The Canadian government‘s Phoenix Pay System, which launched in April 2016, aimed to modernize payroll operations for federal public-service unions. The initiative has a budget of CA $310 million (~US $230 million). It’s an attempt to make more manageable the daunting task of carefully overseeing more than 80,000 pay rules in 105 collective agreements. Even after massive investment and lofty aspirations, the endeavor has suffered huge failures. This has led to a great deal of anger and resentment among alumni and alumni of the federal workforce.
The backstory to the implementation of the new Phoenix Pay System is a portrait in bad planning and execution. Project executives were convinced that they would be able to effectively tailor PeopleSoft’s off-the-shelf payroll package to address the specific needs of the government. The developer team had budgeted the delivery of development of this system at under 60 percent of the vendor’s projected cost. The complexities of connecting 34 HR systems interfaces between 101 agencies of government turned out to be much more complex than thought.
As we approach the end of that map’s life in March 2025, the results have been pretty grim. Yet the system currently has more than 349,000 outstanding errors. Alarmingly, even more than half—53 percent—of these have been pending for more than a year. Ongoing mistakes have plagued about 70 percent of the 430,000 active and retired federal government workers. These workers are paid through the Phoenix pay system.
A Troubling Legacy
Phoenix Pay System, launched in 2016, is far from the first try at changing payroll for the Canadian federal government. The last attempt went down in flames nearly three decades ago in 1995, leaving in its wake a legacy of fear and trepidation about such endeavors. This pattern of ongoing incompetence calls into question whether the federal government can successfully execute any large-scale IT endeavor.
The consequences of the Phoenix project’s failure spread past technical hiccups. Financially, the errors in pay that have yet to be resolved have left many employees—with their families—living paycheck to paycheck. Some have experienced months-long delays in their relief payments or received incorrect payment amounts, which has led to emotional trauma and financial instability.
“Anyone can make a mistake, but only an idiot persists in his error.” – Cicero
This feeling resonates all the more with those affected. It highlights their anger about things they see still not working, still persistently failing even when failure has been tried. Employees were confident that years of experience gained from the failed previous attempt would ensure an easier transition this time.
Commitment to Change
In light of the ongoing challenges, the Canadian government has publicly committed to addressing the backlog of errors in the Phoenix Pay System. CMCPs are designed to completely eliminate these persistent problems by June 2026. Last times were supposed to be different – pledges to jumpstart the area have collapsed. This has led many stakeholders to be extremely doubtful about our ability to reach this new performance target.
The officials understand that repairing them takes more than new technology. It will take a fundamental shift to how things are done and how government agencies communicate with the public. Payroll for a huge staff of public servants is no simple task. It takes a truly unique combination of technical prowess and human ingenuity.
“To Engineer Is Human: The Role of Failure in Successful Design” – Henry Petroski
Acceptance of error not only as a part of the design process, but an important component of success in the future, is necessary.
Lessons Learned
These are lessons we all hope officials will heed after the fallout from the disastrous Phoenix Pay System. To most industry experts, its failure is considered the poster child for poorly managed IT projects. It is an important cautionary tale for other organizations contemplating similar large-scale implementations. The failures provide important lessons to help shape future projects, preventing them from making the same mistakes.
The intricacies of payroll systems take significant lead time, testing, and implementation. Still, as stakeholders begin to plan for the years ahead, they are optimistic that new ideas will help ensure that it never happens again.
