The Public Service's Post-Employment Regime
Table of Contents
B. The Philosophy Behind The Post-Employment Regime
C. Examples of Legitimate Cases of Engaging The Services of Former Employees
Foreword
The Treasury Board Secretariat created the People in Transition - Knowing Your Options series to provide employees with up-to-date information on human resources initiatives and programs during a time of restructuring and readjustment in the federal Public Service.
This issue of People in Transition presents guidelines to employees who are leaving under the various departure programs and who may be considering reemployment with, or contracting with, an organization in Schedules I or II of the Public Sector Compensation Act or with an agency covered by the Public Service Superannuation Act.
Under the Post-Employment Regime, former employees must keep certain things in mind when seeking employment opportunities with the government -- after leaving the government.
Before they leave under a departure incentive program, employees should consult their human resources advisor to ensure that they are fully aware of the implications of the Post-Employment Regime.
A. Introduction
This issue of People in Transition deals with what happens to former employees who have left the Public Service under the various departure programs and who seek to work again with the federal government.
Generally speaking, the intention of the Government of Canada is that when functions have ceased to exist as a result of the Program Review, the positions of the incumbents of those functions should cease too. This is subject to minor modifications such as those in the concepts of Management of Alternates (ref: letter to Directors of Personnel, May 24, 1995) and of Reverse Order of Merit (ref: Manager's Guide to Employment Adjustment).
We are in the age of a renewed, smaller Public Service. For that reason, very few employees leaving the Public Service under the Early Retirement Incentive (ERI), Early Departure Incentive (EDI), Executive Employment Transition Policy (EETP), or other departure incentive programs are expected to return in any capacity to employment with the Public Service. The ERI, EDI, EETP and other departure incentive programs are intended to help employees who have been declared surplus make the transition either to an earlier retirement than they might have expected or to work in the private sector.
However, the government recognizes that citizens are free to apply for any jobs for which they are qualified. It also recognizes that the Public Service may need the services of some employees after they have left.
The key issue is what should be the terms, limitations, and conditions under which such persons who have received departure incentive packages return to work, whether as employees or contractors.
This People in Transition document outlines the terms and conditions that apply to former employees who return to work in departments and agencies covered by the Public Sector Compensation Act, Schedules I or II. Schedules I and II basically comprise all departments and agencies of the Government of Canada, along with other entities such as the museums, the National Gallery, the National Capital Commission, and several corporations. You should check with your human resources specialist should you be in any doubt as to whether your employing department, or any potential future employing entity, is within this universe.
In addition, this document describes the effect on ERI
benefits of reemployment with any agency participating
under the Public Service Superannuation Act.
B. The philosophy behind the Post-Employment Regime
For those seeking to return as employees
- Generally speaking, any person who has left under the terms of an incentive package is subject to considerable restrictions if he or she seeks to return to the Public Service as an appointed employee.
- First, there are the issues of pension suspension and waiver loss. For persons who accept any positions where they become contributors again under the Public Service Superannuation Act, the individual's pension is automatically suspended during the life of this further period of employment. Moreover, these persons lose the benefit of that early retirement waiver upon their subsequent termination of employment unless their second departure is as a result of a surplus situation.
- Persons who accept appointments that do not require them to become "contributors" continue to receive their pensions. However, the Treasury Board is establishing systems to monitor departmental use of such former employees to identify and eliminate abuses of this flexibility.
- Second, there is the issue of repayment. Anyone returning within the number of weeks represented by the non-severance pay portion of their lumpsum payment would have to pay back that payment pro rata on a weekbyweek basis. For example, a person whose "cash out" had been 26 weeks and who returned to employment as a term or indeterminate employee 10 weeks later would have to pay back the remaining 16 weeks. However, if re-employment begins after the time equivalency period has expired, no lumpsum money would have to be repaid.
- Minor differences exist between the various lumpsum based programs. For example, a person taking the payinlieu "cash out" under the Work Force Adjustment Directive is only liable for repayment if the position accepted is with an organization in Schedule I, Part I, of the Public Service Staff Relations Act. Conversely, an EDI recipient accepting a position with any organization in the Public Sector Compensation Act Schedules I or II is liable to repay. The slightly less restrictive treatment of Work Force Adjustment departees is because the Directive clearly stipulates the universe within which they shall be liable whereas the Order in Council establishing the EDI applies to a wider universe.
For those returning in a contractual relationship
- A Public Service employee resigning under the terms of the Work Force Adjustment Directive (WFAD), the EDI, the ERI, the Executive Employment Transition Policy (EETP), or other termination package programs, will be subject to restrictions if he or she contracts for personal services with the Public Service.
- Specifically, the former employee will only be permitted to earn up to $5,000 during the "window period" immediately after employment. This "window period" is the number of weeks covered by the lumpsum portion of the departure incentive and the years and service allowance. The lumpsum portion does not include severance pay, accumulated vacation leave, and the like.
- Under the EDI, the "window period" is actually 39 weeks for any employee with less than 5 years of continuous employment. For those with 5 years or more of continuous employment, this "window period" cannot exceed 58 weeks (52 weeks for the lump sum and a maximum of 6 weeks for the years and service allowance). Under the Work Force Adjustment Directive, it is normally 26 weeks.
- This is believed to be a reasonable alternative to a total ban in that it permits management some flexibility to meet operational requirements.
- During the "window period," former Public Service employees will be subject to this $5,000 rule, whether the former employee undertakes a contract as an individual, as a sole proprietorship corporation, as a partnership, or in cases where that individual has a major interest in the contracting entity.
- Where a former employee goes to work as an employee of, or subcontractor to, an established firm contracting with the government, these restrictions do not apply.
- The Treasury Board will reinforce instructions to managers about proper conduct when dealing with contracting firms and will require departments to take the appropriate corrective action if problems are identified.
- After a former employee's "window period" expires, those
receiving pensions under the Public Service Superannuation
Act will be subject to the Treasury Board's fee abatement
(reduction) policy on contracts for personal services for a
further 12month period. For this additional period, the reduction
applies only to noncompetitive contracts and is established by
setting the contract fee so that the former employee's pension
payment plus the contract fee cannot exceed her or his
former salary.
C. Examples of legitimate cases of engaging the services of
former employees
- Mr. K is an environmental technician working in weather
observation and control. His job is abolished in his small rural
community and nearly all its functions have been transferred to
the nearest city. He asked for the EDI and received it. However,
the department still needs someone for the next year to launch
weather observation equipment periodically by balloon in that
community. The total work involved is only two hours a day, once
a week, for the coming year.
The $5,000 exemption permits this and respects the department's operational needs, which would otherwise require sending another person into the community at a considerably higher cost.
- Mrs. B, a 30-year former Public Service employee who came to
Canada from Russia as a young woman, took the EDI from her job in
Toronto with Industry Canada as an accounting clerk and moved to
a small Northern Ontario town. Four months later, a delegation of
Russian businessmen is making a three-day visit to that area.
Industry Canada is aware of Mrs. B's language skills and wants to
hire her to meet the delegation upon arrival, accompany it and
its Canadian hosts on their visits in the area, and handle
translation.
The $5,000 exemption lessens the department's costs, which would otherwise require hiring an interpreter in Toronto and paying for air travel and accommodation as well as a professional fee.
D. Explanatory grid
The following page contains a grid that shows graphically how the various periods of restriction apply.
The Public Service's post-employment regime
Employees who leave the Public Service are basically free to enter into whatever employment or contractual arrangements they choose, subject to the Conflict of Interest Guidelines. However, the situations below involve either the reimbursement of lumpsum payment, fee reduction, or both.
SITUATION
A person becomes an employee of an organization covered by the Public Sector Compensation Act, Schedule I or II.
EMPLOYEE RECEIVES EMPLOYEE RECEIVES PENSION EMPLOYEE RECEIVES
LUMPSUM PAYMENT BOTH A CASH OUT AND A
(CASH OUT)[1] PENSION
During the "window The individual's pension The combined restrictions
period",[2] pro rata and Early Retirement listed in the two previous
reimbursement or recovery Incentive (ERI) benefits, columns at left apply.
of the cash out. if applicable, are
suspended if the recipient
For example, if you becomes reemployed as a
received 40 weeks of cash contributor under the
out and were reappointed Public Service
22 weeks after Superannuation Act (PSSA).
termination, you would ERI waivers will not be
have to pay back the reinstated when the
remaining 18 weeks.[3] individual subsequently
leaves the Public Service
unless as a result of a
further surplus
declaration.
SITUATION
A person enters into a contract for personal services with an organization covered by the Public Sector Compensation Act, Schedule I or II.
EMPLOYEE RECEIVES EMPLOYEE RECEIVES PENSION EMPLOYEE RECEIVES
LUMPSUM PAYMENT BOTH A CASH OUT AND A
(CASH OUT) PENSION
Contract income is limited Fee reduction for 52 weeks 1. During the "window
to $5,000 during the under the current rules period," fee reduction on
"window period." [4] for noncompetitive a dollar for dollar basis
personal services for contract income
contracts after the exceeding $5,000.
"window period" has
expired. In essence, the 2. After that period, a
contract fee is set so fee reduction applies for
that a former employee's a further 52 weeks under
pension payment plus the the formula in the column
contract fee cannot exceed at left.
his or her former salary.
[1] This excludes severance pay, but includes the separation benefit and any lump-sum payment under the Early Departure Incentive, National Defence Civilian Reduction Program, Executive Employment Transition Policy and the Work Force Adjustment Directive (WFAD). [Return]
[2] The "window period" is the number of weeks covered by the lump-sum portion of the departure incentive and the years and service allowance. [Return]
[3] For those whose lump sum payment was a pay-in-lieu under the WFAD, reimbursement comes into effect only if appointed to an organization within Schedule I, Part I of the Public Service Staff Relations Act [Return]
[4] Any personal services contract that
would allow the recipient to receive more than $5,000 during the
"window period" requires Treasury Board approval. [Return]
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