1995-019-e.html

COMPENSATION DIRECTIVE : 1995-019

P. Charko
Director General
Compensation Sector
Government Operational Service Branch

Reference: CJA 9032-40

BUDGET DIRECTIVE

INCORPORATING THE PROVISIONS
ANNOUNCED
IN THE BUDGET - FEBRUARY 1995

TABLE OF CONTENTS

I. OVERVIEW - BUDGET FEBRUARY 1995

1 PURPOSE

2 OPTIONS

3 CONTENTS

4 DISTRIBUTION


II. EARLY RETIREMENT INCENTIVE (ERI) PROGRAM

1 PURPOSE

2 POLICY
2.1 Early Retirement Incentive Program

3 PROCEDURES
3.1 Early Retirement Incentive (ERI) Program
3.1.1 Eligible Employees
3.1.2 Termination Codes
3.1.3 Deputy Head Certification
3.2 Supplementary Death Benefit Coverage
3.2.1 Forwarding the Election Form


III. WORK FORCE ADJUSTMENT DIRECTIVE LUMP-SUM PAYMENTS

1 PURPOSE

2 BACKGROUND

3 PROCEDURES/INSTRUCTIONS

4. SYSTEMS SUPPORT


IV. UNPAID SURPLUS STATUS (USS)

1 PURPOSE

2 POLICY

INSURANCES

PSHCP
DCP
PSMIP
PUBLIC SERVICE PENSION PLAN
UNEMPLOYMENT INSURANCE

3 PROCEDURES/INSTRUCTIONS
3.1 Reason for Leave Without Pay Code


V. EXECUTIVE TRANSITION POLICY-FINANCIAL SETTLEMENTS

1 PURPOSE

2 POLICY

3 PROCEDURES/INSTRUCTIONS


VI. EARLY DEPARTURE INCENTIVE (EDI) PROGRAM

1 PURPOSE

2 POLICY

3 PROCEDURES/INSTRUCTIONS
3.1 Entitlement Codes
3.2 Reason for Leaving Codes


VII. PRE-RETIREMENT TRANSITION LEAVE

1 PURPOSE

2 BACKGROUND


VIII. LEAVE WITH INCOME AVERAGING

1 PURPOSE

2 BACKGROUND


IX. TRANSFERS TO REGISTERED RETIREMENT SAVINGS PLANS (RRSPs) AND TO REGISTERED PENSION PLANS (RPPs)



I. OVERVIEW - BUDGET FEBRUARY 1995

1 PURPOSE

The purpose of this Budget Directive is to provide you with information on the new work force reduction provisions announced in the budget on February 27, 1995, and related topics such as transfers to registered retirement savings plans and changes to the Work Force Adjustment Policy. Included is documentation on policy and administrative processes as well as systems tools available to Compensation Specialists to facilitate the implementation of the various provisions.

2 OPTIONS

The following are the provisions announced in the budget:

- Early Retirement Incentive (ERI)
- Unpaid Surplus Status (USS)
- Early Departure Incentive (EDI)
- Pre-retirement Transition Leave (PTL)
- Leave with Income Averaging (LIA)
- Work Force Adjustment (WFA)

3 CONTENTS

To date, there is sufficient information on the Early Retirement Incentive to include the policy, procedures, and examples on this provision. As more information becomes available on this option and others, amendments will be issued to this directive to provide you with a "one stop shop" on the effects of these budget measures.

4 DISTRIBUTION

The Budget Directive will be distributed using the distribution list for the regular Compensation Directives.

II. EARLY RETIREMENT INCENTIVE (ERI) PROGRAM

1 PURPOSE

1.1 The purpose of this section is to provide Personnel Offices with information on the Early Retirement Incentive (ERI) Program.

2.2 Personnel Offices are also reminded to ensure that terminating employees are made aware of the changes to the Supplementary Death Benefit Regulations as described in Compensation Directive 1995-016.

2 POLICY

2.1 Early Retirement Incentive Program

The Early Retirement Incentive (ERI) program is applicable ONLY to eligible employees (see 3.1.1) employed in Departments and Organizations FOR WHOM TREASURY BOARD IS THE EMPLOYER as set out in Part 1 of Schedule 1 of the Public Service Staff Relations Act.

The ERI program is designed to help lessen the financial impact of early retirement for eligible surplus employees by extending the waiver of a reduction in an Annual Allowance to eligible surplus employees at least age 50 with at least 10 years of Public Service employment. The program will be in effect from April 1, 1995, to March 31, 1998.

In addition, for Departments and Agencies for whom Treasury Board is the employer, it is very important to note that changes have also been made to the previously existing waiver policy applicable to employees between ages 55 and 59. The same eligibility criteria will apply to all eligible surplus employees between age 50 and 59 in order to receive a waiver of the Annual Allowance reduction.

Pension benefits will cease if the former contributor becomes re-employed and a contributor under the PSSA, and the special ERI benefits will not be reinstated when the individual subsequently leaves the Public Service.

3 PROCEDURES

3.1 Early Retirement Incentive (ERI) Program

These provisions apply to all employees between age 50 and 59 who wish to receive an unreduced Annual Allowance under the PSSA.

All the normal terms and conditions applicable to pensions paid under PSSA, including indexing, will apply to the unreduced Annual Allowance payable pursuant to the ERI.

3.1.1 Eligible Employees

The employee must be issued a surplus notice between April 1, 1995 and March 31, 1998 and must meet all of the following conditions in order to become entitled to the early retirement incentive (ERI). Employees who are already declared surplus on April 1, 1995, must receive a new surplus notice.

a) An eligible employee must elect not later than 60 days after the date of the notice of surplus status to receive the ERI. Department and agencies should exercise care in the timing and delivery of the employee's notice of surplus status. The 60 day time limit for choosing the ERI begins on the day after the date of the surplus notice.

NOTE: A signed and dated statement from the employee made within the required time period to the effect that he//she is opting for the ERI is sufficient for this purpose. (The statement must be retained on the Personnel file.)

b) The employee must cease to be employed not later than 6 months after the date the surplus notice is issued, or no later than such longer period, determined by the Deputy Head, as may be required in order to meet operational requirements.

c) An eligible employee must not have elected to recieve a payment under the Early Departure Incentive (EDI) Program, the Civilian Reduction Program, or in the case of an employee subject to the Executive Employment Transition Policy (EETP), a negotiated settlement.

NOTE: An employee who chooses ERI may be eligible for any payments under the Workforce Adjustment Directive (WFAD).

d) Where the employee is subject to the Workforce Adjustment Directive (WFAD), he/she must not have received a Reasonable Job Offer before ceasing to be employed, or in the case of an employee subject to the EETP, he/she must not have received an offer of alternative employment in the Public Service.

e) Where the employee's services are no longer required by reason of a transfer of work or function to an employer outside the Public Service, the employee must not have received an offer of contiguous employment from that Employer, as a consequence of the transfer.

f) The employee must be at least age 50 but not yet 60 at time of termination.

g) The employee must opt for an Annual Allowance under the PSSA before termination of employment. The benefit option is made using the regular Optional Benefit Form (PWGSC-TPSGC 2011). While the benefit option does not have to be completed at the same time as the election to receive the ERI, care must be taken to ensure the benefit option is completed prior to termination otherwise the employee will not be entitled to the ERI.

h) The employee must have been employed in the Public Service for a period or periods totaling at least ten (10) years. The ten years can be comprised of both full-time and part-time employment.

Where the eligible contributor has any part-time pensionable service to their credit, then all of the contributor's part-time employment after 1980 can be included for the purposes of the minimum 10 years of Public Service employment required to be eligible for a pension reduction waiver.

There are also circumstances where part-time employment prior to 1981 can be recognized for purposes of the minimum 10 years of Public Service employment criteria. For example, if an eligible contributor with any part-time pensionable service to their credit first became employed in the Public Service as a full-time employee, then the contributor's part-time employment prior to 1981 would be eligible for the minimum 10 years of Public Service employment criteria required to be eligible for a pension reduction waiver.

(i) If an employee is declared surplus in one position, accepts a second position, and is again declared surplus, he/she could still be eligible to elect for the ERI if the conditions above are met with respect to the second position.

3.1.2 Termination Codes

In order that proper statistical information can be tracked, two new termination codes have been identified on the Regional Pay System (RPS) for employees who terminate and are eligible for the ERI.

Termination code 40 must be used for employees between age 50 and 54 who terminate with an ERI entitlement.

Termination code 41 must be used for employees between age 55 and 59 who terminate with an ERI entitlement.

The regular termination codes should continue to be used for all other terminations.

3.1.3 Deputy Head Certification

The Deputy Head, or his/her delegated official, is responsible for certifying that the employee has met the above requirements in order that an unreduced Annual Allowance reduction can be payable.

The Deputy Head may delegate the certification authority to other POSITIONS in their organization as appropriate.

The attached certification form must be signed and forwarded to the Superannuation Directorate along with the regular termination documents. Until a formal PWGCS-TPSGC form is available, the attached form can be copied on Departmental letterhead and used for this purpose

3.2 Supplementary Death Benefit Coverage

3.2.1 Forwarding the Election Form

The SDB Election form for employees who wish to retain SDB coverage, election form PWGSC-TPSGC 2017 "Election to Continue SDB Coverage" must be completed and forwarded to the Superannuation Directorate along with regular termination documents.

The above-named individual was at least age 50 at termination and has been employed in the Public Service for at least 10 years. I certify that the individual concerned has met the requirements for receipt of an unreduced Annual Allowance, i.e., the Early Retirement Incentive (ERI) as indicated below:

1) The employee received a Notice of Surplus Status between April 1, 1995 and March 31, 1998.

2) The employee elected not later than 60 days after the date of notice of surplus status to receive the ERI.

3) The employee has not elected to receive a payment under the Early Departure Incentive (EDI) Program, the Civilian Reduction Program or in the case of an employee subject to the Executive Employment Transition Policy (EETP), a negotiated settlement.

4) The employee has not received a Reasonable Job Offer within the meaning of the Workforce Adjustment Directive (WFAD) or, where the employee is subject to EETP, has not received an offer of alternative employment in the Public Service.

5) Where the employee's services are no longer required by reason of a transfer of work or function to an employer outside the Public Service, the employee has not received an offer of contiguous employment from that Employer.

6) The employee has ceased or will cease to be employed not later than 6 months after the date of surplus notice (after April 1, 1995) or such longer period as determined by the Deputy Head because of operational requirements.

III. WORK FORCE ADJUSTMENT DIRECTIVE LUMP-SUM PAYMENTS

1 PURPOSE

1.1 The purpose of this section is to outline the six (6) entitlement codes for various lump-sum payments that may be made to employees under the revised Work Force Adjustment (WFA) directive.

2 BACKGROUND

2.1 The revised Work Force Adjustment directive, effective December 15, 1991, was approved by the Treasury Board on November 7, 1991.

3 PROCEDURES/INSTRUCTIONS

3.1 The particulars of these entitlement codes are as follows:

Code 363/YL Retention Payment Transferable
Code 364/YL Retention Payment Non-Transferable
There are three situations in which an employee may be eligible to receive a retention payment. These are total facility closures, relocation of work units and devolution or privatization.

The payment represents a lump-sum equivalent of six months' pay.

Code 363 is to be used to requisition that portion of the benefit which is eligible to be transferred to a Registered Retirement Savings Plan (RRSP) or to a Registered Pension Plan (RPP). This payment is subject to Income Tax and Unemployment Insurance deductions. Please note that if this payment is transferred to an RRSP or to an RPP it would not be subject to income tax.

Code 364 is to be used to requisition that portion of the benefit which exceeds the established limits and is not eligible to be transferred to an RRSP or to an RPP and will therefore, automatically be designated as non-eligible on the T4A. This payment is subject to Income Tax and Unemployment Insurance deductions.

Full details of these payments are included in sections 7.4 to 7.7 of the WFA directive.

Code 365/YL Turnkey Payment Transferable
Code 366/YL Turnkey Payment Non-Transferable
A devolution occurs where a departmental operation is either transferred from the Public Service to any other part of the federal government, to another level of government, to a local airport authority or to an aboriginal group.

In a devolution situation, a one-time lump sum equivalent to six months' pay may be authorized to employees who resign or are laid off to join the new employer.

Code 365 is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP. This payment is subject to Income Tax and Unemployment Insurance deductions. Please note that if this payment is transferred to an RRSP or to an RPP it would not be subject to income tax.

Code 366 is to be used to requisition that portion of the benefit which exceeds the established limits and is not eligible to be transferred to therefore, automatically be designated as non-eligible on the T4A. This payment is subject to Income Tax and Unemployment Insurance deductions.

Full details of these payments are included in section 7.8 of the WFA directive.

Code 367/YL Contracting Out Payment Transferable
Code 368/YL Contracting Out Payment Non-Transferable
Contracting out occurs where a departmental operation is transferred from the Public Service to a private sector organization. Employees accepting an offer of employment from a contractor will receive a lump sum equivalent to six months' pay.

Code 367 is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP. This payment is subject to Income Tax and Unemployment Insurance deductions. Please note that if this payment is transferred to an RRSP or to an RPP it would not be subject to income tax.

Code 368 is to be used to requisition that portion of the benefit which exceeds the established limits and is not eligible to be transferred to an RRSP or to an RPP and will therefore, automatically be designated as non-eligible on the T4A. This payment is subject to Income Tax and Unemployment Insurance deductions.

Full details of these payments are included in section 8 of the WFA directive.

3.2 Entitlement codes 108 (Retiring Allowance) and 051 (Retiring Allowance Non-Transferable) are to be used for requesting pay in lieu of unfulfilled surplus period as provided for in section 7.2 of the WFA directive.

3.3 Entitlement codes 250 (Separation Benefit) and 279 (Separation Benefit Non-Transferable) are to be used for requesting the separation benefit payment as provided for in section 7.3 of the WFA directive.

3.4 The particulars of entitlement codes 108, 051, 250 and 279 are contained in Services Pay Directive 1989-143(49) dated November 9, 1989. This directive also provides the particulars of entitlement codes 054 (Severance Pay) and 280 (Severance Pay Non-Transferable).

3.5 For further information concerning the determination of the limits for the transfer of funds to an RRSP or to an RPP, refer to Services Pay Directive 1990-097(49) dated September 28, 1990.

3.6 Care should be taken to ensure that the appropriate entitlement codes are utilized. The proper codes must be used whether or not the employee requests a transfer of funds to an RRSP or to an RPP.

IV. UNPAID SURPLUS STATUS (USS)

1 PURPOSE

1.1 The purpose of this directive is to provide compensation clients with comprehensive information concerning Unpaid Surplus Status (USS).

2 POLICY

2.1 The USS option will be made available to indeterminate surplus employees in Most-Affected departments. The USS policy will apply for three years after Parliament passes legislative changes to the Work Force Adjustment Directive (WFAD).

Surplus employees in the "most affected" departments will be offered a departure incentive (Early Retirement Incentive [ERI] or the Early Departure Incentive [EDI]). If they reject the incentive and have not been appointed under the reasonable job offer (RJO) provisions of the WFAD at the end of six months (paid surplus status), they may be placed by the Deputy Minister on USS for a period of 12 months during which they remain eligible for a reasonable job offer as a surplus employee.

An employee refusing a RJO during the 12 months of USS will be laid off on 30 days unpaid notice.

If the surplus person has not been appointed at the end of the 12 month USS period, he or she will be laid off by the Deputy Minister and have access to normal severance benefits at that time.

While on USS, employees will have a right to priority placement.

INSURANCES

Employees will still have life, health and dental insurance coverage during the 12 month period of USS; i.e. coverage under the Public Service Health Care Plan (PSHCP), the Dental Care Plan (DCP) and the Public Service Management Insurance Plan (PSMIP).

For insurance purposes, there is no change in the employee contribution rates. In other words, it will be the same rate as if the employee was on a type of leave without pay where the employer's share of the premiums/contributions would continue, for example, sick leave or maternity leave.

Notes:

1. The Employer will not remit premiums for coverage under the provincial health care plans in the two premium paying provinces (Alberta and British-Columbia). Employees will be responsible for enrolling with the provincial authorities and for direct payment of the full premiums.

2. Employees will not be eligible for coverage under either the Disability Insurance Plan or the Long-term Disability Insurance Plan.

PSHCP

Employees will have the option of continuing their PSHCP coverage. The Employer will continue to pay its share of the total contribution rate. Employees will pay their share of the total contribution rate, where applicable.

DCP

Employees' dental coverage will continue. The Employer will pay the full cost for continued coverage, i.e., no employees contributions will be required.

PSMIP

Employees who have coverage under any of the employee-paid life insurances (Basic Life, Supplementary Life, Accidental Death and Dismemberment, Dependants' Insurance) will be able to continue their coverage by remitting the normally required premiums to National Life, in accordance with the existing arrangements for periods of leave without pay.

Year Following USS Period

Employees who are laid-off at the end of the USS period will be eligible to continue to be covered under the PSHCP and DCP, for a period of up to one year, provided they pay the full monthly contribution cost (Employee and Employer share).

PUBLIC SERVICE PENSION PLAN

For PSCS purposes, USS is treated the same as any other type of double rate Leave Without Pay (LWOP). Contributions for the first three months as at single rate, and the balance is double rate. The employee may opt not to count the period beyond 3 months for pension purposes. A Pension Adjustment (PA) will be reported for the LWOP unless the employee opts not to count the LWOP as pensionable.

Deficiencies for the Public Service Superannuation Act (PSSA) or the Supplementary Death Benefit (SDB) that are not paid prior to termination will be collected from any pension benefits available (i.e. from a continuing annuity if that is the benefit option). If the benefit option is a Return of Contributions (ROC), SDB deficiencies for the full period of the LWOP can be collected from the ROC (or paid in cash) .

UNEMPLOYMENT INSURANCE

Employees on USS would be eligible to apply for unemployment insurance benefits, subject to meeting the qualifying conditions for the program.

3 PROCEDURES/INSTRUCTIONS

3.1 Reason for Leave Without Pay Code

New LWOP code 9 has been identified for the 12 month period a surplus employee is Temporarily Struck-Off Strength and benefiting from an unpaid surplus status. The description of this LWOP code is: Unpaid Surplus Status (12 months) /Statut de fonctionnaire excédentaire non rémunéré (12 mois).

Reason for Leaving Code

New reason for leaving code 46 has been assigned to identify surplus employees who are laid off after the year of unpaid surplus status as no re-appointment occurred during the period of USS. The description of this code is: Lay Off - End of Unpaid Surplus Status/Mise en disponibilité - Fin du statut de fonctionnaire excédentaire non rémunéré.

The Personnel Pay Input manual will be amended to reflect the new codes described above.

Report

A new warning report entitled "Notice of Termination of USS" will be produced to alert departmental personnel when the unpaid surplus status period will terminate.

In order to allow departments sufficient lead time to process the termination documents, the report will be generated 9 months into the unpaid surplus status period (9 months from the effective date of reporting the T-SOS under LWOP code 9).

V. EXECUTIVE TRANSITION POLICY-FINANCIAL SETTLEMENTS

1 PURPOSE

1.1 The purpose of this section is to advise you of the pay reporting requirements for various financial settlements that may be authorized under the new Executive Employment Transition (EET) policy.

2 POLICY

2.1 The Executive Employment Transition policy was effective on September 1, 1992, and applies to all surplus situations involving Executives and certain other senior excluded employees from that date (EX 01 to EX 05).

Excluded levels: DS 7A, DS 7B, DS 08, LA 2B, LA 3A, LA 3B, LA 3C, MD MOF 04, MD MOF 05 and
MD MSP 03). The policy replaces the Work Force Adjustment directive which formerly applied to Executives.

2.2 The deputy head is authorized to approve the composition of individual termination settlements and the amounts of the lump sum payments, within the limits prescribed by the policy.

3 PROCEDURES / INSTRUCTIONS

3.1 The lump sum payments described below are to be requested through the Regional Pay System.

Payment in Lieu of Notice

A notice period or a lump sum payment in lieu of notice, equivalent to up to 52 weeks of salary. For additional details, see the EETP administrative guidelines section 4.1.1.

Entitlement code 108 (Retiring Allowance-Transferable) is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP (Registered Retirement Savings Plan) or to an RPP (Registered Pension Plan) . This payment is subject to Unemployment Insurance deductions. Please note that this payment is also subject to Income Tax unless it is transferred to an RRSP or to an RPP.

Entitlement code 051 (Retiring Allowance Non-Transferable) is to be used to requisition that portion of the benefit which exceeds the established limits and is not eligible to be transferred to an RRSP or to an RPP and will therefore, automatically be designated as non-eligible on the T-4A. This payment is subject to Income Tax and Unemployment Insurance deductions.

The particulars of entitlement codes 108 and 051 are contained in Services Pay Directive 1989-143(49) dated November 9, 1989.

Forgone Benefits

Up to 10% of salary, paid as a lump sum to offset the costs related to the purchase of private insurance, medical and dental coverage comparable to Public Service programs. For additional details, see the EET policy administrative guidelines section 4.1.2.

Turnkey Payment or Payment in Lieu of Forgone Benefits Transferable entitlement code 365 and Turnkey Payment or Payment in Lieu of Foregone Benefits Non-Transferable code 366 must be used to requisition this lump sum payment.

Compensation for Pension Reduction

Up to 30 % of salary to compensate for the actuarial pension reduction applicable to Executives who are at least age 50 and under age 55, and eligible to opt for an immediate annual allowance. For additional details, see the EET policy administrative guidelines section 4.1.3.

Entitlement code 367 (Contracting Out Payment or Compensation for Pension Reduction Transferable) is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP. This payment is subject to Unemployment Insurance deductions. Please note that this payment is also subject to income tax deductions unless it is transferred to an RRSP or to an RPP.

Entitlement code 368 (Contracting Out Payment or Compensation for Pension Reduction Non-Transferable) is to be used to requisition that portion of the benefit which exceeds the established limits and is not eligible to be transferred to an RRSP or to an RPP and will therefore, automatically be designated as non-eligible on the T-4A. This payment is subject to Income Tax and Unemployment Insurance deductions.

The particulars of entitlement codes 367 and 368 are contained in Services Pay Directive 1992-025(14) dated April 3, 1992.

Alternative Lump Sum Payment

For the affected Executive who does not wish to benefit from any of the financial or non-financial elements stipulated in the policy, the deputy head may offer instead a lump sum payment of up to 15% of salary. For additional details, see the EET policy administrative guidelines section 4.3.

Entitlement code 250 (Separation Benefit or Alternative Lump Sum Payment Transferable) is to be used to requisition that portion of the benefit which is eligible to be transferred to an RRSP or to an RPP. This payment is subject to Unemployment Insurance deductions. Please note that this payment is also subject to income tax unless it is transferred to an RRSP or to an RPP.

Entitlement code 279 (Separation Benefit or Alternative Lump Sum Payment Non-Transferable) is to be used to requisition that portion of the benefit which exceeds the established limits and is not eligible to be transferred to an RRSP or to an RPP and will therefore, automatically be designated as non-eligible on the T-4A. This payment is subject to Income Tax and Unemployment Insurance deductions.

The particulars of entitlement codes 250 and 279 are contained in Services Pay Directive 1989-143(49) dated November 9, 1992.

3.2 For further information concerning the determination of the limits for the transfer of funds to an RRSP or to an RPP, refer to Services Pay Directive 1990-097(49) dated September 28, 1990.

BI-WEEKLY LUMP SUM

3.3 When an Executive is appointed to a position outside the Executive Group with a lower salary range maximum, the following salary administration will apply:

If the employee's current rate of pay is less than or equal to the job rate for the new position, then the appointment will be treated as a transfer and the employee will be assimilated within the range at the appropriate rate.

If the employee's current rate of pay is above the job rate for the new position, the employee's salary will be frozen on appointment until it is matched or exceeded by the range maximum applicable to the level of the position (salary maintenance).

In a salary maintenance situation, future salary increases will be made as biweekly lump sum payments equivalent to the percentage increase to the job rate of the employee's new level and applicable only for the duration of the period covered by the increase. Thus, if an increase is applied to the salary range applicable to the position, and the new range is to be effective for 15 months, the employee's bi-weekly salary cheque will reflect this increase as a supplementary amount which will cease to be paid on the date when the range ceases to be in effect. For additional details, see the EET policy administrative guidelines section 3.

3.4 Entitlement code 230 (Lump Sum Equivalent) must be used to request the bi-weekly salary adjustment indicated above. The adjustment should be reported as a continuing bi-weekly entitlement (rate base 7). Care should also be taken to terminate the adjustment at the end of the increase period. Please note that a future end date is not allowable for a continuing entitlement and such date will reject if input.

3.5 If leave without pay is reported for an employee (PAC 15) and an entitlement code 230 is present on the employee's master file, a PAC 18R transaction must be reported in order to reduce the entitlement for the period of the leave without pay.

3.6 If the employee is hired on a part-time basis, it will be necessary to prorate the bi-weekly amount of entitlement code 230 to account for the employee's reduced assigned work week. The system automatically prorates the full bi-weekly entitlement based on the employee's assigned work week. We will advise you when this change is operational.

3.7 The bi-weekly lump sum payments are to form part of the employee's basic rate of pay for all purposes except overtime and salary calculations on subsequent appointments. These lump sums are to be considered when computing termination benefits such as severance pay and the payment of unused vacation leave credits. Furthermore, the lump sums are to be treated as salary for the determination of contributions and benefits under the Public Service Superannuation Act.

3.8 For further details concerning entitlement code 230, please refer to Services Pay Directive 1986-033(017) dated April 8, 1986.

3.9 The attached chart represents the entitlement codes utilized to request the various payments authorized under the Workforce Adjustment directive and the Executive Employment Transition policy.

VI. EARLY DEPARTURE INCENTIVE (EDI) PROGRAM

1 PURPOSE

1.1 The purpose of this section is twofold; to provide compensation clients with the relevant details concerning the Early Departure Incentive Program (EDI) and to outline the necessary payment and processing instructions.

2 POLICY

2.1 The EDI program will apply only to indeterminate employees who have been declared surplus in departments and agencies and other parts of the Public Service designated by the Governor-in-council as "most affected". The EDI option would be offered for three years after Parliament passes legislative changes to the Work Force Adjustment Directive (WFAD).

Many employees who choose EDI will also be able to take advantage of an education/training allowance of up to $7,000.00 (for receipted expenses) in preparation for employment outside the Public Service. The training allowance will be paid via departmental accounting systems.

Eligible employees who opt for the EDI must do so within the 60 day window from the date of being notified of their surplus status and must terminate their employment, at management discretion, within six months after receipt of the EDI offer (the six month period includes the 60 day window period).

Employees in "most affected" departments who have been designated surplus prior to the passage of enabling legislation, will still have 60 days to make their decision, and six months of paid surplus status, starting from the date they are offered the EDI.

Exceptionally, the six-month paid surplus status may be extended by the Deputy Head, or his delegate, for operational reasons.

The EDI is a defined cash payment (see Section 2.2. below), in addition to severance pay, in exchange for an employee's resignation from the Public Service. The payment will be smaller for employees who have less than five years of service and for employees who are entitled to receive pension benefits. It will also be less than the payments provided in the Civilian Reduction program (CRP) of the department of National Defence.

Employees taking the EDI are not eligible for pay-in-lieu or any lump sum payments under the WFAD.

An individual who receives a cash payment under the EDI and who is subsequently re-appointed to an organization funded from the Consolidated Revenue Fund, must reimburse the Receiver General for Canada an amount corresponding to the regular pay from the effective date of re-appointment to the end of the period which the cash payment (less severance pay) would cover.

Employees who have opted not to accept the EDI during the 60 day window period are ineligible for the EDI, unless subsequently declared surplus from another position in a "most affected" department.

If a Reasonable Job Offer within the meaning of the WFAD is made at the time of surplus declaration or at any time prior to the written acceptance of the EDI option, the employee is ineligible for the EDI.

Employees whose functions are transferred outside the Public Service and who receive and accept an offer of contiguous employment arranged by the Employer are ineligible for the EDI.

An employee who elects for the Early Retirement Incentive (ERI) is ineligible for the EDI.

Surplus executives, with the exception of executives under the WFAD, are ineligible for the EDI. In addition to the ERI option, surplus executives will qualify for the benefits currently provided under the Executive Employment Transition policy (EETP) . For further details, refer to the Guidelines for Departure Incentives for Surplus Executives issued by Treasury Board on May 5, 1995.

2.2 The EDI payment design chart is appended for your information. The payment criteria and structure are as follows:

Less than 5 years of continuous employment

maximum payment of 44 weeks of regular pay including severance pay

severance pay at lay-off rate: 2 weeks' pay for first complete year of continuous employment plus 1 week pay for each additional complete year of continuous employment (less any amount received in severance from a previous lay-off)

lump sum payment of 39 weeks of regular pay (capped at the difference between severance entitlement and the maximum allowable payment of 44 weeks of regular pay)

education/training allowance of up to $7,000.00 for receipted expenses

5 or more years of continuous employment and not entitled to a reduced or unreduced pension
or Eligible for a reduced pension (annual allowance)

maximum payment of 90 weeks of regular pay including severance pay

severance pay at lay-off rate: 2 weeks' pay for first complete year of continuous employment plus 1 week pay for each additional complete year of continuous employment (less any amount received in severance from a previous lay-off)

lump sum payment of 52 weeks of regular pay (capped at the difference between severance entitlement and the maximum allowable payment of 90 weeks of regular pay)

age and years of service allowance (capped at the difference between severance entitlement and the maximum allowable payment
if age plus years of continuous employment equals:

education/training allowance of up to $7,000.00 for receipt expenses (if not in receipt of an annual allowance)

Entitled to an unreduced pension (immediate annuity)

maximum payment of 70 weeks of regular pay including severance pay

severance pay at lay-off rate:
2 weeks' pay for first complete year of continuous employment plus 1 week pay for each additional complete year of continuous employment (less any amount received in severance from a previous lay-off)

lump sum payment of up to 52 weeks of regular pay (capped at the difference between severance entitlement and the maximum allowable payment of 70 weeks of regular pay)

3 PROCEDURES/INSTRUCTIONS

3.1 Entitlement codes

Two new entitlement codes have been assigned for requesting the payment of the EDI. The particulars are as follows:

Code 373
Payment under Early Departure Incentive - Transferable
Code 373 is to be used to requisition that portion of the EDI payment which is eligible to be transferred to a Registered Retirement Savings Plan (RRSP) or to a Registered Pension Plan (RPP). This payment is subject to Unemployment Insurance deductions. Please note that this payment is also subject to income tax unless it is transferred to an RRSP or to a RPP.

Code 374
Payment under Early Departure Incentive - Non Transferable
Code 374 is to be used to requisition that portion of the EDI payment which exceeds the established limits and is not eligible to be transferred to a RRSP or to a RPP and will, therefore, automatically be designated as non-eligible on the T4A and Relevé 1. This payment is subject to Income Tax and Unemployment Insurance deductions.

The rate of income tax to be withheld at source on these payments are the rates for lump-sum payments, i.e., the same rates used for payment of retiring allowances and returns of superannuation contributions.

For further information concerning the determination of the limits for the transfer of funds to an RRSP or to an RPP, refer to Services Pay Directive 1990-097(49) dated September 28, 1990.

Care should be taken to ensure that the appropriate entitlement codes are utilized. The proper codes must be used whether or not the employee requests a transfer of funds to a RRSP or to a RPP.

If a new or separate line object is to be assigned in the department's accounting records to identify payments made with codes 373 and 374, the Financial Product Branch (address below) must be advised of the line object allocated in order that the Pay Expenditure Control file may be updated accordingly.

Manager
Financial and Reporting Products Directorate
Departmental Products Sector
Government Operational Service Branch
10B1, Phase III, Place du Portage
Hull, Québec
K1A 0S5

Although entitlement codes 373 and 374 will be operational in the Regional Pay System in the very near future, these codes may not be used until enabling legislation is passed (tentative mid-summer) and the payment is warranted.

Codes 365 and 366

Current entitlement code 365 (Turnkey Payment-Transferable) is now to be utilized to requisition the payment in lieu of foregone benefits contained in Section 4.1.2 of the EETP (transferable portion) This payment was previously reported under entitlement code 051.

Current entitlement code 366 (Turnkey Payment-Non Transferable) is now to be utilized to requisition the payment in lieu of foregone benefits contained in Section 4.1.2 of the EETP (non-transferable portion) . This payment was previously reported under entitlement code 108.

3.2 Reason for leaving codes

For monitoring purposes, new or revised reason for leaving codes, as described below, have been designated for various work force adjustment initiatives including EDI.

Code 04

The description of this code will be amended as follows: Resignation under the Work Force Adjustment program.

Code 44

This is a new reason for leaving code to identify employees who resign under the Executive Employment Transition program. The description of this code will be as follows: Resignation under the Executive Employment Transition program.

Code 45

This is a new reason for leaving code to identify employees who resign either under the Early Departure Incentive or the Civilian Reduction programs. The description of this code will be as follows: Resignation under the Early Departure Incentive/Civilian Reduction programs.

The Personnel Pay Input manual will be amended to reflect the new or amended entitlement and reason for leaving codes.

PLUS AN ENTITLEMENT UNDER THE FOLLOWING COMPONENTS CAPPED AT THE DIFFERENCE BETWEEN SEVERANCE ENTITLEMENT AND THE MAXIMUM ALLOWABLE PAYMENT:

PLUS

Source: Treasury Board Secretariat, April 1995


VII. PRE-RETIREMENT TRANSITION LEAVE

1 PURPOSE

The purpose of this section of the directive is to provide information on the proposed Pre-retirement Transition Leave Option.

2 BACKGROUND

The proposed voluntary work arrangement is to be made available to all federal indeterminate employees, for who Treasury Board is the employer, who are within two years of an entitlement to an immediate annuity. The employee may voluntarily reduce their hours of work by up to 40% by using the leave without pay for unworked hours provision. At the same time, pension and benefits coverage will be based on full salary with contributions at the single or normal rate.

NOTE: More detailed information will be provided as a revision to Section VII of this Budget Directive as it becomes available


VIII. LEAVE WITH INCOME AVERAGING

1 PURPOSE

The purpose of this section of the directive is to provide information on the proposed Income Leave Averaging Option.

2 BACKGROUND

The proposed voluntary work arrangement is to be made available to all federal indeterminate employees for whom Treasury Board is the employer. Indeterminate employees may voluntarily reduce their hours of work by taking a period of leave without of pay with the reduced income averaged over an agreed to one year period. At the same time, pension and benefits coverage will be based on full salary with contributions at the single or normal rate.

NOTE: More detailed information will be provided as a revision to Section VIII of this Budget Directive as it becomes available.


IX. TRANSFERS TO REGISTERED RETIREMENT SAVINGS PLANS (RRSPs) AND TO REGISTERED PENSION PLANS (RPPs)

The policy and procedures concerning transfers of retiring allowances to RRSPs and/or RPPs will be forthcoming.

In the meantime, please refer to Services Pay Directive 1990-097(49) dated September 28, 1990.

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