February marks ten years since the troubled Phoenix pay system was launched by the federal government, and recent data sheds light on its impact. Following its introduction in 2016, Phoenix was harshly criticized by the auditor general of Canada as it caused both overpayments and underpayments to thousands of public servants, issues that persist today.
Public Services and Procurement Canada (PSPC) has released the latest figures outlining the ten-year journey of Phoenix in numbers. Since its inception, approximately 483,130 employees have been overpaid a total of $3.57 billion. By December 2025, around 370,252 employees had repaid $3.09 billion in overpayments, leaving 112,878 employees with outstanding balances totaling $487 million.
Regarding underpayments, PSPC stated that tracking such figures within Phoenix is challenging due to the lack of standardized recording methods.
The total internal cost of Phoenix is estimated to be around $4.8 billion, including an initial development cost of $309 million and subsequent investments of $3.51 billion between 2016 and March 2025. The government has allocated approximately $980.7 million for Phoenix operations and backlog clearance for the current and upcoming fiscal years.
Data from the past five fiscal years indicates that IBM Canada Ltd., Systematix IT Solutions Inc., McKinsey & Company Canada PricecwaterhouseCoopers LLP, and Oracle Canada ULC were the top beneficiaries of Phoenix contracts. IBM, responsible for the system’s design and deployment, received over $851 million in the last decade.
The current workforce dedicated to reducing the Phoenix backlog consists of 1,769 full-time employees at the Miramichi-based payroll center, a significant increase from the early days of the project. Efforts are ongoing to gather detailed information on the total number of staff involved in the Phoenix project over the years.
The transition to Dayforce, the software set to replace Phoenix, is expected to be completed by 2030. A $350.6-million contract with Dayforce, covering work until June 2026 and potentially extended to 2049, has seen 131 full-time equivalent staff working on the project.
As of January, there were 233,000 cases in the Phoenix system awaiting processing, with 37% within service standards and 45% pending for over a year. The pay center received 109,000 new transactions last month and processed 110,000 cases. PSPC aims to address 122,500 backlog and priority cases by June this year in preparation for the Dayforce pilot.
The testing phase for Dayforce is set to involve the Canadian Nuclear Safety Commission, Shared Services Canada, and Public Services and Procurement Canada, with a requirement for error-free payroll files and zero arrears before the transition.