The Phoenix Pay System, a Canadian government IT initiative aimed at modernizing the federal payroll process, has been plagued with problems since its launch in April 2016. With a budget that’s even more enviable—CA $310 million—this project shines. Its mission is to provide accurate, timely, and secure payroll service to the 430,000 current and retired federal employees. Yet, even after all that investment, more than 70% of employees received paychecks wrong. As of March 2025, more than 349,000 errors remain unresolved, raising questions about the government‘s capability in managing large-scale IT projects.
A History of Failures
The Canadian government’s payroll system failures are nothing new. The initial replacement effort launched in 1995 was a catastrophic failure, stranding many employees without prompt and precise payment. All of this past experience and knowledge was ignored as the Phoenix project continued without properly dealing with the known causes of that initial failure.
The current climate has fueled a national firestorm that questions the government’s ability to appropriately supervise expensive, enterprise-wide IT development projects. The magnitude of the promised investments has many stakeholders asking if enough better lessons have been absorbed from previous mistakes. This lack of accountability and long-term thinking has made it feel as though we are making the same mistakes all over again.
“Anyone can make a mistake, but only an idiot persists in his error.” – Cicero
Most critics feel powerfully vindicated by such an assertion. They claim that the federal government disregarded certain warnings and recommendations that would have prevented today’s debacle from happening in the first place.
Persistent Payroll Problems
Since launching, the Phoenix Pay System has faced a myriad of problems. These issues have severely affected millions of users. More than three-quarters of employees have experienced paycheck errors. The error could be an underpayment, overpayment, or even no paycheck at all. Consequently, as of March 2025, an astounding 349,000 payroll mistakes have yet to be corrected.
Even more worrisome is that nearly 60 percent of these errors have been outstanding for more than a year. The emotional and economic toll on these employees and their families has been equally devastating. Millions more are suffering from the economic effects of staggered paychecks, creating additional levels of stress and anxiety for millions of American families.
As employees grapple with these issues, they are left questioning the government’s commitment to resolving these problems and ensuring a reliable payroll system.
The Financial and Emotional Toll
The ramifications of failure of the Phoenix Pay System go far beyond simple inconveniences. Instead, employees say, they’re left feeling disheartened and frustrated with the persistent failures that plague their paychecks. The hit to family finances has been enormous. So many of them can’t afford to live where they work due to a lack of stable, reliable income.
Additionally, the emotional toll has fostered a climate of suspicion where workers feel they can no longer trust their boss—the federal government. All the while, these residents have repeatedly expressed feeling unheard, unconsidered, and deprioritized. The lingering legacy of these outstanding issues left unaddressed is still taking a toll on the well-being and morale of this workforce.
We want to hear that the government recognizes this urgent problem and is truly committed to a solution. Despite the new action, employees are still doubtful that substantive change will be made.
An Ongoing Concern
The high failure rate of IT projects within the Canadian government raises important questions about governance and project management practices. The ongoing mess that is the Phoenix Pay System stands as a cautionary tale of the perils of complex, large-scale IT efforts.
As the government does invest in technology projects, many players—including technology and data experts—argue that far greater oversight and accountability measures are needed. Like us, they think we need to rethink our entire approach. If we fail to heed the lessons of the past, we can expect the same poor outcomes again and again.
“To Engineer Is Human: The Role of Failure in Successful Design” – Henry Petroski
