Background

The Treasury Board provided direction to departments and agencies for the sound management of employment adjustment programs. To assist departments in managing these activities the government introduced two new incentive programs: the Early Departure Incentive program (EDI) and the Early Retirement Incentive program (ERI). These programs do not replace the existing Work Force Adjustment Directive (WFA) but complement it. The WFA is designed to help "surplus" Public Service employees whose jobs are eliminated. This help includes finding work within the federal government, unless these employees choose to leave the Public Service.

The EDI applies to those departments which are designated by the Treasury Board as "most affected departments." DIAND is not so designated, therefore, only WFA and ERI apply to DIAND and are subject of this audit. All departments are required to provide assurance of compliance, with these directives, to the Treasury Board.

Objectives and Scope

The objectives of the audit were to provide an assessment of the application of the WFA and the ERI directives by DIAND and to determine the degree of compliance with central agency and departmental directives with due regard for economy, efficiency and effectiveness.

The audit scope covered WFA/ERI actions taken during the period from April 1995 to June 1996 in the Atlantic, Ontario, Saskatchewan and NCR regions. The number of actions taken, during this time period, was 50 in the above regions and 35 in the other regions. The audit reviewed all 50 cases in the Atlantic, Ontario, Saskatchewan and NCR regions.

Approach

The approach to the audit focused on all 50 cases included in the scope. For each of these cases, the review included testing of the calculation of benefits provided and confirming the eligibility of employees under the directives. Also, we examined whether or not the employees' duties were eliminated. This was done by comparing organization charts before and after the employee was declared surplus, reviewing job descriptions and having discussions with their respective managers. The audit reviewed management of the WFA process, both at headquarters and in the regions. This was accomplished through interviews and reviews of documentation. In addition, in consultation with the management, a small sample of ten employees, not affected by work force adjustment situations, at headquarters and the three regions were interviewed to assess the WFA impacts.

General Assessment

Based on our review, the Atlantic, Ontario, Saskatchewan and NCR regions of the department were in compliance with the WFA/ERI directives and central agency and the departmental policies and procedures.

Key Observations

In 16 of the 50 cases reviewed, errors of over or under payments, ranging from $20 to $600 were found in the calculation of the amount of the Pay in Lieu of Unpaid Surplus (cash out) or the amount of the Severance Pay, paid out to the departing employees under WFA/ERI actions.

In the Ontario Region, a school principal and five teachers were provided benefits under the application of ERI, excluding cash out, although their positions were not eliminated. This was due to circumstances beyond the control of the region where a planned devolution of schools to First Nations did not occur. However, the propriety of the application of WFA/ERI directives to these cases has been substantiated by the department by obtaining a legal opinion from the Department of Justice Canada in an earlier case of a similar principle.

Key Recommendations

The Director General, Human Resources Branch, Corporate Services implement national procedures to ensure employees involved in calculation of departure benefits are aware of the appropriate formulas for calculation of WFA/ERI benefits and the calculations are verified by a supervisor before they are being paid to departing employees.

Audit of the Work Force Adjustment Directive and the Early Retirement Incentive Program (PDF 39 Kb) in PDF format.

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