February marks the 10-year anniversary of the Phoenix pay system’s launch in the federal government. This error-ridden platform has overpaid and underpaid thousands of public servants, with lingering effects still evident today. Recent data reveals the scale of the ongoing challenges.
The Impact on Employees
Government estimates indicate that since Phoenix’s rollout in 2016, approximately 483,130 employees received overpayments totaling $3.57 billion. This figure includes administrative overpayments from 2017 to 2020, created intentionally to manage temporary assignment pay.
As of December 2025, around 370,252 employees have repaid their overpayments, with $3.09 billion recovered. This leaves 112,878 employees owing about $487 million.
Underpayments remain untracked, as no equivalent code or process exists in Phoenix. Officials note too many variables complicate accurate tallies.
Total Financial Burden
The system’s internal costs reach about $4.8 billion. Initial development cost $309 million, followed by $3.51 billion invested from 2016 to March 2025 for operations, improvements, stabilization, and backlog reduction.
For the past fiscal year and the upcoming 2026-27, allocations total $980.7 million to operate Phoenix and clear the backlog, which stood at 233,000 cases last month.
Key Contractors
Over the past five fiscal years, major contracts went to IBM Canada Ltd., Systematix IT Solutions Inc., McKinsey & Company Canada, PricewaterhouseCoopers LLP, and Oracle Canada ULC.
IBM, responsible for designing and deploying Phoenix, secured over $851 million in the last decade. Other firms received awards ranging from $11 million to $45.9 million for consulting, software management, process streamlining, IT services, and telecommunications. Additional contracts cost taxpayers $64.7 million in that period.
Detailed breakdowns before 2020-21 are unavailable due to financial system limitations and internal reorganizations. Figures exclude taxes.
Workforce Dedicated to Fixes
Currently, the equivalent of 1,769 full-time workers at the Miramichi, N.B., pay centre tackle the backlog—triple the initial staff levels.
Total public servants involved from design through management remain unquantified amid significant organizational changes and departmental transfers. Efforts continue to compile this data.
Transition to Dayforce
Dayforce software will replace Phoenix by 2030. A $350.6-million contract, signed from June 2019 to June 2026, may extend to 2049.
The project employed 131 full-time equivalents last year, peaking at 192 in 2022-23.
Current Backlog Status
As of January, 233,000 cases awaited processing: 37% within service standards, 45% (105,000 cases) pending over a year.
Last month, the centre handled 109,000 new transactions and processed 110,000 cases. Officials plan to clear 122,500 backlog and priority cases from April to June 2025 ahead of the Dayforce pilot.
This fall, testing begins with the Canadian Nuclear Safety Commission, Shared Services Canada, and Public Services and Procurement Canada. Participating organizations must resolve all payroll errors and arrears before file transfers.
