FAQs for Executive back pay
resulting from the Economic Increase
These Qs and As were developed by APEX in consultation with OCHRO and PSPC. This information contained is provided for information purposes only and does not constitute a legal document. Should you require more detail on the information contained herein, please consult your departmental compensation advisor.
Who is eligible for the salary revisions?
You are eligible for the salary revisions if you were an employee in the Executive (EX) Group or acting in an EX position in the core public administration (CPA) between April 1, 2014 and March 31, 2018.
Excluded employees in the Defence Scientific Group (DS levels 7A, 7B and 8) in the CPA are also eligible for these revisions.
If you are an employee in a group and level that mirrors the terms and conditions of employment of the EX Group, please confirm with your human resources advisor whether you are eligible for these increases.
You are not eligible for the salary revision for a fiscal year if you obtained a performance rating of ‘Did Not Meet (Level 1)’ for that year’s performance cycle.
What are the effective dates of the economic increases?
The Government of Canada approved annual salary revisions for each of the fiscal years 2014-15 to 2017-18 for executives in the core public administration.
What are the percentages on a per year basis?
The increases are as follows:
- 0.75% effective April 1, 2014;
- 0.75% effective April 1, 2015;
- 1.25% effective April 1, 2016;
- 1.25% effective April 1, 2017; and
- 1.0% wage adjustment on April 1, 2016.
The government is applying equivalent pay increases for unrepresented executives as are negotiated for represented public servants.
When will the salary revisions and retroactive payments be completed?
For departments served by the Miramichi Pay Centre, salary revisions will be
prioritized as follows:
- Group 1:
- substantive EXs who were active on or after April 1, 2018
- non-executives who acted in executive positions on or after April 1, 2018
- Group 2:
- substantive EXs who were active between April 1, 2014 and March 31, 2018 and who were inactive (retired, resigned, terminated, deceased) as of April 1, 2018
- non-executives who acted in executive positions between April 1, 2014 and March 31, 2018 and who were no longer acting executives on or after April 1, 2018
Salary revisions and retroactive payments for Group 1 will be completed by September 30, 2019. Salary revisions and retroactive payments for Group 2 may not be completed in 2019.
- Departments not served by the Miramichi Pay Centre and who have their own Compensation Advisors can begin completing their salary revisions according to their own internal time
Will my salary for the period 2014-2018 be recalculated?
Yes, the salary revisions are retroactive. Your salary for each of the four fiscal years between April 1, 2014 and March 31, 2018 will be revised and the adjustments will be calculated as if the salary revisions had been approved on the effective dates. The retroactive payments will be based on the amount of time you were in an Executive (EX) Group position during each of the four years.
Will the economic increase affect the executive performance pay?
Yes, since performance pay is calculated as a percentage of salary, your performance pay will be recalculated based on your revised salary on March 31 for each of the four cycles.
All salary and performance pay revisions resulting from these salary increases for executives will be recalculated and processed, once the new salary ranges are uploaded in the pay system.
Can I get amended T4s for the period covering these economic increases and can I refile my taxes based upon the year that I earned the economic increase to my salary?
Employment income is based on amounts you are paid and receive in a calendar year, regardless of when the work was performed. Therefore, amounts paid to you in 2019 will be reported on your 2019 T4 even if they relate to periods covering 2014-2018. An amended T4 will not be issued for those years.
At what rate will the back pay be taxed?
Depending on the income you received for the current year and the tax table that corresponds to the province where you lived on December 31 of the year.
The first thing to do is to check the tax rate versus your salary. Refer to the tax table. Then add salary arrears from 2014 to 2018 to your 2019 salary. You will then be able to see if you fall into a new tax bracket.
Canadian income tax rates for individuals: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html
As there will be deductions for superannuation from the back pay, how will this affect my registered retirement savings plan (RRSP) and the room I have to contribute?
Earnings in relation to these contributions will be included in the pension adjustment (PA) calculated for the year when the retro payment amount is received. This amount will be reported in box 52 of your T4 for that year.
The PA represents the value of the benefits you earned during the year under your employer-sponsored pension plan. Your PA will reduce your RRSP deduction limit for the following year.
How will this economic increase affect an executive who is currently drawing a pension? What about for one who is about to retire?
Once the retroactive amounts owing to you are paid, your pay file will be updated and this information will be transferred to the Pension Centre, where pension payments made to you for the corresponding period will be re-calculated and processed. If you are about to retire, your pension will be adjusted once the Pension Centre receives your updated salary history.
Over the period covered by the retroactive payment I have cashed out some excess vacation leave. Will the value of these amounts I received be adjusted as well?
The adjustments will be calculated as if the salary revisions had been approved on the effective dates. Therefore, the value of your cashed out leave will be recalculated.
During the period covered by the retroactive payment I received disability insurance payments. Will these payments also be adjusted retroactively to reflect the new rates of pay for that same period of time?
The adjustments will be calculated as if the salary revisions had been approved on the effective dates. Therefore, the value of your disability payments will be recalculated.
During the period covered by the retroactive payment I took maternity/parental leave. Will the top-up of my Employment Insurance Benefit payments be adjusted retroactively to reflect the new rates of pay for that same period of time?
The adjustments will be calculated as if the salary revisions had been approved on the effective dates. Therefore, the value of your maternity leave top up payments will be recalculated.
I am planning on retiring in the next year and wondered when my best five consecutive years of pensionable earnings will be adjusted to reflect the new rates of pay?
The economic increase will result in an increase in executive pay for the years from 2014 – 2018. If this covers one or some of an executive’s best five consecutive years, a recalculation of the pension payments will be implemented once the Pension Centre receives the updated salary information.
Will the adjustment of the base pension be made at the same time as the payment of owed back-pay?
No. Adjustments to your base salary and pension are handled separately. Once any retroactive salary owing to you is paid, your updated salary will be provided to the Pension Centre, where your pension history will be amended to reflect any change in salary and the corresponding adjustment to any pension amounts paid.
How much detail will be provided with regards to the payment of back pay in the Compensation Web Application (CWA). Will individuals be able to see a breakdown of the amount (by fiscal-year or type of pay) or will only one lump- sum payment appear?
Once the economic increase rate is in the system, the Compensation Advisors will have to revise the salary manually. The breakdown of the amount will show in the pay stubs posted on the Compensation Web Application if entered by fiscal year/type of pay. If entered by lump-sum payment, the breakdown might cover the entire period of the retroactivity.
What services are or will be available to executives requesting clarification regarding their receipt of back pay or a review of their pay file?
Executives with questions regarding their back pay or pay file should contact their compensation service provider.
When will the next Economic Increase be implemented that will cover the period starting 1 April 2018?
TBS will inform the executive community once decisions are taken on economic increases for executives for 2018-2019.
Where can I go if I need support from Canada Revenue Agency (CRA)?
Executives can consult CRA’s website at: https://www.canada.ca/en/revenue-agency/campaigns/about-canada-revenue-agency-cra/frequently-asked-questions-tax-implications-phoenix-payroll-issues.html