
• departmental operational requirements, and
• the Workforce Adjustment Directive and other related TB directives, the incentive programs (EDI, ERI and the Executive Employment Transition Policy, [EET]), and opportunities for Alternative Delivery Initiatives (ADI).

This audit objective is intended to provide assurance that management is taking a strategic approach to resource reductions, that programs are not being used when there are less expensive alternatives, that programs are not being used inappropriately to address other human resource issues, and that employees are treated equitably.

Objective 2: Program Management

The auditor's objective is to ensure that workforce reductions are being managed such that the assumptions on which planning and program implementation were based are tested through monitoring and reporting and corrective steps are initiated when necessary.

This audit objective is intended to provide assurance that targets will be achieved as planned. Certain situations may prevent a small number of departments from achieving targets while the special programs are still in effect. Under these circumstances, particular attention should be given to the ability to achieve reduction targets that are planned to occur after the special programs are no longer available.

Objective 3: Policy Compliance

The auditor's objective is to ensure that workforce adjustment is carried out in compliance with relevant policies.

This audit objective is intended to provide assurance that policies and programs are administered as intended. In order to ensure that policy intent has been respected, the auditor often may need to go beyond a strict compliance audit to examine the circumstances surrounding or leading to particular cases.

Because of the wide variation among departments, the first two sections: Planning and Infrastructure and Program Management only include audit objectives and audit criteria, allowing each audit team considerable scope to establish its own methodology, audit tools and reporting formats.

The Policy Compliance section contains a generic audit objective and detailed audit questionnaires and worksheets. The questionnaires and worksheets are grouped into two parts: the first applies to all departments whereas the second is relevant only to Most Affected Departments. An attempt has been made to list the policy compliance elements in descending order in terms of their potential priority or importance, however each Department will need to decide which of these issues warrant their audit attention. The intent of this modular presentation is to allow departments to customize their own audit program by extracting and applying those checklists which they consider most appropriate for their situation. Each audit team will need to decide the relative importance of the issues or where they will place emphasis and how to distribute their resources (e.g. sampling versus audit of all cases). Each department will need to base these decisions on their assessment of management concerns, risk and available resources.

Invariably, no single operational planning document will cover all workforce adjustment situations occurring within a department. The audit team will need to obtain and review a number of documents such as submissions to Treasury Board, new technology strategies, strategic and business plans, organizational charts and monitoring reports. In addition to reviewing the corporate or departmental documents and structures, where authority and responsibility for workforce reduction have been delegated, the audit team may want to select a sample of regional or local units to examine their planning, program management and compliance with policy.

Treasury Board Secretariat requests that Departments forward copies of their summary audit reports to them and make available detailed reports and working papers as required.

The auditor's objective concerning planning and infrastructure is to ensure human resource reductions are being well planned within the context of:

• resource reduction targets,
• departmental operational requirements, and
• the Workforce Adjustment Directive and other related TB directives, the incentive programs (EDI, ERI, EET), and opportunities for Alternative Delivery Initiatives.

2.1.1 Establishing and making progress towards targets

Appropriate reduction targets in terms of salaries, benefits expenditures and Full Time Equivalents (FTEs) are documented in human resource reduction plans:

• targets are clearly described in terms of how and when the reductions are expected to take place (i.e. ERI, EDI, WFA, employee take-overs, natural attrition, etc.);
• the guiding principle of the 12 month pay-back on the department-wide expenditures incurred by the two special departure incentives, EDI and ERI, is evident (i.e. there is a direct correlation between workforce reductions and anticipated future savings. See the letter from TBS to Deputy Heads, Directors of Personnel, Senior Financial Officers and Heads of Audit, December 13, 1995.); and
• the level, skills and location of positions to be eliminated in each of the three fiscal years during which downsizing is to take place are specified.

2.1.2 Integrating WFA with operational requirements

Workforce reduction planning and departmental operational requirements are reflected in all major planning documents and plans:

• alternative delivery initiatives and resourcing strategies have been considered to minimize the impact on indeterminate staff; and
• new organizational structures are identified along with number, type, level, skills and location of staff required.

2.1.3 Minimizing impact of workforce adjustment situations: employees

The impacts of workforce adjustment situations on employees, both those potentially leaving the department and those remaining, are minimized:

• alternative reduction arrangements are considered (e.g. job sharing, accepting volunteers and facilitating alternates), to ensure that reduction targets and operational requirements are met while supporting employee interests;
• processes are in place to consider and identify opportunities for alternation of affected employees and redeployment of surplus employees both within the department and between departments where appropriate;
• appropriate controls are in place on staffing and use of contracts to ensure that employees are not denied opportunities for continuing employment (i.e. that recruitment or contracting are not bringing in skills which exist already among affected or surplus staff); and
• appropriate services are provided to assist all employees although circumstances and needs may vary from one case to another.

2.1.4 Minimizing impact of workforce adjustment situations: clients

Service delivery centres establish plans to minimize the impact of workforce adjustment situations on the delivery of programs and services to clients:

• programs and services that will no longer be offered to clients are identified;
• new services or new means of delivering services are detailed; and
• the impact of downsizing on the quality of client service is measured.

2.1.5 Establishing an appropriate administrative infrastructure

Responsibilities and accountabilities for managing WFA are clearly established:

• senior level committees direct and regularly consider workforce adjustment progress and issues;
• administrative units are established to perform key support activities such as counselling employees, co-ordinating training and facilitating alternations and placements; and
• workforce adjustment administrators and managers are equipped with the skills, knowledge and abilities to perform their roles effectively.

2.1.6 Establishing and maintaining reliable management information systems (MIS)

A centrally-accessible information and data system exists to be used at corporate and regional levels to help manage WFA. The MIS covers all WFAD, EDI, ERI, Alternative Delivery Initiatives (ADI), and other cases, as called for in applicable directives and policies.

The auditor's objective is to ensure that workforce reductions are being managed such that the assumptions on which planning and program implementation were based are tested through monitoring and reporting, and that corrective steps are initiated when necessary.

3.1.1 Monitoring and reporting on workforce adjustment progress

Workforce reduction results are reported regularly to senior management (Deputy Head) and discussed with a view to ensuring adequate progress or corrective action:

• monitoring challenges the assumptions on which planning documents were based to maintain their validity and reliability;
• information in MIS databases is regularly compared to information in databases maintained by other departments (i.e. PSC and PWGSC);
• the pace and degree of progress towards targets is tracked in terms of both dollar savings and FTEs giving careful consideration to the 12 month payback indicator;
• the number of cases where the salary budget of the responsibility centre has not diminished by the equivalent salary of the recipients of EDI or ERI or where positions of surplus employees have not been abolished are reported;
• reports are available and considered on the number of former public servants in receipt of lump sum payment under WFAD who have been appointed by the department during the period covered by such payments;
• reports are available and considered on the number of former public servants in receipt of lump sum payment under WFAD who have been subsequently accorded personal service contracts during the period covered by such payments; and
• reports are available and considered on the success rates in terms of placement of affected and surplus employees, on the effectiveness of retraining programs, and on the impact of reduction on target groups' representation.

3.1.2 Taking corrective action

Corrective action is taken on a timely basis to ensure that targets will be achieved and employees' rights are respected.

• plans and assumptions are revised when targets will not be achieved; where 12 month pay back cannot be achieved, a rationale or an analysis of intervening factors is provided;
• controls are placed on staffing, recruitment and contracting when these may be undermining redeployment of affected and surplus employees;
• directives are issued when policies may have been inadvertently violated;
• recovery is initiated where inappropriate payments have been made; and
• managers are disciplined when policies have been knowingly violated.

4.1.1 Early Retirement Incentive (ERI) -- Pension Penalty Waiver

Audit Criteria

ERI benefits are provided in accordance with the eligibility conditions set out in applicable legislation and regulations.

Audit Questionnaire

1. Were eligible employees informed about the ERI and its sixty day notification requirement at the same time they were declared surplus?

2. Were ERI benefits provided only to employees who met all of the following conditions:

• between April 1, 1995 and March 31, 1998, met the definition of surplus employee as per ERI regulations;
• were declared surplus, and had at least five years of pensionable service and 10 years of Public Service employment;
• were at least 50 years old, but not yet 60, by the time of their departure from the Public Service;
• chose the ERI option within 60 days of being declared surplus;
• made an election for an annual allowance under the Public Service Superannuation Act prior to the termination date;
• left the Public Service within six months of being declared surplus (this period can be extended by the Deputy Head due to operational requirements);
• were employed with a department or agency for whom Treasury Board is the employer, or a separate employer who became eligible for ERI;
• had not chosen or received a payment under the Early Departure Incentive;
• had not received payment under the Civilian Reduction Program;
• had not received a negotiated settlement under the Executive Employment Transition Policy (EET);
• had not received a reasonable job offer or, in positions subject to EET, had not received an offer of alternate employment in the public service, prior to termination of employment;
• had not received an offer of contiguous employment in cases of transfer of work outside the public service?

3. Was the surplus employee's position abolished and the duties not substantively recreated in another position?

4. Is there any evidence that operational requirements were unduly extended so that an employee could become eligible by virtue of meeting either the age or years of service criteria?

Audit of Early Retirement Incentive Payment (ERI)
Fact and Assessment Sheet

Report Date:	Auditor	Protected
A. General Information
Name:	RC:	No.
Birth Date:	Region	Group/Level:
PRI:	Position:	Age:
Alternate:	E.E. Target Group:	Official Language:

 

B. Information on ERI Payment
Indeterminate Position:	Severance pay:
Surplus Date:	PSC notified:
Acceptance Date:	Pension Waiver:
Resignation Date:	Supplementary Death Benefit:
Proposed Lay-Off Date:	Annual Allowance Election:
PSC Start Date:	Reasonable Job Offer:
Years of Continuous Employment:	Offer of Contiguous Employment:
Years of Pensionable service:	Training:
Rate of Pay:	Assigned a counsellor:
Other lump sum payment:	Certification:
Pay in lieu (PIL) of Unfulfiilled Surplus (ERI):
C. Returnee Information
Reappointed:	Recovery of PIL Payment:
Reappointment Date:	Pension suspension:
D. Deletion of Position
Position Abolished:	Position Refilled:
Similar Position Created:
E. Additional Costs
Overtime costs:	Establishment Level increase:
Contract costs:	Acting Pay:

Audit of Early Retirement Incentive Payment (ERI)
Audit Notes

Reason for Surplus

Other notes:

Audit of Early Retirement Incentive Payment (ERI)
Audit Calculations

Required Information a).. Rate of Pay: ___________ b) # of days remaining in the surplus period (6 months is the maximum): _________ c) years of continuous employment: __________
1.0 Pay in lieu of Unfulfilled surplus:	Per Audit	Actual	Over/Under
If Unfulfilled surplus Period = 6 months. PIL Benefit = higher of : a / 2: ______________ / 2 = [ a / 260.88 ] ______________ * b: [ ______________ / 260.88 ] * ______________ = (Note: Benefit is prorated for part-time and seasonal employees.)
In all other cases the following calculation is performed; PIL Benefit = [ a / 260.88 ] ______________ * b: [ ______________ / 260.88 ] * ______________ = (Note: Benefit is prorated for part-time and seasonal employees.)
2.0 Severance Pay:
2.1 # of weeks of entitlement = c (rounded down to obtain complete years) + 1: ______________ + 1 = [note: 2 weeks of entitlement are awarded for the first year of continuous employment, on first lay off and one for each subsequent year. Some leave without pay periods such as Care and Nurturing, relocation of spouse and personal needs may have to be deducted from the # of years of continuous employment. The period must also be reduced by any period for which a severance payment has been made.]
2.2 Severance Pay = [ a / 52.176 ] * result of section 2.1: [ _________ / 52.176 ] * ___________ = (Note: if at termination date, the employee was acting for more than 4 months, the acting salary may prevail for determination of severance pay. N.B. This ,varies according to the wording of the relevant collective agreements.)
3.0 Separation Benefit: (not applicable between July 15, 1995 and June 22, 1998)
Separation Benefit = [ a / 52.176 ] * c (rounded down to obtain complete years unless collective agreement provides for proration of final year of continuous employment for severance pay purposes upon retirement.) [note: annual salary / 52.176 * 15 is the maximum ] [ ______________ / 52.176 ] * ______________ =
Total

Audit of Early Retirement Incentive Payment (ERI)
Audit Calculations (continued)

Pension Waiver

Information required a) age (at termination date): _______ years and _____ days = ____._____ (see Table A for conversion to nearest 1/10) b) years of pensionable service (at termination date): ______ years and ______ days = ______.______ (see table A)

Section 1 There are 3 possible scenarios (A,B or C), depending on the age and the number of years of pensionable service at termination date: fill out the section which is relevant to the case.

A) Age: 55 to 60 Total pensionable service: 25 to 30

i) lesser of: (circle the lesser result) 60 - a: 60 - _____._____= 30 - b: 30 - _____._____ =

ii) % of pension waiver = Result of section i) * 5% ___________ * 5% =

B) Age: 50 to 55 Total pensionable service: 25 or more

i) Greater of: (circle the greater result) 55 - a: 55 - _____._____ = 30 - b: 30 - _____._____ =

ii) % of pension waiver = Result of section i) * 5% ______________ * 5% =

C) Age: 50 to 60 Total pensionable service: less than 25

% of pension waiver = (60 - a) * 5% - (60 - _______._______) * 5% =

Section 2

A) Pension payable for year 1 with the waiver (from PWGSC):

B) Less: Pension payable for year 1 if there was no waiver: (Amount in A) * (1 - pension waiver calculated in section 1): ___________ * (1 - _________) =

C) Difference

4.1.2 Administration of Alternates

Audit Criteria

The placement of an alternate is done in accordance with the eligibility conditions set out in applicable program orders and policy statements.

Audit Questionnaire

1. Was each alternate an indeterminate employee occupying a non-affected position to which the affected employee could be deployed or transferred?

2. Did each match occur between employees at the same or equivalent level?

3. Did the switch occur before the affected employee was formally declared surplus?

4. Did the employee who moved into another individual's job for the purposes of saving that individual from becoming surplus only receive an ERI, EDI or EET benefit based on the fact that two people exchanged jobs through a transfer occurring on the same day?

5. Did any employee alternate into a position in which the salary maximum was more than four per cent higher than the salary maximum of the position vacated, and receive an ERI, EDI or EET benefit?

6. Did any affected employee request that their position be classified to a lower level to assist in obtaining an alternation? If yes, were the following conditions met:

• the employee requested the downgrading in writing, agreeing to give up any right to grieve the new lower classification level;
• the employee was not given salary protection upon appointment to the alternate position;
• surplus received all termination payments at the new lower level of the position; and
• the termination of employment and the abolition of the affected position occurred within five working days of the alternation.

7. Did the placement of alternates result in either the elimination of a function, a position, or the salary equivalent?

8. Were there any additional costs to the separation or to the continuing work as a result of alternation?

4.1.3 Administration of Volunteers

Audit Criteria

When pay in lieu has been approved under the conditions set out in WFAD, Section 6.2.6, July 16, 1996 (i.e. a non-surplus employee has volunteered to leave the Public Service in place of a surplus employee), the conditions of approval have been followed.

Audit Questionnaire

1. In the case where a surplus employee was replaced by a volunteering employee, did the volunteering employee receive only the pay in lieu of unfulfilled surplus period? (N.B. As volunteering employees are not surplus, they are not eligible for severance payment at the lay-off rate.)

2. Did the volunteer receive severance pay at the lay-off rate when it should have been at the resignation or retirement rate?

4.1.4 Administration of Alternative Delivery Initiative

N.B. Alternative delivery initiatives are addressed in the Workforce Adjustment Directive which came into force on July 16, 1996 for a period of three years. All references below are to that document.

Audit Criteria

Implementation of alternative delivery initiatives provides fair and reasonable treatment of employees, value for money and affordability, and maximization of employment opportunities for employees.

Audit Questionnaire

1. Was the alternative delivery initiative appropriately classified according to the Type of arrangement as per criteria provided? (WFAD Section 7.2.2)

2. Were all employees being offered employment by the new employer provided written notice giving them the opportunity to choose whether they wish to accept the offer? (WFAD Section 7.4.1)

3. Did all employees indicate their acceptance or rejection of employment offers within the prescribed time frame? (WFAD Section 7.4.2)

4. Were employees accepting job offers treated appropriately according to the Type of arrangement and their union status in accordance with WFAD provisions? (WFAD Sections 7.5.4, 7.7)

5. Were employees declining job offers treated appropriately according to the Type of arrangement and their union status in accordance with WFAD provisions? (WFAD Section 7.5)

6. Was reimbursement sought from employees who received a lump-sum payment and salary top-up and were subsequently reappointed to the Public Service? (WFAD Section 7.8)

7. Were vacation leave credits and severance pay correctly handled in accordance with employee circumstances? (WFAD Section 7.9)

8. Were the policy requirements of Transfer Termination Authority (TB Human Resources Manual, Ch. 1-13) respected, namely:

• corporate human resources principles and guidelines have been established for the treatment, identification and termination of employment of departmental employees affected by the transfer of any work, business or undertaking;
• a formal decision to transfer any work, undertaking or business has occurred prior to offers of employment being made to employees;
• employees who are significantly involved with the work, undertaking or business have been considered for employment opportunities with the receiving organization;
• regard has been given to employees' interests and preferences, subject to operational requirements; and
• authorities under this policy have been exercised in accordance with the terms of the Work Force Adjustment Directive in place at the time of transfer?

4.1.5 Retention Payment

Audit Criteria

The conditions of approval of the retention payment have been met.

Audit Questionnaire

1. Were retention payments made only in cases where the workforce adjustment situation was created by total facility closures, relocation of work units, devolution or privatization? (N.B. As of July 16, 1996, the concepts of devolution and privatization have been replaced by the alternative delivery provisions of the Directive. However, these former provisions remain in effect where employees were declared surplus in devolution or privatization situations prior to July 16, 1996.)

2. If yes, were the corresponding conditions for payment created by total facility closures met (WFAD 7.5, July 14, 1995):

• jobs were in remote areas of the country; or
• retraining and relocation costs were prohibitive; or
• prospects of reasonable alternative local employment were poor?

3. Were the corresponding conditions for payment created by a relocation of work units met (WFAD 7.6, July 14, 1995):

• work units were being geographically relocated;
• in comparison to other options, it was preferable that certain employees be encouraged to stay in their jobs until the day of workplace relocation; and
• the employee opted not to relocate with the function?

4. Were the corresponding conditions for payment created by devolution or privatization met (WFAD 7.7, July 14, 1995):

• the operation was devolved or privatized; and
• in comparison to other options, it was preferable that certain employees be encouraged to stay in their jobs until the day of devolution or privatization, so that the work unit remained a fully operational entity until that day?

5. Did all employees receiving retention payments agree to leave the Public Service without priority rights (i.e. resign or retire)? (WFAD 7.4.2, July 14, 1995)

6. Were all employees provided with retention payments or only those in key positions?

4.1.6 Workforce Adjustment Measures: Communication with Employees and Unions

Audit Criteria

Communication with employees, and with the unions of which they are members, is initiated in a timely fashion to inform them of any changes in their status, to make them aware of their options, and to request that they inform the department of their intentions.

Audit Questionnaire

1. Did the deputy head or a delegated executive head of the department notify in writing each employee whose services were no longer required, providing the reason for the decision? (WFAD Section 1.1.6)?

2. Was each employee provided with a copy of the WFAD and other relevant information (e.g., EDI or ERI), at the same time as he or she received notification of becoming subject to workforce adjustment (WFAD Section 1.1.13)?

3. Were bargaining agent representatives advised and consulted regarding any workforce adjustment situation throughout the process and after the decision had been made?

4. After July 12, 1996, were bargaining agent representatives advised of the names and addresses of their members who had formally been advised of their being in "affected" status? ("J. Letter" re: Section 23 Complaint)

5. In situations where work units were relocated, did the department notify each employee in writing in order to provide them with the option of either relocating with the work unit or of being declared surplus (WFAD Section 3.1.1)?

6. In situations where work units were relocated, did the department request written notification from the employee, within six months of the departmental notification, as to his or her intention to move or be declared surplus (WFAD Section 3.1.2)?

4.1.7 Workforce Adjustment Measures: Counselling of Employees

Audit Criteria

To help employees decide among options, they are provided with adequate counselling.

Audit Questionnaire

1. Was each eligible employee assigned a counsellor to provide explanations and assistance in each of the areas specified in the ERI and EDI?

2. Was each surplus employee and laid-off person assigned a counsellor to provide explanations and assistance in each of the areas specified in WFAD Section 1.1.33?

3. Was each surplus employee and laid-off person made fully aware of whom to contact for counselling relating to his or her workforce adjustment situation?

4. Were steps taken to ensure that accurate information was provided through the counselling services to minimize the risk of possible legal action being taken against the department at a future date, based on a contention that insufficient or inaccurate information had been provided?

4.1.8 Workforce Adjustment Measures: Surplus Employee Placement

Audit Criteria

Indeterminate employees affected by workforce adjustment are treated equitably, and given every reasonable opportunity to continue their careers as Public Service employees. (WFAD Section 1.1.1)

Audit Questionnaire

1. Is the PSC contacted, the WFA information database reviewed, and if applicable, the local departmental office contacted to confirm that no qualified and interested priority employee, surplus employee, or laid-off person is available locally prior to relocating a surplus employee or laid-off person (WFAD Section 1.1.18)?

2. Is there a process in place to ensure that the appointment of surplus employees or laid-off persons is not hindered by the appointment or reappointment of term employees or the contracting for temporary assistance through a private employment agency (WFAD Section 1.1.26)? If yes, describe the process.

3. In situations where work units were relocated, did the relocation of surplus employees and laid-off persons occur only if the individual declared a willingness to relocate?

4. Are candidates at the same position level identified and considered prior to appointing surplus employees who are at a level higher to that position (WFAD Section 1.1.15)?

5. Is at least one of the following conditions met before employees declared surplus under the WFAD are laid off (In the case of MADs, these provisions are superseded by amendments to the Public Sector Compensation Act of July, 1995.):

• employee has refused a reasonable job offer; or
• employee is not mobile; or
• employee cannot be retrained within two years; or
• the employee requests to be laid off?

4.1.9 Workforce Adjustment Measures: Retraining

Audit Criteria

Every reasonable effort is made to retrain affected employees, surplus employees, and laid-off persons in order to facilitate their redeployment to existing or anticipated vacancies.

Audit Questionnaire

1. Did surplus employees or laid-off persons receive retraining to facilitate appointment to a specific vacancy or anticipated vacancy?

2. If yes, was a retraining program prepared and given written consent by the home department, the individual and the appointing department (WFAD Sections 1.1.34 and 4.2.3)?

3. Are the skill requirements of existing and anticipated vacancies routinely documented, and matched with the skills of affected employees, surplus employees and laid-off persons for the purpose of identifying candidates for retraining?

4. Are candidates from the department assessed for appointment to a vacancy, prior to assessing candidates from other departments?

5. If yes, is there also an assessment of retraining possibilities to make surplus employees and laid-off persons from the department suitable for appointment, prior to assessing candidates from other departments?

6. Was an attempt made to enter into a signed agreement, or less formal agreement, with the PSC or other departments for retraining that was intended to facilitate appointment of surplus employees and laid-off persons?

7. Is there a process for ensuring that no other priority person who qualifies for a position is available prior to retraining a surplus employee or laid-off person for the position (WFAD Sections 4.2.1b and 4.3.1c)?

8. If employees fail at retraining, are they laid off?

4.1.10 Workforce Adjustment Measures: Salary Protection

Audit Criteria

When surplus employees and laid-off persons are appointed to a lower-level position under the WFAD their rate of pay is protected as per their collective agreement or the provisions of the Regulations Respecting Pay on Reclassification or Conversion (WFAD Section 5.1.1).

Audit Questionnaire

1. Was an attempt made to redeploy each person with salary protection to a position with any level that is similar to the employee's level when he or she was declared surplus (WFAD Section 1.1.2)?

2. Where appointments to lower level positions were made, was the former rate of pay level maintained for the duration of time each employee was appointed to that particular lower level position (Please note that salary protection can be ended if the employee refuses a transfer to a job at the salary protected level in the same location.)?

3. Are there procedures to minimize the cost of salary protection of the department, including attempts to reappoint salary protected employees to positions at the salary protected level, particularly during the 2 year reinstatement priority period?

4.1.11 Workforce Adjustment Measures: Pay in Lieu of Unfulfilled Surplus Period

Audit Criteria

The conditions for approval of pay in lieu of unfulfilled surplus period are followed.

Audit Questionnaire

1. Was the amount of pay in lieu of unfulfilled surplus paid to employees in accordance with WFAD section 7.2.1, July 16, 1996?

2. Did employees who received payment in lieu of unfulfilled surplus receive a retention or turnkey payment, or any other payment to which they were not entitled?

3. Did overtime costs, acting pay, term or contract employee costs, or establishment levels, increase as a result of a resignation of an employee who received a payment in lieu of unfulfilled surplus period?

4. Were any of the duties performed by an employee continued following the resignation? If yes, how were the duties performed and compensated?

5. Were the surplus employees' positions abolished?

6. Was the surplus employee's position re-created in a way that would cause additional costs to be incurred?

7. In cases where an employee's surplus period has been extended, was the pay-in-lieu calculated for the remainder of the period only, and not for the full six months?

4.1.12 Post-employment Regime: Reappointment

Audit Criteria

In cases where employees who had resigned from the federal government after accepting an EDI, ERI or other termination package wish to return to the Public Service, reappointment is in accordance with applicable regulations and legislation.

Audit Questionnaire

1. Were any employees reappointed to the Public Service during the period covered by the lump-sum payment?

2. Did the employees understand the post-employment terms and conditions?

3. Did employees who were appointed to the public service during the period covered by the lump-sum payment, refund on a proportionate basis, the amount of the lump-sum payment in accordance with WFAD 7.2.5, 7.4.3, 7.8.2 and 8.9, July 14, 1995?

4. If the employee was in receipt of a public service pension, did this employee lose the ERI pension waiver upon reappointment? Was the pension suspended after the person became a contributor (i.e., they were appointed for a period of more than six months, they completed a period of employment in excess of 6 months, or they were appointed on an indeterminate basis.)?

5. Is there any evidence to indicate that managers deliberately re-hired the cashed-out person as a term employee for less than six months? Note: By not being engaged for any more than six months, a person could draw their pension and the full job rate for the position at the same time. A manager offering such repetitive appointments is clearly enabling the individual to circumvent post-employment restrictions and should be subject to disciplinary action. (TB Memo to all Deputy Heads - September, 1995 on Probity in Relations with Former Public Service Employees.)

4.1.13 Post-employment Regime: Contracting

Audit Criteria

In cases where employees who had resigned from the federal government after accepting an EDI, ERI, or other termination package wish to return to work on a contract for services with any federal government organization, the contractual agreement is in accordance with applicable regulations and legislation.

Audit Questionnaire

1. Have any former employees been identified as having worked on contracts? If yes, how many?

2. Is it known whether any employee earned more than $5,000 during the period covered by the lump-sum portion of the termination package? (This ceiling does not apply if a former employee works as an employee of, or sub-contractor to, an established firm contracting with the federal government.) If yes, please specify.

3. Is it known whether twelve months following the expiry of the lump sum period, former public servants in receipt of a pension or different annuities have had their contract fees set so that the amount they earned on contract plus their pension did not exceed their former salary?

4. If an employee returned on a contract with a private sector firm, is there any evidence that the manager told the firm that he would grant them a contract if they would refer the person as their employee who would undertake the task, and at the same time advise the employee to register with the company? (TB Memo to all Deputy Heads - September, 1995 on Probity in Relations with Former Public Service Employees.)

5. Does the employee have a major share in the company?

6. Did the person come back immediately after the termination of the employment relationship to undertake or finalize work that clearly should have been done before the separation date?

4.2.1 Administration of Early Departure Incentive (EDI)

Audit Criteria

EDI payments are made in accordance with the conditions set out in the enabling legislation.

Audit Questionnaire

1. Were eligible employees informed about EDI and its 60 day notification requirement at the same time as they were declared surplus?

2. Were EDI benefits provided only to employees who met the following conditions:

•  left the public service within the time frame provided by the legislation;
• were indeterminate employees who had been declared surplus;
• did not receive a reasonable job offer (either at the time of the surplus declaration or any other time prior to written acceptance of the EDI option);
• had not benefited from an ERI, Civilian Reduction Program (CRP) or Executive Employment Transition Policy (EET);
• had opted for the EDI within 60 days of the date of receipt of the offer;
• had not accepted an offer of contiguous employment;
• had not received a WFAD lump-sum payment?

3. Did the EDI payments comply with the specified maximum amounts?

4. Was proper certification and authorization for employees electing to take an EDI provided?

Audit of Early Departure Incentive Payment (EDI)
Fact and Assessment Sheet

Report Date:	Auditor	Protected
A. General Information
Name:	RC:	No.
Birth Date:	Region	Group/Level:
PRI:	Position:	Age:
Alternate:	E.E. Target Group:	Official Language:

 

B. Information on ERI Payment
Indeterminate Position:	Severance Allowance:
Surplus Date:	Other lump sum payment:
Acceptance Date:	EDI Payment:
Resignation Date:	EDI Maximum Payment:
Proposed Lay-Off Date:	Reasonable Job Offer:
PSC Start Date:	Offer of Contiguous Employment:
Years of Continuous Employment:	Education/Training Allowance:
Rate of Pay:	Training Plan:
Severance Pay:	Assigned a counsellor:
EDI lump sum payment:	Certification:
C. Returnee Information
Reappointed:	Recovery of EDI Payment:
Reappointment Date:	Pension suspension:
D. Deletion of Position
Position Abolished:	Position Refilled:
Similar Position Created:
E. Additional Costs
Overtime costs:	Establishment Level increase:
Contract costs:	Acting Pay:
F. Delegation of Authority:
G. Conclusion:

Audit of Early Departure Incentive Payment (EDI)
Audit Calculations

Required Information a) Rate of pay: __________ b) age (at termination date): _______ years and _____ days = _____. ______ If < 5 years service: 39 weeks regular pay c) years of service (at termination date): _______ years and ______ days = _____.______ If 5 + years service: 52 weeks regular pay d) qualifying weeks
1.0 EDI lump sum payment:	Per Audit	Actual	Over/Under
Lump Sum Payment = [a / 52.176 ] * d: [ ___________________/ 52.176 ] * __________ =
2.0 Service Allowance: (only applies if 5+ years continuous employment.)
2.1 b + c: ______ + _______ = (note: partial years for both age and years of service may be used but the sum must be rounded down to the whole number, e.g. Age = 44.7 and Years of service = 20.6, thus Total: 44.7 + 20.6 = 65.3 becomes 65)
2.2 Circle the appropriate answer based on result of section 2.1 age + years of service. # of weeks for qualifying allowance less than 50 or entitled to an unreduced pension (immediate annuity) .............................................. 0 week 50-54......................................1 week 55-59 .....................................2 weeks 60-64 .....................................3 weeks 65-69 .....................................4 weeks 70-74 .....................................5 weeks 75+ ........................................6 weeks
2.3 Service Allowance = [ a / 52.176 ] * result circled in section 2.2 [ ______________ / 52.176 ] * ________ =
3.0 Severance Pay:
3.1 # of weeks of entitlement = c (rounded down to obtain complete years) + 1: ____________ + 1 = (note: 2 weeks of entitlement are awarded for the first year of continuous employment, on first lay-off and one for each subsequent year. Some leave without pay period such as Care and Nurturing, relocation of spouse and personal needs may have to be deducted from the # years of continuous employment. The period must also be reduced by any period for which a severence payment has been made.)
3.2 Severance Pay = [ a / 52.176 ] * result of section 3.1 [ ______________ / 52.176 ] * ________ = (Note: if at termination date, the employee was acting for more than 4 months, the acting salary may prevail for determination of severance pay. This varies according to provisions of the relevant collective agreements.)
EDI Maximum Payment: lump sum payment + severance pay + service allowance
i) however, the following maximum payments apply (please circle appropriate # of weeks): if <5 years continuous employment: maximum = annual salary / 52.176 * 44 weeks if >5 years continuous employment, and not eligible for or has not elected to receive a reduced pension, or not entitles to an unreduced pension: maximum = annual salary / 52.176 * 90 weeks if >5 years continuous employment, and is entitled to an unreduced pension: maximum = annual salary / 52.176 * 70 weeks
ii) Maximum EDI Payment: [ a / 52.176 ] * answer to section i (please comment if sub-total (actual) paid is > result calculated above) [ ___________ / 52.176 ] * _________ =
4.0 Education/Training Allowance ($7,000 maximum,, receipts required) = (Note: employees who are entitled to an unreduced pension or who are in receipt of an annual allowance are not eligible.)
Total

Audit of Early Departure Incentive Payment (EDI)
Audit Notes

Reason for Surplus

Other notes:

4.2.2 Training and Education Allowance (TEA)

Audit Criteria

A training allowance to help eligible employees acquire skills needed to enter the workforce outside the public sector is made available.

Audit Questionnaire

1. Are mechanisms in place for providing the Training and Education Allowance to eligible employees?

2. Are the availability and eligibility requirements of the TEA communicated to eligible employees (i.e. those eligible for EDI and not in receipt of a Public Service pension at the time of departure)?

3. Are there effective procedures to ensure that expenditures are directed only toward appropriate training of eligible employees?

• Did the employee opt for the Training and Education Allowance prior to leaving the Public Service?
• Did the employee submit a training plan within six months of leaving the Public Service?
• Did the employee demonstrate that the training plan would prepare him or her for a job outside of the Public Service? If the training was on-the-job training, was there a guarantee of a job at the end?
• Were training allowances provided within the maximum allowed ($7,000)?
• Was the employee in receipt of a Public Service Pension at the time of departure?
• Was there evidence that the employee undertook personally the training and education courses or programs at an institute recognized by the Income Tax Act (or other training if the employee can show that it is likely to lead to a job)?
• Were the required training receipts received from the employee?
• Was the employee reimbursed only after, but within 30 days of receipts being submitted (i.e. did not receive an advance payment)?
• Was a T-4 for the amount reimbursed to the employee issued once a year?
• Did the payment only cover allowable expenses? Note: The maximum allowable amount for tools and equipment is 50% of the total costs approved under the training allowance provided that the curriculum specifically requires the tools and equipment. This amount does not cover travel and accommodation expenses except where required for professional certification, licensing or registration.
• Was the Training and Education Allowance approved by either the RC Manager or the Chief of Training?
• Was EDI approved and the training plan submitted before training began?

4.2.3 Administration of Unpaid Surplus Status

Audit Criteria

The department should ensure that indeterminate employees affected by workforce adjustment are treated equitably, and given every reasonable opportunity to continue their careers as Public Service Employees.

Audit Questionnaire

1. Were surplus employees notified of surplus status at least six months prior to the commencement of USS. (WFAD Section 1.1.12)?

2. Were surplus employees put on USS once they declined an incentive and had not received a reasonable job offer within six months? If not, were operational reasons for extending the six months clearly documented?

3. Were payments made correctly (see Fact and Assessment Sheets)?

4. Were legitimate efforts made to find a job offer for any employee put on USS?

Audit of Surplus Status Under EDI - Unpaid Surplus Status (USS)
(Decline of EDI or ERI)
Fact and Assessment Sheet

Report Date:	Auditor	Protected
A. General Information
Name:	RC:	No.
Birth Date:	Region	Group/Level:
PRI:	Position:	Age:
Alternate:	E.E. Target Group:	Official Language:

 

B. Information on Surplus Status
Indeterminate Position:	Separation Payment:
Surplus Date:	Unpaid Surplus Status Date:
No Acceptance of EDI:	Reasonable Job Offer::
Paid Surplus Status Date:	Lay Off Date:
Rate of Pay:	Training:
Pay in Lieu of Unfulfilled surplus	Assigned a counsellor:
Severance Pay:	PSC notified:
Years of Continuous Employment:	Years of pensionable service::
C. Returnee Information
Reappointed:	Recovery of Cash out:
Reappointment Date:	Pension suspension:
D. Deletion of Position
Position Abolished:	Position Refilled:
Similar Position Created:
E. Additional Costs
Overtime costs:	Establishment Level increase:
Contract costs:	Acting Pay:
F. Delegation of Authority:
G. Conclusion:

Audit of Surplus Status Under EDI - Unpaid Surplus Status (USS)
(Decline of EDI or ERI)
Audit Notes

Reason for Surplus

Other notes:

Audit of Surplus Status Under EDI - Unpaid Surplus Status (USS)
(Decline of EDI or ERI)
Audit Calculations

Renseignements requis a) Taux de rémunération:_______ b) Années d'emploi continu : ______ c) Nbre de jours de la période de priorité d'excédentaire qui restent (maximum 6 mois) : ________ (Le nombre de jours de la période de priorité d'excédentaire qui restent est compté depuis la date de cessation d'emploi (inclusivement) jusqu'à la date de mise en disponibilité proposée (exclusivement )
1.0 Statut d'excédentaire rémunéré : (Nota : Le fonctionnaire continue de travailler et d'être rémunéré. Si, après 6 mois, il n'a pas reçu d'offre d'emploi raisonnable, son statut peut passer à «statut d'excédentaire non rémunéré». Si, toutefois, le fonctionnaire refuse une offre d'emploi raisonnable, il peut être mis en disponibilité à la fin de la période de priorité d'excédentaire rémunéré. À tout moment au cours de la période, le fonctionnaire peut choisir de renoncer à des droits de priorité en échange d'offres d'emploi et offrir de démissionner avant l'expiration de la période de priorité d'excédentaire rémunéré de six mois. En pareil cas, le fonctionnaire reçoit le même paiement forfaitaire que s'il avait été mis en disponibilité.)
2.0 Statut d'excédentaire non rémunéré : (Nota : Tout en demeurant employé, le fonctionnaire ne travaille plus à la fonction publique du Canada. Il a droit à l'assurance-chômage. Pendant 12 mois, il a droit à un placement prioritaire, mais il cesse de toucher une rémunération. Si, au cours de cette période, le fonctionnaire refuse une offre d'emploi raisonnable, il peut être mis en disponibilité.)
Date de mise en disponibilité : Date de déclaration à titre d'excédentaire :
3.0 Rémunération en remplacement de la partie non expirée de la périodede priorité d'excédentaire : (Nota : Cette partie du calcul est très inhabituelle étant donné que, normalement, le fonctionnaire choisit de recevoir la PDA ou un paiement dans le cadre du PERA. Toutefois, si un tel cas survient, le calcul se fait comme suit :)	Par vérification		Réel	Au-dessus/ en-dessous
Rémunération en remplacement de la partie non expirée de la période de priorité d'excédentaire = [ a / 260.88 ] * c : [ _________ / 260.88 ] * __________ =
4.0 Indemnité de départ :
4.1 Nbre de semaines d'admissibilité = b (arrondi au chiffre inférieur pour obtenir des années complètes) + 1 : __________ + 1 = (Nota : 2 semaines d'admissibilité sont accordées pour la première année d'emploi continu, à la première mise en disponibilité, et une semaine par année par la suite. Certains genres de congés sans solde de plus de 3 mois comme ceux pour les soins et l'éducation d'enfants d'âge préscolaire, la réinstallation du conjoint et les besoins personnels doivent être déduits du nombre d'années d'emploi continu.).
4.2 Indemnité de départ = [ a / 52.176 ] * résultat de la section 4.1 : [ _________ / 52.176 ] * ___________ = (Nota : si, à la date de cessation d'emploi, le fonctionnaire est intérimaire depuis plus de 4 mois, la rémunération provisoire sert seulement aux fins du calcul de l'indemnité de départ. Cette exigence peut varier en fonction du libellé de la convention collective.)
5.0 Indemnité de cessation d'emploi : (ne s'applique pas entre le 15 juillet 1995 et le 22 juin 1998)
Indemnité de cessation d'emploi = [ a / 52.176] * b (arrondi au chiffre inférieur pour obtenir des années complètes, à moins que la convention collective ne prévoie le calcul proportionnel de la dernière année d'emploi continu aux fins de l'indemnité de départ lors de la retraite)(nota : salaire annuel / 52.176 * maximum 15) [ _________ / 52.176 ] * __________=
Total

TABLE A - Audit of Early Retirement Incentive Payment (ERI)

To Calculate the rounding to the nearest 1/10 of Year

# of days in the incomplete year	Nearest 1/10 of year
0 to 18 days	0/10
19 to 54 days	1/10 or .1
55 to 91 days	2/10 or .2
92 to 127 days	3/10 or .3
128 to 164 days	4/10 or .4
165 to 200 days	5/10 or .5
201 to 237 days	6/10 or .6
238 to 273 days	7 /10 or .7
274 to 310 days	8/10 or .8
311 to 346 days	9/10 or .9
347 to 364 days	10/10 or 1

From Compensation Reference Guide, Departure Incentives, Human Resources Development Canada May, 1995