Ottawa considers new system for next-generation payroll

But significant changes in how federal government conducts business needed, finds report

BY Jim Wilson 02 Feb. 2024

Dayforce presents a technically viable option for the GC's next modern HR and pay system, according to Public Services and Procurement Canada.

The government body came to that conclusion after looking into four categories of viability:

Functionality - Dayforce provides 85% of in‑scope business requirements, and meets most of Ottawa’s critical HR-to-pay capabilities needs.
Complexity - Dayforce is flexible enough to respond to the complexities of Ottawa’s HR and pay scenarios.
Accuracy - Dayforce behaved as expected during parallel validation against the current pay system, with differences being explainable.
Mandatory requirements - Dayforce can meet the federal government’s viability criteria for security, privacy, official languages and accessibility. Dayforce can securely and reliably interoperate with the necessary systems in the GC's IT ecosystem.

“Public servants deserve to be paid accurately and on time for their work. We are continuing to take action to ensure that we are improving current pay operations, while also moving toward a system that meets the needs of the Government of Canada now and in the future,” said Jean-Yves Duclos, minister of public services and procurement.

“Exploring a new, modern and effective system is an opportunity to reimagine how services could be delivered in a fully digital environment.”

Next-generation payroll

The Treasury Board of Canada Secretariat established the Next Generation Human Resources and Pay team (NextGen HR and Pay) in 2019 to explore a future HR and pay solution for the federal government. It is meant to be a digital solution that is mobile, accessible and available 24-7.

The changes follow the government’s troubled Phoenix pay system, where a 2017 report found that the government’s failure to fully appreciate the intricacies involved in changing the way it administered payroll led to the problems.

In December 2019, the federal government launched a process allowing former employees to request general compensation for damages caused by Phoenix.

Ottawa previously selected SAP for a pilot to test a potential HR and pay solution.

Successful implementation of new HR and pay system

Despite Dayforce’s viability, significant changes in the way the federal government conducts its HR and pay business are needed for the successful implementation of a new system, according to the report.

These include:

Achieving government-wide readiness to adapt existing business processes and practices to adopt a modern solution, including robust change management strategies
Simplifying and standardizing complex HR and pay business rules and processes to support efficiency and automation, including involvement from all interested groups;
Introducing a single employee record that captures employee data in one place and follows employees throughout their career across the GC and into retirement
The capacity to manage, as an enterprise, the transformation and future-state service and solution for HR and Pay, and maintain existing systems throughout the change to ensure a smooth transition.

The current pay system is used to deliver pay to an average of 420,000 current and former employees bi-weekly. In 2023, this represented approximately 13.1 million payments, totalling roughly $36 billion, according to the federal government.

One of the complexities of Ottawa’s HR and pay environment is the challenge of applying almost 150 different collective agreements representing employees from over 100 departments and agencies.

More testing is required in future phases to address the issues and gaps discovered during initial testing, and assess all functionality currently offered by the various HR systems in use today, according to the report.

“The government will always take steps to ensure that all public service employees are paid accurately and on time,” said Anita Anand, president of the Treasury Board. “We will continue working with all partners, including bargaining agents, to simplify human resources and pay processes to ensure that all efforts contribute to the success of a new employee-focused human resources and pay system.”