Ottawa has already burned through $3.5 billion trying to fix the Phoenix pay fiasco — and now it’s shelling out even more after settling with federal employees hit by the chaotic payroll issues.
Even after the settlement, the Phoenix pay system is still a disaster, with 400,000 unresolved issues clogging the system. As the government prepares to transition to Dayforce, a new replacement payroll system, one valid concern is going unaddressed: the root problem. That root problem is the need for customization in payroll systems. Without it, the government risks perpetuating the same issues.
The Public Service Alliance of Canada (PSAC), where 40% of its members reported pay problems from Phoenix over the years, has raised alarms about the selection process for Dayforce, warning of insufficient consultation.
In PSAC’s words, the government “seems intent on repeating the same blunders. There is no way to determine if Dayforce is the right system until it has been tested in departments with more complex pay transactions, such as Coast Guard workers who work variable shifts.”
This underscores a critical point: payroll systems for a workforce as extensive and diverse as Canada’s federal government cannot succeed with a one-size-fits-all approach. The challenges of managing complex pay structures, variable shifts, and unique employment scenarios across departments demand flexibility — something large, off-the-shelf systems often struggle to provide.
While the government’s initial testing found Dayforce to be a “technically viable option,” the process has raised questions about whether it can meet the nuanced needs of government payroll without encountering the same pitfalls as Phoenix. The choice of a pre-built system, structured around standardization over adaptability, underscores the risks of failing to prioritize customization.
Opportunity to Get It Right
Ottawa’s decision to select payroll systems has historically prioritized established, recognizable providers over solutions tailored to its unique needs.
As the government moves forward with Dayforce, it’s essential to recognize that even well-known tech names may not be equipped to address these specific challenges. Larger providers often lack the agility and innovation to offer the level of customization needed, making it crucial to evaluate whether such systems can truly meet the complexities of federal payroll.
The stakes are high. By prioritizing flexibility and engaging in meaningful consultation with stakeholders, the government can avoid the costly errors of the past. A payroll system built to adapt to the unique demands of Canada’s public service would not only ensure smoother implementation but also restore trust among employees who have endured years of payroll issues.
A Path Forward
Ottawa has an opportunity to address the core issues that have plagued its payroll systems. Customization must be at the forefront of this effort. Without it, the government risks encountering the same problems down the line, perpetuating a cycle of inefficiency and frustration.
The lessons from Phoenix are clear: one-size-fits-all solutions don’t work for Canada’s diverse federal workforce. To succeed, the government must embrace systems designed to adapt to its unique needs — and ensure the right processes are in place to support them.
Simon Bourgeois is the co-founder and CEO of Nmbr, Canada’s only embedded payroll company.
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