OTTAWA — Canada’s auditor general says the federal government is running out of time to clear the backlog of public service pay transactions under the old Phoenix system to avoid infecting the new system with errors.

The federal government is working to replace the error-prone Phoenix with a new system, Dayforce, and all departments and agencies are expected to move to the new platform by March 2031.

A new report from the Office of the Auditor General of Canada says the government has made “limited progress” on eliminating a backlog of pay transactions that stood at more than 233,000 and affected at least 133,000 employees as of Sept. 30, 2025.

The report says the government earlier this year shortened the timeline for bringing departments and agencies under Dayforce by about three years, which “significantly” reduced the time available to clear the backlog.

The report found the Treasury Board of Canada Secretariat and Public Services and Procurement Canada have been managing the transition to the new system well, and the project will provide value for money once implemented.

The report says that while the government has estimated replacing Phoenix with Dayforce will cost more than $4.2 billion, preliminary estimates didn’t include costs for departments and agencies to transition to the new system.

This report by The Canadian Press was first published March 23, 2026.

Catherine Morrison, The Canadian Press