Processing of Pay Equity Interest Cheques-Questions and Answers

Q.1 Certain pay equity recipients have been notified by their departments that they have received more money than they were entitled to in regards to their payments and that this money would be recovered on their interest payment. How many recipients are in such a situation?

The Government of Canada is confident that most pay equity payments are accurate. The requirement to recover monies applies only to a small number of the 230,000 current and former employees entitled to receive pay equity payments.

Most recipients will be receiving a final pay equity cheque in December 2000. This cheque will cover the interest owed to recipients for the period of March 8, 1985 to July 28, 1998. In the majority of cases, the amount of this cheque will be able to offset any pending recoveries.

Q.2 How long has the federal government been aware of the fact that certain pay equity recipients had received more money than they were entitled to? Why has it chosen to only inform pay equity recipients of this situation now?

The need to reconcile the interest payment is stipulated under section 9.5 of the pay equity agreement between the federal government and the Public Service Alliance of Canada (PSAC).

When the agreement was signed in 1999, it was requested that the recipients receive their payments as soon as possible. To do this, the payment process was automated to the extent possible. However, section 9.5 of the pay equity agreement stipulates that any overtime, acting or promotion situation during the period of April 1, 1994 to July 28, 1998 be manually recalculated on an individual basis.

As a result, before the interest cheque is released, departments must undertake a verification process to ensure that every recipient receives exactly what they are entitled to under the pay equity settlement.

Q.3 Exactly how many interest cheques need to be recalculated/verified?

The Government of Canada is confident that most of the pay equity payments made to the 230,000 individuals entitled to receive them are accurate. To ensure this is the case, departments are undertaking a reconciliation process before the final interest cheques are sent out.

Of the 230,000 recipients eligible to receive pay equity payments, an estimated 5 per cent of accounts will need to be manually recalculated, as stipulated under section 9.5 of the pay equity agreement. This represents any overtime, acting or promotion situation during the period of April 1, 1994 to July 28, 1998.

This verification must be carried out to ensure that when we close the books on pay equity, recipients have received exactly what they are entitled to under the agreement. Having said that, we wish to reassure recipients that they will receive all money owed to them under this agreement.

Q.4 What will happen to employees who have been notified that a recovery is necessary but who are unable to repay the amount owed to the federal government?

Not all recalculations will necessarily result in a recovery situation. In most cases, the interest payment will be more than sufficient to offset any pending recoveries and will still provide some money to recipients.

In exceptional circumstances where there is a recovery that exceeds the interest payment to be made and the recipient is experiencing financial hardship, we will work with him or her to identify a repayment plan that takes into account the specific individual's ability to pay.

Q5. What steps is the federal government taking to alert recipients of pending recoveries?

Departmental compensation specialists are currently alerting those affected that the recovery has been made from their interest payment.

In most cases, the interest cheque -- which is the final payment under the pay equity settlement -- will be more than sufficient to offset any pending recoveries and still put money in the pockets of recipients.

Q6. What impact will recoveries have on individuals who have been identified as estate beneficiaries of those entitled to receive pay equity payments?

If a recovery is pending, the final interest cheque to beneficiaries will be reconciled and the recovery deducted from the remaining balance owing before it is sent to the recipient or the recipient's estate.

In exceptional circumstances where there is a recovery to be made that exceeds the interest payment, we will work with recipients or their beneficiaries to identify a repayment plan that takes into account the specific individual's ability to pay.

December 2000