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This chapter describes the situations which result in amounts owing to the Crown and the policies and procedures relating to the recovery of those amounts.
The Receiver General has authority to recover an overpayment of salary or wages made to an employee from any money payable by the Crown to the employee or to the employee's estate (Financial Administration Act, Section¬†155(3)).
Where possible, the overpayment is deducted from subsequent salary payments, but it may also be recovered from superannuation benefits or any other money payable to the employee or to the employee's estate, or to a third party, pursuant to an assignment or a power of attorney.
Where there is any conflict between the provisions of this policy and those in a collective agreement, the terms of the collective agreement will apply.
The following types of overpayments must be recovered in full from the first available funds payable to the employee:
Treasury Board has authorized that in exceptional circumstances where a full and immediate recovery of large overpayments will impose a financial hardship on an employee, deputy heads and heads of agencies may direct that the recovery of over-payments of salary and allowances or arrears of deductions for rent be extended over a number of pay periods at a minimum recovery rate of 10% of the gross salary entitlement per pay period. In extenuating circumstances, deputy heads and heads of agencies may allow for a lower recovery rate. This authority may not be delegated.
A higher rate may also be applied at the employee's request or where the deputy head is of the opinion that the employee has contributed to causing the overpayment.
In cases where authority is given to extend the period of recovery, care must be taken to ensure that the extension does not jeopardize the recovery of the outstanding liability due to the termination of employment. It is emphasized that "exceptional circumstances" as outlined above are not a normal occurrence and in the majority of cases, the method for recovery is by withholding the total amount of the overpayment from future salary or wages. Salary overpayments are a debt due the Crown and recovery is therefore not contingent upon the approval of the employee.
In no circumstances can the recovery of an emergency salary advance be made over an extended period of time.
The department, not the paying office, is responsible for ensuring that all overpayments of salary, wages, or pay and allowances are recovered from any sum of money that may be due or payable to an employee or former employee.
Paying office responsibility
When an overpayment is discovered by the paying office pertaining to an active employee, the department or agency will be advised of the amount of the overpayment. The paying office will take no further action until the appropriate department or agency provides written advice as to the method, rate and/or period of recovery.
When an overpayment of salary remains after all available funds of an employee who has terminated employment have been applied, the paying office will advise the department or agency of the outstanding balance of the salary overpayment. Once the department or agency has been notified of the outstanding amounts, no further action will be taken by the paying office.
When a department or agency discovers an overpayment with regard to an active employee and the overpayment can be recovered over a specified period, the reporting document sent to the paying office must indicate the method, rate and/or period of recovery. If no direction on the reporting document is given to the paying office, the recovery of the overpayment will be made in full from the first available funds payable to the employee.
When the paying office notifies the department or agency that an overpayment still exists after all available funds of a former employee have been exhausted:
When an overpayment has been partially or fully recovered from a pension benefit, it is the responsibility of the department or agency to inform the paying office in order that their records can be kept current.
In order to prevent over-payments, the practice of withholding or returning for cancellation or amendment, any payroll cheques which are obviously inaccurate must continue. Furthermore, departments should make every effort to eliminate overpayments by prompt dispatch of pay action documents.
Most relevant terms and conditions provide that when an employee ceases to be employed for any reason other than death or lay-off and has been granted more vacation leave with pay than entitled, or more sick leave with pay than earned, or any type of leave with pay and has not fulfilled the conditions under which it was granted, recovery action shall be taken.
The overpayment for the excessive leave may be recovered from any moneys payable in respect of the employee's employment. In computing the amount of the overpayment, the most recent period or periods of leave granted shall be deemed to be the period or periods of unearned leave.
Treasury Board has directed that, for superannuation purposes, overdrawn annual leave shall not be considered leave without pay for superannuation contributions. Paying offices should recover the salary overpayment without the double rate superannuation contributions.
An employee who has been granted leave without pay because of insufficient leave credits or because leave with pay cannot be granted until a specific period of employment is completed, as in the case of new employees being taken on strength, and the period of leave exceeds six consecutive working days, superannuation deductions, if applicable, must be recovered at penalty rate.
Where there is any conflict between the provisions of this policy and the terms and conditions of employment, the terms and conditions of employment will apply.
In the event that the individual is required to repay an overpayment in the same or a subsequent year, no reduction from income is allowable with respect to the repayments (whether made by deduction from the employee's pay or in some other manner). That is to say, that the employee's T4 or Relev√©¬†1 must be reduced for the year for which the overpayment pertains and not for the year or years in which it is recovered.
In certain circumstances moneys owing to an employee may be made payable to another party. When an overpayment on account of salary, wages, or pay and allowances occurs recovery may be effected in the same manner as a normal salary overpayment.
Recovery of other amounts owing by the employee (for example superannuation, gratuity) may require voluntary authorization of the payee. Refer to Section¬†5 of this chapter.
Should voluntary authorization not be obtained recovery action under Section¬†155.1 of the Financial Administration Act may be commenced. Refer to section¬†10 of this chapter.
Generally, the authority which permits the payment of an advance or loan to an employee will also provide for its recovery from the employee's salary or any other money payable.
Where an employee to whom the advance or loan is made ceases to be employed or dies without accounting for or refunding the advance or loan, most authorities allow recovery to be made out of any moneys payable to that employee or the employee's estate.
All accountable advances or loans not repaid or accounted for must be reported in the Public Accounts report laid before Parliament annually.
The total of the charges is deducted at source from salary and credited to revenue of the department administering the accommodation. Collections for pooled housing under Public Works Canada are transferred to Public Works annually.
The Treasury Board has authorized deputy heads and heads of agencies to direct that recovery of arrears of rent for government quarters caused by underdeductions from salary may, at the request of the employee, be extended over a number of pay periods at a normal recovery rate of 10% of the gross salary entitlement of the employee for a pay period. In extenuating circumstances, a lower recovery rate may be authorized. A higher rate may be applied at the employee's request or in special circumstances where the deputy head is of the opinion that the employee has contributed to causing the underdeduction from salary.
The Treasury Board has directed that Crown-owned housing units may continue to be occupied by an employee who is suspended from duty as follows:
If the rent is not paid in cash and cannot be deducted from salary, it should be recovered from superannuation deposits or other moneys owed to the employee by the Crown, pursuant to the provisions of Section¬†155(1) of the Financial Administration Act.
Although a living-cost differential has replaced the supply of meals and rations in most isolated posts, there are, nevertheless, certain situations where the supply of meals and rations must be continued. In such circumstances, unless the Treasury Board has authorized other rates in specific instances, charges for meals and rations are levied in accordance with the Isolated Posts Regulations (refer to the Isolated Posts Directive volume).
The compensation rates for certain groups include provision of uniforms. In any other case, if a department supplies uniform clothing, the cost must be assessed against the employee unless otherwise authorized by the Treasury Board.
The parking policy of the federal government is promulgated in the Employee Services volume.
At work places served by regularly scheduled public transit, parking will be provided in the minimum quantity required for effective operation of the installation, and those employees provided with parking will be charged for the space provided. Conversely, at work places not served by regularly scheduled public transit, parking will be provided without charge to the employees in a quantity sufficient to meet reasonable demand.
This parking policy applies to:
The policy does not apply to Separate Employers listed in Part¬†II of Schedule¬†I of the Public Service Staff Relations Act. These employers are, however, encouraged to adopt these or similar policies and guidelines to ensure consistency across the Public Service. Separate employers are expected to consult with the Treasury Board Secretariat before implementing any significantly different parking policy and guidelines.
Parking charges shall be recovered from employees through payroll deductions and shall be credited to the Consolidated Revenue Fund.
Rebates to employees for parking charges shall be considered only:
In either of the above cases, employees will be entitled to a rebate of 1/20th of the monthly charge for each day.
For those departments compiling their own payrolls, the parking charge deductions will be initiated in the normal manner.
Payroll deductions from employees having parking privileges will commence and terminate in accordance with reporting procedures provided in the Personnel-Pay Input Manual.
If a payroll deduction cannot be processed in time for the effective month, recovery of arrears will be made by double deductions in subsequent months. Refunds, in respect of conditions identified in Section¬†4.4.3 above, will be processed through the pay system. Departmental personnel should report the amount to be refunded.
Paying offices shall remit to the Department of Public Works and/or reimbursing clients of the Department of Public Works, on a regular basis, the total amount deducted under the parking deduction code(s).
There are also other miscellaneous charges made from salary, for example, toll charges for personal messages sent by employees in isolated areas using departmental communications facilities.
An employee may make voluntary arrangements to settle a Crown debt by authorizing the amount of the indebtedness to be deducted from payments due from the Crown.
When a person, who is indebted to the Crown, authorizes a department in writing to deduct the amount of a debt from money owed to that person by the Crown, the department may act on this authorization.
The term "assignment" with respect to money payable to any person means the legal transference by the person to whom the money is owing of all rights to that money. An assignment is irrevocable.
All assignments against the salary or wages of a public servant are prohibited (FAA Section¬†68(5)).
Consequently, where an advice is received of an assignment which covers the salary or wages payable to an employee, or pay and allowances of members of the Canadian Forces or the Royal Canadian Mounted Police, both assignee and assignor should be advised forthwith that the document cannot be acted upon.
When a delinquent debtor has not opted to make voluntary arrangements to repay the debt, action may be initiated under a specific statute or regulation that permits set-off or recovery.
The Income Tax Act, which authorizes set-off to collect amounts owing under the Income Tax Act and taxes owing to a province where the Minister of Finance has entered into an agreement with the province to collect the tax on its behalf;
This section applies only to collection of arrears of federal income tax and provincial income tax of the nine provinces for which, pursuant to a tax collection agreement, the federal government (Revenue Canada Taxation) acts as agent for the province in collection of tax.
There is no such agreement with the Province of Quebec and consequently, no authority to collect arrears of Quebec tax.
Where an employee or former employee owes an amount representing arrears of income tax, other than Quebec tax, the amount owing may be collected as follows:
For the purpose of the above, "salary or wages" includes any amount coming within the definition of salary or wages in the Income Tax Act (refer to Chapter¬†6 of this volume).
The above authorizes retention of a debt or obligation from money payable to the debtor, and therefore applies equally to retention from money payable to the employee's estate. It also provides authority for retention from money payable to a third party, pursuant to an assignment or power of attorney given by the debtor, because the amount so assigned is restricted to the amount that would otherwise be payable to the assignor or attorney, which in these circumstances is the net amount.
However, retention out of money to which some other person becomes entitled upon the death of the debtor (for example, an allowance or other amount payable to a surviving spouse or child) may be effected only if the relevant statute so provides or upon written consent of the recipient.
The direction of the Taxation Branch is given on a form¬†T1118 (Requirement to Pay) submitted to the paying office which issued the T4¬†slip for the employee.
A Canada Employment and Immigration (formerly UIC) demand on third party does not constitute sufficient authority to recover from an employee's salary unemployment insurance benefits paid in error. It is the responsibility of Employment and Immigration Canada to seek recovery authority, pursuant to Section¬†155(1) of the Financial Administration Act.
Specific authority to recover an overpayment of salary or wages made to an employee is set out in section¬†2 of this chapter.
Where there is no specific authority to recover an amount owing to the Crown, recovery may be effected pursuant to Section¬†155(1) of the Financial Administration Act.
Section¬†155(1) provides that where any person is indebted to the Crown, the Minister responsible for the recovery or collection of the debt may request that the debt be deducted or set-off from any sum of money that may be due or payable by Her Majesty to that person or that person's estate.
Section¬†155(4) of the same act also states that no amount may be retained under Section¬†155(1) without the consent of the appropriate Minister under whose responsibility the payment would otherwise be made. In addition, set-off may not be made where the statute governing the payment involved stipulates that the money is not attachable nor may set-off be made against payments from trust accounts.
Normally, this procedure is used where the employee or the estate do not voluntarily authorize recovery, but it should also be used where collection is requested from moneys payable by other than the employing department or directly by the Receiver General.
Where the employee becomes re-employed in a different department, which results in a change in Minister, consent of the new Minister responsible for the salary payment is required before recovery action may be commenced.
Following termination from the Public Service and where the employee becomes re-employed in the same department as that from which the termination occurred, consent from the Minister for recovery action would not be required.
Upon termination of employment from the Public Service, consent of the Minister under which the terminal benefits would normally be paid is required to commence recovery action.
Where a debt is to be collected through set-off against salary or pension, the rate of collection should be mutually agreed upon by both the department responsible for collecting the debt and the department responsible for making the payment, and should give consideration to preventing undue hardship while at the same time protecting the Crown's interest. Set-offs against contractual payments, however, should normally be for the full amount of the debt.
It should be noted that the President of the Treasury Board is deemed to be the Minister responsible for the payment and return of superannuation contributions and pension benefits.
The requirement for consent of the paying Minister does not apply to set-offs to recover overpayments of salaries, wages, and employment related allowances under Section¬†155(3).
Upon receipt of a written request to effect set-off pursuant to 155(1) and consent of the paying Minister has been obtained pursuant to 155(4) the action may be processed as either a manual one-time deduction or on a continuing basis.
The request for set-off should stipulate:
The following procedures provide a structured method for processing manual one-time deductions:
For on-going payments, a pay action must be raised and forwarded to the applicable SSC pay office.
Specific codes have been allocated for the collection of debts due to Crown and are contained in the PPIM, Section¬†9-5-4.
Where no specific code has been allocated Deduction Code¬†540 "Other debts owing to the Crown" may be used.
Use of the specific code will transfer the amount directly to the crediting department. Use of the Deduction Code¬†540 will necessitate the deposit of the deducted amount, by means of the home department's Pay Expenditure Control File, into a suspense account. The funds are then transferred to the crediting department by means of an ISA form, prepared by the departmental Finance Section.
Until payroll deductions are effected the procedures outlined for manual one-time deductions will apply.
A DSS Requisition for Return of Contributions Form (DSS¬†2009) is to be completed in accordance with established procedures with the exception of the recoverable amounts section, which should make reference to attachments such as those listed below.
The documents attached should include:
Upon cessation of employment in a particular position or from the Public Service, employees are generally held accountable for the return of miscellaneous items (briefcases, books, parkas, etc.). When such items have not been accounted for or returned, the item's equivalent dollar figure becomes a debt to the Crown and is recoverable under 155(1) of the Financial Administration Act. (See Section¬†10 of this Chapter.)
A charge may be assessed against an employee for damage to Crown-owned property and the amount deducted from the employee's salary.
Similarly, where the Crown has paid a claim of a third party for damages or other cause and an employee is found to be liable to reimburse the Crown, all or part of the amount so paid may be assessed against the employee and deducted from salary.
Where, pursuant to the opinion of the Deputy Attorney General or as a result of the judgment of a court, the Crown is required to pay a claim for damages, regardless of the cause, and in the opinion of the Deputy Attorney General:
demand shall be made by the department concerned upon the officer or servant for reimbursement to the extent of the whole amount required to be paid by the Crown, except that the Treasury Board may, by reason of extenuating circumstances, direct that the demand be made for a lesser amount or that no demand be made.
Unless otherwise directed by the Treasury Board, if an officer or servant of the Crown upon whom a demand is made under this section does not, within a reasonable time, arrange for the payment of the amount demanded, the department concerned shall refer the matter back to the Deputy Attorney General with a request to take steps to enforce payment.
Where the officer or servant concerned admits liability and authorizes deduction to be made from salary or wages, deduction may be made upon approval of the Receiver General.
The amount of the demand may not be deducted arbitrarily from the salary of the officer or servant if liability is not admitted and the deduction not authorized by the officer or servant.
Where the officer or servant concerned does not arrange for payment of the Crown's claim within a reasonable period of time, the department concerned, unless otherwise ordered by the Treasury Board, will request the Deputy Attorney General to recommend what legal steps should be taken to enforce payment.
If, after the case is referred back to the Department of Justice, the officer or servant still does not admit liability and the case is taken to court, a judgment in favour of the Crown would have the effect of establishing a debt due the Crown which could be collected under Section¬†155 of the Financial Administration Act.
Treasury Board has approved the use of financial penalties, in accordance with Section¬†50 of the Public Service Terms and Conditions of Employment Regulations, as a disciplinary measure in lieu of suspensions. In giving such approval, it was the intention of the Treasury Board that financial penalties should be an added disciplinary option where it is considered preferable to suspension for operational or economic reasons.
Financial penalties in lieu of suspensions should be expressed in dollar amounts and be approximately equal to the employee's rate of pay for the period of suspension the infraction would have attracted if that method of discipline had been used.
Payroll deductions from an employee having a financial penalty will be commenced and terminated using deduction code¬†542. Reporting procedures are described in the Personnel-Pay Input Manual.
In recovering financial penalties, the deputy head may establish an extended recovery period taking into consideration the amount of the penalty and the salary of the employee.
Any amount assessed will be considered a debt owed the Crown for the purposes of establishing priority in making deductions.
Paying Offices shall journalize the amount deducted to Treasury Board by use of a Source¬†50 Journal Voucher using Treasury Board coding 48-045-093-45942-00000. The amount recovered will be credited to a "Miscellaneous Non-Tax Revenue Account".
Any amount recovered from an employee which is in excess of that subsequently established through the grievance or adjudication process shall be refunded to the employee using the same deduction code¬†542 if the refund is processed in the same fiscal year as the deduction, and charging the refund to the "Miscellaneous Non-Tax Revenue Account". The Pay Office will recover the amount to be refunded by a Source¬†50 Journal Voucher entry to Treasury Board.
If the refund was made in a fiscal year subsequent to the year in which the deduction was made, then the refund would be charged to "Refunds of amounts pertaining to previous years deductions", using code¬†543 and Treasury Board coding 22-045-351-32600-00000.
Subject to specified conditions, Sub-sections¬†1(b) and 2 of Section¬†155 of the Financial Administration Act provide for the collection of the following types of debts out of money payable by Canada to the debtor:
Recovery actions under Sub-section¬†155.1(b) require the consent of the paying Minister.
All reasonable action must be taken to locate a missing debtor taking into account the amount owing vis-√†-vis the administration and collection expenses that may be incurred.
The Privacy Act provides that, subject to any other Act, personal information under the control of a government institution may be disclosed to any government institution for the purpose of locating an individual, in order to collect a debt owing to the Crown by that individual or to make a payment owing to that individual. This provision is intended to facilitate the collection of debts due to the Crown.
In addition, Section¬†9(2) of the Financial Administration Act empowers the Treasury Board to require any public officer or agent of Her Majesty to provide a department with such information from any account, return, record, statement, document, or report as may be required to locate a debtor or to effect a set-off. The Treasury Board in turn has directed that upon the request of a department, any other department or agent of Her Majesty shall provide the following information to the requesting department, provided that disclosure of the information is not otherwise precluded by law:
A request for the information may be made either orally or in writing; however, with an oral request, the onus is on the responding department to satisfy itself of the authenticity of the request before disclosing the information requested. When making a request, the amount or the nature of the debt need not be disclosed.
A general departmental practice is to have all requests screened by the Departmental Privacy Co-ordinator.
Information to be provided in response to such a request must be obtained from a document, record, or file pertaining to the debtor and not a third party such as a relative or a spouse and must not be used for any other purpose.
All overpayments on account of salary, wages, or pay and allowances must be reported in the Statement of Public Accounts presented before Parliament annually. The report is generally co-ordinated through the departmental/agency financial organization.
After all means of collection action have been exhausted and liquidation of the debt has been unsuccessful the debt may be considered for write-off pursuant to the Debt Write-Off Regulations.
As a general rule, approval to write-off overpayments of salaries, wages, or employment-related allowances will be granted only in very exceptional circumstances. In most cases the overpayment is expected to be recovered, although, where the employee's circumstances warrant, recovery can be arranged over a period of time or even deferred until termination of employment and then recovered from severance pay or a return of superannuation contributions.
The write-off of debts owing by an active employee requires the approval of the Treasury Board regardless of the amount owing.
The Debt Write-Off Regulations stipulate the authorities and criteria for the write-off of debts of former employees.
It should be noted that the writing off of a debt does not forgive the debt or eliminate the obligation of the debtor to make payment; nor does it affect the right of the Crown to enforce collection at any time in the future.
Accordingly, departments must keep sufficient documentation on these debts to enable them to resume collection action should it become feasible to do so; and
Departments must also keep documentation on debts written off for review by the OCG and possible further action.