Unreasonable Employer Actions Do Not Nullify Overpayment

OUTCOME: Dismissed

Date: 202 60522 File : 566-02-50513 Citation: 2026 FPSLREB 60 Federal Public Sector Labour Relations and Employment Board Act and Federal Public Sector Labour Relations Act Before a panel of the Federal Public Sector Labour Relations and Employment Board [NAME_1] [NAME_1] and [NAME_2] (D epartment of Employment and Social Development) Employer Indexed as [NAME_1] v. [NAME_2] (Department of Employment and Social Development) In the matter of an individual grievance referred to adjudication Before: [NAME_3], a panel of the Federal Public Sector Labour Relations and Employment Board For [NAME_1]: [NAME_4] and [NAME_4], Public Service Alliance of Canada For the Employer: [NAME_5], counsel ADVANCE \y 657 Decided on the basis of written submissions, filed December 8, 15, 17, and 18, 2025 .

REASONS FOR

DECISION I. Overview [ 1 ] This grievance is about an overpayment of salary by the employer to [NAME_1] between November 2, 2017, and December 25, 2019. The employer began taking steps to recover the overpayment piecemeal starting on January 5, 2023. [NAME_1] acknowledges that he was overpaid. He grieves that the employer is prevented from collecting that overpayment by the doctrine of estoppel and because the employer acted unreasonably in the manner in which it dealt with this overpayment. [ 2 ] I have concluded that the employer is not prevented from collecting the overpayment because of the doctrine of estoppel. That doctrine requires 1) a representation, 2) that was intended to affect a legal relationship, and 3) that the person receiving the representation relied on it by 4) acting on it or changing their position in some way to their detriment. Assuming that there was a representation that [NAME_1] was entitled to be paid that money, he has not demonstrated that he relied on that representation to his detriment. This is a necessary condition for the doctrine of estoppel and [NAME_1] has not met it in this case. [ 3 ] I have concluded that the manner in which the employer recovered this overpayment from [NAME_1] was unreasonable in 5 ways: 1) it informed him of the overpayment in a piecemeal way over 11-plus months, 2) it recovered a different overpayment without telling him, 3) it recovered part of the overpayment a week before he was supposed to respond to it with a proposal for a reduced recovery rate, 4) it required him to acknowledge the overpayment (waiving any right to argue that the overpayment was barred by a limitation period) before considering more generous terms of repayment, and 5) it asked him to repay amounts that it knew were statute-barred without telling him that they were statute-barred. [ 4 ] However, the unreasonable manner in which the employer recovered the overpayment does not require it to waive the overpayment or prevent it from recovering it. [NAME_1] also asked for damages against the employer flowing from this unreasonable behaviour. The parties will be permitted to make further submissions about whether [NAME_1] is entitled to damages. [ 5 ] My detailed reasons follow.

II. Procedural background [ 6 ] [NAME_1] presented his grievance on February 9, 2024. The grievance was denied at the third and final level of the grievance procedure on the basis that the employer’s decision maker did not have the authority to stop recovering the overpayment. [NAME_1] referred this grievance to adjudication on August 19, 2024. [ 7 ] In the fall of 2025, the Federal Public Sector Labour Relations and Employment Board (“the Board”) was advised that this grievance had become more urgent to resolve. Therefore, I directed that this grievance be decided in writing. The parties filed written evidence (including books of documents admitted on consent, and a written statement by [NAME_1] about his evidence) and submissions according to the timetable that I set. The parties had the opportunity to cross-examine each other on the written evidence provided, but both declined. [ 8 ] The employer objected to one aspect of [NAME_1]’s reply submissions on the basis that it set out new evidence that was beyond the proper scope of a reply. I have not ruled expressly on that objection because, as I will explain, [NAME_1]’s evidence does not satisfy the requirements of estoppel, even including that reply evidence. However, I asked for one brief clarification about the evidence from the employer, which it provided. [ 9 ] Finally, the parties agreed that I should provide them with a bottom-line decision (i.e., the result of the case, with reasons to follow) shortly after receiving their submissions. I provided that bottom-line decision on January 5, 2026, as follows: … The grievance is allowed in part. The employer is not estopped from collecting this overpayment because [NAME_1] has not demonstrated that he relied on a representation to his detriment. The Board has the jurisdiction to assess the manner in which the employer recovered the overpayments under s. 155(3) of the Financial Administration Act and the Directive on Terms and Conditions of Employment (“T&C Directive”). The manner in which the employer recovered the overpayments was unreasonable. [NAME_1] is not entitled to a halt to recovery action or reimbursement of sums already recovered as a result of the manner of the collection of the overpayment. [NAME_1] may be entitled to damages as a result of the manner of the collection of the overpayment. The parties will be given an opportunity to provide written submissions on whether [NAME_1] is entitled to damages and, if so, the appropriate quantum of damages. … [ 10 ] After issuing that decision, I held a case management conference with the parties to discuss the next steps. The parties asked that I provide the reasons for that decision before addressing the issues that it leaves unresolved. [ 11 ] These are the reasons for that bottom-line decision.

III. Facts A. [NAME_1]’s employment [ 12 ] [NAME_1] joined the federal public service by accepting a job at the D epartment of Employment and Social Development on August 17, 2015. His position was classified at the PM-01 group and level. In 2017, he requested a demotion to a CR-03 position for health reasons, and his demotion became effective on November 2, 2017. [ 13 ] On November 21, 2023, [NAME_1] applied for pre-retirement transition leave, to run for 2 years, starting on January 15, 2024. This meant that he would only work 3 days per week for a 2-year period, and then he would retire on January 15, 2026, the day before he was to turn 75 years of age. B. The overpayments at issue in this grievance [ 14 ] As a result of his voluntary demotion, [NAME_1]’s base salary was reduced by the gross amount of $7031 each year. However, the employer did not reduce his pay until January 23, 2020. By paying [NAME_1] at the higher PM-01 rate of pay instead of the CR-03 rate, this created a net overpayment of $13 656.12. [ 15 ] The employer has provided no explanation for why it took it just over two years to process this pay reduction. [ 16 ] In [NAME_1]’s statement of evidence, he said this: “ After my voluntary demotion, I sent two Pay Action Requests to the employer asking them if they had adjusted my pay. There was no reply.” [ 17 ] He also says that he recalls seeing pay adjustments on his paycheques on several occasions, so he thought that the employer’s compensation advisors had fixed his rate of pay. The employer has provided a spreadsheet of [NAME_1]’s pay during that period. His basic net pay did fluctuate during that time, with the two-week net pay ranging from a high of $1610.84 to a low of $1411.15. His net pay after the reduction was made in January 2020 was between $1207.90 and $1786.77, the higher amounts being for the weeks that he worked overtime. [ 18 ] The employer’s submissions state that “… there is no evidence whatsoever that [NAME_1] made any inquiries after his demotion took effect and he continued to be paid at his pre-demotion salary for more than two years.” This is simply incorrect; [NAME_1]’s evidence is clear and uncontradicted that he made two inquiries, and the employer decided not to cross-examine him about that evidence. [ 19 ] In addition to fixing [NAME_1]’s rate of pay, the employer also identified that the previously incorrect rate of pay meant that [NAME_1] was overpaid. The notes on [NAME_1]’s pay file provided to me read as follows: … Jan 23/20: ee was at step 3 of PM, goes to max CR3. PRC done on Jan 3/20, next YEPO for 2017 is Jan 20 2020, pending confirm part of OP generated on PRN 123237019397 for Jan 22 2020, amount is 241.41 more than 10% reg pay for Jan 22 shows an OP of approx 19$k, but it is not in arrears yet, nor is there a generated amount OP generated on ck 4732449-56700B 241.41 added notes to OP case 2497391 as I dont think letters are being sent for OPs during covid .… … [Emphasis in the original] [ Sic throughout] [ 20 ] The employer has not provided any evidence about when this pay note was created. It is dated January 23, 2020, but it references the COVID-19 pandemic, which did not start until March 2020. [ 21 ] In other words, the employer knew about the overpayment and decided not to do anything about it at the time. The reference to the overpayment of approximately $19 000 is the gross overpayment instead of the net overpayment (i.e., net of taxes and other deductions) that the employer may recover. [ 22 ] When the employer finally decided to do something about the overpayment, it decided to do it piecemeal.

1. Overpayment collection no. 1: $699.84 [ 23 ] On January 5, 2023, the employer sent [NAME_1] a letter, stating that he had been overpaid in the amount of $669.84. That letter stated that the overpayment was “… due to a late demotion being entered …”. The letter stated that the overpayment occurred over three pay periods between November 2 and December 13, 2017. That letter gave [NAME_1] two options: he could agree or disagree with the amount of the overpayment. If he agreed to repay the overpayment, then the letter stated that he could ask for a flexible repayment plan. [ 24 ] The letter also gave the wrong amount of the overpayment, stating that it was $669.84 instead of $699.84. [ 25 ] [NAME_1] wrote to the employer several times after receiving that letter. He asked for an explanation and for a reduction in the rate of collection of that overpayment. The employer refused to grant [NAME_1] flexibility because he did not admit that he had been overpaid. On May 17, 2023, an official wrote to [NAME_1], to explain how they reached the amount of $669.84, as follows: … … As you have not returned your “Annex B” and acknowledged the overpayment, the flexibility measures do not apply, and recovery at the default rate of $223.28 will commence. However, If you wish to acknowledge the overpayment you may do so by copying and pasting the Annex B below selecting the highlighted portion and returning to me via email. The amount of $189.66 in “Option C” is the flexible amount based on 10% of your gross biweekly salary of $1896.58. If this will cause financial hardship, we can go as low as 5% of your gross biweekly salary which would be $98.43/pay. Anything less than 5% must be approved by your finance department. If we do not receive acknowledgement by May 24, 2023 the default recovery of $223.28 will commence on your June 7, 2023 pay and will continue until recovered in full. … [ 26 ] That email also dealt with another overpayment, this time of $212.78. I will address that overpayment separately in this decision. [ 27 ] [NAME_1] responded on May 23, 2023. He explained that he was upset. Additionally, he complained about the employer trying to deal with overpayments separately, stating this: “I do not want to deal in peace meal [ sic ]… I will deal with the entire overpayment issues as one case. So please send me the detailed breakdown of how the overpayment of $212.78 was arrived at.” [ 28 ] There were some further emails between [NAME_1] and an official at the pay centre. The employer deducted $223.27 from his pay on June 7, 2023, despite the official from the pay centre writing to him on June 3, 2023, to state that he had until June 16, 2023, to return a signed form (again, requiring him to acknowledge the overpayment) that would reduce the recovery amount per paycheque. [NAME_1] complained about that as well. In response, a different official from the employer’s overpayment team wrote as follows on June 19, 2023: … Information has been provided to you, explaining the details surrounding your overpayment. Documentation has not been received that supports your claim that the calculation provided is incorrect. Please be advised, at this time, an impasse has been reached. Flexibility measures apply for employees who have acknowledged the overpayment. As you have not acknowledged the overpayment, the flexibility measures will not apply, and recovery at the default rate will commence. If you wish to acknowledge the overpayment and have access to the flexibility measures, please provide documentation to support your claim. Please note, acknowledging the overpayment is the only way to gain access to flexible repayment. Failure to do so by (4 weeks after initial letter) will result in the default recovery rate of $223.28 biweekly being initiated effective 5/7/2023. … [ 29 ] The employer continued to recover this overpayment, and it was repaid by September 13, 2023.

2. Overpayment collection no. 2: $6520.58 [ 30 ] On November 27, 2023, the employer wrote to [NAME_1] with another demand to repay an overpayment. This overpayment was also because the employer did not reduce [NAME_1]’s salary after he was demoted, but this time it was for the period between December 14, 2017, and December 12, 2018. [ 31 ] Like with the first overpayment letter, the employer would defer repayment or provide a flexible repayment arrangement only if [NAME_1] acknowledged the debt. [NAME_1] wrote to say that he would acknowledge the debt “under duress”, to secure more generous terms for its repayment. Eventually, the employer agreed to recover this overpayment in $50.16 increments each pay period. [ 32 ] This overpayment letter was sent four days after the employer approved [NAME_1]’s application for pre-retirement leave. [ 33 ] The employer later acknowledged that $501.58 of this amount fell outside the six-year limitation period that it had to collect it. The employer says that [NAME_1] was informed of this sometime after January 31, 2024 (when it started collecting the overpayment), and that this amount would not be collected. Therefore, the net overpayment for this period is $6019.

3. Overpayment collections nos. 3 and 4: $6194.29 and $241.41 [ 34 ] On December 19, 2023, another pay centre official wrote to [NAME_1] in response to his questions about overpayment no.

2. This official advised him that there were two other overpayments about his demotion in 2017. The first overpayment was in the amount of $6194.29 and was for the period from December 13, 2018, to December 11, 2019. The second overpayment was $241.41 and was for the period from December 12 to 25, 2019. The email went on to state, “As of now, you have not been officially notified of the other 2 overpayments ($6194.29 and $241.41), however those cases will eventually be processed by agents at the pay centre.” [ 35 ] I have no explanation for why the last overpayment was made for December 25, 2019, yet the employer’s evidence is that it did not fix [NAME_1]’s pay until January 23, 2020. [ 36 ] The employer eventually sent an overpayment letter to [NAME_1] on November 25, 2024, for these two amounts. Like with the first two overpayment letters, the employer would defer repayment or provide a flexible repayment arrangement only if [NAME_1] acknowledged the debt. [ 37 ] This time, the employer agreed to pause the recovery of those amounts until his grievance was decided. After the employer denied his grievance at the final level, [NAME_1] began repaying all the overpayments at the rate of $70.00 each pay period, beginning on October 8, 2025.

4. Net overpayments at issue in this grievance [ 38 ] In total, the overpayment in this grievance amounts to $13 154.54. The employer had recovered $2345.28 of that amount as of December 1, 2025, when it provided the breakdown of the overpayment, leaving $10 809.26 to be recovered. [NAME_1] continued to repay $70 of that amount every 2 weeks, it will have been reduced by the time this decision is released. C. Other overpayments [ 39 ] There are three other overpayments that occurred during [NAME_1]’s employment.

1. Overpayment in 2016 of $8036.44 [ 40 ] On July 29, 2025, the employer sent an overpayment letter to [NAME_1]. The letter states that an overpayment was generated in 2016 when [NAME_1] was on leave without pay. The letter is not very clear about the reason for this overpayment. In one part, it says, “Leave without pay was approved in [NAME_6] but was not approved by Section 34 in Phoenix and therefore recoveries did not happen” for 3 or 3.5 hours each day between September 1 and 9, 2016. In another part, it says, “Leave without pay was entered late. An overpayment was previously generated and later reversed as it was processed incorrectly. This overpayment has been re-created [ sic ] with the corrected hours and amounts” for the period from July 4 to August 31, 2016. [ 41 ] The employer acknowledges that this alleged overpayment occurred more than six years earlier, so it has not commenced the recovery of it. I note two things. First, the employer has not said that it will never commence the recovery of this amount, leading to some uncertainty. Second, despite acknowledging that this alleged overpayment falls outside the six-year limitation period in s. 32 of the Crown Liability and Proceedings Act (R.S.C., 1985, c. C-50), the employer still sent a letter to [NAME_1] asking him to repay it. The employer never tells [NAME_1] in this letter that its attempt at collection is statute-barred.

2. Overpayment in 2017 worth $322.95 [ 42 ] On October 7, 2025, the employer sent another overpayment letter to [NAME_1]. The letter says that it is about leave without pay for the period from July 4 to August 31, 2016 . As far as I can make out from the letter, [NAME_1] received a retroactive pay revision in 2017 as part of the normal collective bargaining process. This pay revision was applied to his pay in 2016 while he was on leave without pay. Like the $8036.44 overpayment that I just discussed, this overpayment is well beyond the six-year limitation period for its collection. Again, like in the earlier letter, the employer never tells [NAME_1] this.

3. Overpayment in 2017 worth $212.78 [ 43 ] As I said earlier, [NAME_1] emailed frequently with pay centre officials in May and June 2023, to try to address the first overpayment for this demotion. On May 24, 2023, a pay centre official included the following information in one of her emails: … … The overpayment of $212.78 was generated due to a revision on your pay for the period of Aug 17, 2015-July 26, 2017 with the exception of the period of July 4-Aug 31, 2017 when you were on Leave Without Pay. You were paid $3491.37 (gross) for Revision on CHQ#11235033 issued Sept 6, 2017. However, you were only entitled for $3147.86 thus an Overpayment was created for $343.51 (gross) and Net $212.78. This was automatically recovered from CHQ# 26376914 because due to being less than 10% of your gross biweekly of $2128.56, the flexibilities do not apply and is to be recovered at lump sum 1 st available funds.… … [ Sic throughout] [ 44 ] The employer never prepared an overpayment letter for this amount. Instead, it collected $212.78 from [NAME_1] without telling him. The employer has provided what it calls a spreadsheet listing [NAME_1]’s earning by paycheque. Paycheque 26376914 is dated May 29, 2019, meaning that is when it recovered this overpayment.

4. Overpayment in 2025 worth $3568.21 [ 45 ] On or shortly before March 31, 2025, [NAME_1] noticed that his pay was higher than he expected. Therefore, he wrote to the pay centre on March 31, 2025, to tell it about this. [ 46 ] On July 4, 2025, the employer sent [NAME_1] an overpayment letter. That letter explains that [NAME_1]’s pre-retirement leave was not processed properly for the period from February 10 to April 23, 2025. [NAME_1] had been on pre-retirement leave for over a year. The employer has not tried to explain this error, and I cannot understand how it could have happened. [ 47 ] [NAME_1] agrees that he should pay this amount back. [ 48 ] In summary, [NAME_1] was employed with the employer from August 17, 2015, to January 15, 2026, or a period of roughly 10.5 years. During his employment, he changed jobs once, had 1 or 2 periods of leave without pay, and reduced his workweek to 3 days in 2024. This is not that complicated of a pay file. Despite that relatively straightforward career, [NAME_1] was paid the wrong amount for almost a quarter of his career: July 4 - September 9, 2016 (2 months), July 4 - Aug 31, 2017 (2 months), November 2, 2017 - December 25, 2019 (just over 2 years), and February 10 - April 23, 2025 (just over 2 months). [ 49 ] [NAME_1] has not alleged that the employer has acted in bad faith or has targeted him for any reason. On the other hand, the employer provided no evidence to explain this staggering degree of incompetence. D. Impact on [NAME_1] [ 50 ] [NAME_1] has outlined the impact of these events on him. These events have had both a financial and emotional impact on him. [ 51 ] In terms of the financial impact, [NAME_1] began working for the federal government at age 64. He worked in a call centre before getting this job. He has very modest savings (just over $10 000) and no pension aside from what he will receive as a result of his employment with the federal government (roughly $450 per month) added to his Canada Pension Plan and Old Age Security benefits. Even before taking the overpayment into account, he will still earn less than the monthly rent on his small apartment. [ 52 ] [NAME_1] has also provided evidence of the emotional impact that these overpayments, and the manner in which they were dealt with, have had on him. In light of my decision, I will not go into that evidence further at this stage; it will be much more relevant when deciding the remaining element of this case.

IV. Issues raised in the grievance [ 53 ] [NAME_1] raises two main arguments about why he should not have to repay the overpayment at issue. He argues that the employer is estopped from collecting the overpayment. In the alternative, he argues that the employer has the discretion about whether to recover this overpayment and that it exercised that discretion unreasonably. I will deal with both of those arguments in turn.

V. Estoppel: [NAME_1] has not demonstrated detrimental reliance [ 54 ] [NAME_1] argues that the employer is estopped from collecting the overpayment relating to his voluntary demotion in 2017. [ 55 ] More specifically, [NAME_1]’s argument is based on what civil courts refer to as promissory estoppel. As the Supreme Court of Canada stated in [NAME_7] v. [NAME_7] Co. of Canada , [1991] 2 SCR 50 at 57: … The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.… … [ 56 ] I acknowledge that the Board is not bound to follow the precise rules of promissory estoppel set out in court proceedings. As the Supreme Court of Canada put it in Nor-Man Regional Health Authority Inc. v. Manitoba Association of Health Care Professionals , 2011 SCC 59 at para. 28, estoppel in this legal context “… remains an arbitral remedy and not a strict application … of the doctrine of promissory estoppel applicable in courts of law” [emphasis in the original]. However, labour arbitrators and the Board have applied that same four-part test for estoppel, namely, 1) a representation, 2) intended to be relied upon, 3) some reliance in the form of action or inaction, and 4) detriment arising from that action or inaction; see Brown and Beatty, Canadian Labour Arbitration , 5th ed., at chapter 2.47. Both parties submit that I should apply that four-part test, and I will do so in this case. [ 57 ] [NAME_1] argues that the representation in this case was the employer’s silence in not disclosing the overpayment once it discovered it in late 2019 or early 2020. [NAME_1] argues that the employer has a legal duty to make this disclosure in a timely fashion and that its failure to amounts to a representation that [NAME_1] was correctly paid. The employer argues that this does not amount to a representation for three reasons: it corrected the rate of pay as soon as the case was processed, it initiated the recovery within the relevant limitation period, and [NAME_1] could have discovered the mistake himself. [ 58 ] In light of my conclusion about detrimental reliance (i.e., the third and fourth elements of the test), I have decided not to address the issue of a representation further. I will leave that for another time, when the issue of whether the failure to disclose a known overpayment is a representation determines the result of a grievance. [ 59 ] On detrimental reliance, [NAME_1] acknowledges that the party that has relied on a representation must have experienced detriment. However, [NAME_1] goes further and expands on the concept of detriment, arguing that it includes any unfairness. In support of that submission, [NAME_1] relies on [NAME_8] v. [NAME_2] (Department of Public Works and Government Services - Translation Bureau) , 2016 PSLREB 30 at para. 43, which quoted from Canada (Attorney General) v. [NAME_9] , 2008 FC 411, which in turn cited from [COMPANY_10]. v. I.W.A. Canada, Local 1-424 , 2000 CanLII 50133 (BC LA) (“ [COMPANY_10] ”). The arbitrator in [COMPANY_10] wrote as follows: … In other words, an estoppel will arise when a person or party, unequivocally by his words or conduct, makes a representation or affirmation in circumstances which make it unfair or unjust to later resile from that representation or affirmation. The unfairness or injustice must be more than slight. It does not matter whether the representation or affirmation was made knowingly or unknowingly, or actively or passively. The representation is taken to have that meaning which reasonably was taken by the party who raises the estoppel.… … [ 60 ] Respectfully, [NAME_1] has taken that passage out of context. Immediately after providing that statement, the arbitrator in [COMPANY_10] went on to cite other decisions outlining the necessity of detrimental reliance. The Board in [NAME_8] did the same thing, citing cases about detrimental reliance immediately after citing that passage. Additionally, the main issue in [NAME_8] , [NAME_9] , and [COMPANY_10] was about whether there was a representation that would trigger the doctrine of estoppel. That passage should be read in that context — as a discussion of the nature of a representation in the labour relations context and not to diminish the need for a [NAME_1] to demonstrate detrimental reliance. [ 61 ] In short, I prefer the following statement from [NAME_11] v. [NAME_2] (Canada Border Services Agency) , 2020 FPSLREB 81 at para. 38: [38] After reading these cases, I agree with the argument presented by the employer’s counsel that it was not enough for the grievors to show that an error was made in granting the VL credits to them and that they innocently relied upon it, but rather, they had to show that some detriment then arose from their reliance and that the detriment or unjust result had to be more than slight. [ 62 ] With that in mind, I turn to [NAME_1]’s submissions. On the issue of detrimental reliance, [NAME_1] summarized his submissions as follows: … 50. The Employer’s disclosure of the overpayments three years after discovery has caused and will continue to cause [NAME_1] significant financial detriment. The timing of the recovery falls at a time when [NAME_1] is making significantly less due to his demotion, his pre-retirement leave, and his upcoming retirement in January 2026.

51. The Union submits that it would be unfair and unjust to force [NAME_1] to repay the demotion related overpayments now when doing so would cause him significant financial hardship. … [ 63 ] This does not amount to detrimental reliance. As the Board stated in [NAME_12] v. [NAME_2] (Department of Human Resources and Skills Development) , 2010 [NAME_12] 93 at para. 44: 44 In overpayment cases, the Board’s case law holds that detrimental reliance needs to be proven by [NAME_1]. [NAME_1]’s representative never demonstrated the presence of detrimental reliance of a financial nature on the part of [NAME_1] and instead argued that repaying the amount calculated presented a financial hardship for [NAME_1]. Financial hardship is not the same as detrimental reliance: detrimental reliance occurs at the time of the error and arises from the fact that [NAME_1] relied on the statement or error of the employer and incurred a debt or acted in a manner which indicated that he / she relied on the employer’s word or error. Financial hardship, on the other hand, arises from the discovery of the error and the consequent request by the employer to repay what has been given in error. This being the case, the doctrine of estoppel, as it has typically been applied in cases related to monetary overpayments, cannot be used by [NAME_1] to found her grievance. [ 64 ] I reach the same conclusion in this case. [NAME_1] has led evidence of his financial hardship. However, he has led no evidence that he incurred a debt or acted in a manner that was in reliance on the employer’s error. [ 65 ] The closest [NAME_1] comes to asserting that he suffered detrimental reliance is the following submission: … 84. [NAME_1] could have been able to manage the financial consequences of the overpayment recovery if he had had the ability to commence recovery in 2020 while he was in a stronger financial position and could have been afforded a longer period of time with a full-time salary to repay the debt. … [ 66 ] I have a great deal of sympathy for that argument; however, [NAME_1] has not provided sufficient evidence to support it. He has provided no evidence about his financial circumstances in 2020. In 2024, he told the employer that he had a budget shortfall of approximately $200 per month; in his evidence at this adjudication, he admitted that his calculations were in error and that his shortfall is closer to $15 per month. However, I have no evidence that he was better off in 2020 and was better able to withstand a reduction in his pay. [ 67 ] I have also reviewed [NAME_1]’s expenses carefully. He lives a frugal lifestyle. I have no evidence that he was less frugal in 2020. In other words, [NAME_1] has not identified what expenses he would have cut back in 2020 or identified something that he would not have purchased, had he known about the overpayment sooner. [ 68 ] The closest [NAME_1]’s evidence comes to showing detrimental reliance is that one of his children was sending him money (as much as $2000 each month), to help him make ends meet. However, that child is self-employed. Her business has been struggling as well, so she cannot support him any longer. I considered whether this is sufficient to show that [NAME_1] relied on the employer’s silence to his detriment. However, I am unable to draw that conclusion. At best, that shows that his child suffered detriment if she could have economized in 2020 going forward and sent [NAME_1] more money to repay the overpayment. [ 69 ] I also considered whether [NAME_1]’s pre-retirement leave constituted detrimental reliance. [ 70 ] The employer argues that [NAME_1]’s pre-retirement leave was not irrevocable or inalterable. In reply, [NAME_1] submitted that he believed that it was irrevocable and that he was told by his team leader that it was irrevocable. The employer objects to this as being outside the proper scope of reply. I note that the Directive on Leave and Special Working Arrangements states that “[o]nce the pre-retirement transition leave application has been signed by both the participant and the person with the delegated authority, any changes to the arrangement may be made only in rare and unforeseen circumstances”, and the employer did not suggest that it would have granted [NAME_1] permission to undo his decision, in any event. [ 71 ] However, I do not need to address that objection because I agree with the employer that [NAME_1] never said that he would have undone his pre-retirement leave, had he known about the overpayment. He never says why he applied for pre-retirement leave. He says that he decided to retire at age 75 because of his health and that he asked to be demoted in 2017 because of his health as well, but he never said why he decided to reduce his schedule to working 3 days a week, starting in January 2024. [ 72 ] More importantly, [NAME_1] never says that he would not have applied for pre-retirement leave had he known about the overpayments. He never says that he would have kept working full-time, to pay off the overpayment. That could have been evidence of detrimental reliance, and had [NAME_1] said that I would have had to assess his claim on that basis. But he never said that, and I cannot infer it — especially in light of [NAME_1]’s other work-related decisions that were based on his health. [ 73 ] For these reasons, I have concluded that [NAME_1] did not rely on the employer’s failure to disclose the overpayments to his detriment. Therefore, I do not need to decide whether that failure to disclose amounts to a representation for the purposes of estoppel.

VI. Discretion in s. 155(3) of the Financial Administration Act [ 74 ] [NAME_1] argues that the employer’s collection of an overpayment is discretionary and that the employer acted unreasonably by collecting the overpayment in this case. [NAME_1] says that the employer’s actions were unreasonable in four ways: its delay notifying him of the overpayment (almost four years) was unreasonable, the piecemeal manner in which [NAME_1] was told about the overpayment was unreasonable, the employer unreasonably pressured [NAME_1] to agree with the overpayment to access a lower repayment rate, and the employer unreasonably failed to consider forgiving the overpayment in light of [NAME_1]’s age, looming retirement, and personal finances. [ 75 ] The employer makes two main arguments in response. First, it argues that the Board does not have the jurisdiction to consider its exercise of authority to collect the overpayment. In essence, it argues that it does not have discretion about whether to collect the overpayment but only about how it does so. Second, it argues that it acted reasonably. [ 76 ] In respect of the employer’s jurisdictional argument, I have concluded that the Board has the jurisdiction to assess the employer’s discretionary decision to collect an overpayment. I also agree with [NAME_1] that the employer’s actions were unreasonable in the first three ways that he describes, but not the fourth. I will address these two issues in that order and then explain the basis for the order that I make in this case. A. Jurisdiction of the Board to decide this issue [ 77 ] The parties’ submissions turn in large part on the interpretation of s. 155(3) of the Financial Administration Act (R.S.C., 1985, c. F-11; FAA ) as well as the Directive on Terms and Conditions of Employment (“the T&C Directive ”). I will deal with the FAA first and then turn to the T&C Directive .

1. Financial Administration Act [ 78 ] The employer’s ability to recover overpayments is set out in s. 155(3) of the FAA . The entire s. 155 reads as follows: Deduction and set-off Déduction et compensation 155 (1) Where any person is indebted to (a) Her Majesty in right of Canada or (b) Her Majesty in right of a province on account of taxes payable to any province, and an agreement exists between Canada and the province whereby Canada is authorized to collect the tax on behalf of the province, the appropriate Minister responsible for the recovery or collection of the amount of the indebtedness may authorize the retention of the amount of the indebtedness by way of deduction from or set-off against any sum of money that may be due or payable by Her Majesty in right of Canada to the person or the estate of that person. 155 (1) Le ministre compétent responsable du recouvrement d’une créance soit de [NAME_13], soit de Sa [NAME_14] du [NAME_14] d’une province s’il s’agit d’impôts provinciaux visés par une entente entre le Canada et la province en vertu de laquelle le Canada est autorisé à percevoir les impôts pour le compte de la province, peut autoriser, par voie de déduction ou de compensation, la retenue d’un montant égal à la créance sur toute somme due au débiteur ou à ses héritiers par [NAME_13]. Payments in respect of which Canada has contributed Paiements auxquels le Canada a contribué (2) Where, in the opinion of the Minister of Finance, (a) any person is indebted to a province by reason of having received from the province a payment, in respect of which Canada has contributed under any Act, to which that person was not entitled, and (b) the province has made reasonable efforts to effect recovery of the amount of such indebtedness, the Minister may require the retention of the amount of the indebtedness by way of deduction from or set-off against any sum of money that may be due and payable by Her Majesty in right of Canada to that person, and the amount so deducted, less the portion thereof that in the opinion of the Minister is proportionate to the contribution in respect thereof made by Canada, may be paid to the province out of the Consolidated Revenue Fund. (2) Le ministre, s’il estime qu’une personne est débitrice d’une province pour avoir reçu de celle-ci, sans y avoir droit, un paiement auquel le Canada a contribué en conformité avec une loi et que la province a fait des efforts raisonnables en vue de recouvrer cette créance, peut exiger la retenue, par voie de déduction ou de compensation, d’un montant égal à la créance sur toute somme due à cette personne par [NAME_13]; le montant ainsi déduit, moins la partie de ce dernier qui, selon le ministre, est proportionnelle à la contribution que le Canada a faite à cet égard, peut être versé à la province sur le Trésor. Recovery of over-payment Recouvrement (3) The Receiver General may recover any over-payment made out of the Consolidated Revenue Fund on account of salary, wages, pay or pay and allowances out of any sum of money that may be due or payable by Her Majesty in right of Canada to the person to whom the over-payment was made. (3) [NAME_15] peut recouvrer les paiements en trop faits sur le Trésor à une personne à titre de salaire, de traitements ou d’allocations en retenant un montant égal sur toute somme due à cette personne par [NAME_13]. Consent of other Minister Assentiment du ministre compétent (4) No amount may be retained under subsection (1) without the consent of the appropriate Minister under whose responsibility the payment of the sum of money due or payable referred to in that subsection would but for that subsection be made. (4) La retenue d’argent prévue par le paragraphe (1) ne peut être effectuée sans l’assentiment du ministre compétent responsable, en l’absence de ce paragraphe, du paiement de la somme en cause. [ 79 ] The employer’s jurisdictional point rests on the word “may” in s. 155(3) of the FAA . The employer submits that the word “may” does not mean that recovering a debt owing to the Crown is discretionary but that the mechanism used to recover that debt is discretionary. In other words, the word “may” is about the decision to use s. 155(3) of the FAA instead of some other means. [ 80 ] This is a question of statutory interpretation. Therefore, I must determine this issue by considering the text, context, and purpose of the provision. [ 81 ] In most cases, the text takes precedence and is the “anchor of the interpretive exercise” (see Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Directrice de la protection de la jeunesse du CISSS A , 2024 SCC 43 at para. 24). However, in this case the text is not dispositive. [ 82 ] As the Supreme Court of Canada said in Canada (Attorney General) v. [NAME_17] , 2011 SCC 30 at para. 54: [54 ] … Legislative use of the word “may” usually connotes a measure of discretion … This is as one would expect. It seems too clear for argument that [NAME_18] intended the federal and provincial Crowns to deal with debt collection in a rational, reasonable and cost-effective way. … [ 83 ] While that case was about the collection of debts owed by family sponsors of permanent residents who accessed social assistance, it remains an apt point in this context as well that “may” usually connotes a measure of discretion. [ 84 ] However, the word “may” can mean other things. The word “may” is permissive (see the Interpretation Act (R.S.C., 1985, c. I-21), s. 11), but that can mean different things. The word “may” can be used to confer an authority or a power, confer an entitlement that may or may not be subject to conditions precedent or to procedural limitations, or indicate that the legislature authorized a person or class of persons to do something but that acting is discretionary (see [NAME_19] v. Canada (Citizenship and Immigration) , 2018 FCA 143 at para. 45). In this case, the word “may” in s. 155(3) could mean either the first or third things — it could confer a power to collect overpayments on the Receiver General (as opposed to some other entity), or it could mean that the exercise of that power is discretionary. [ 85 ] To make things even more difficult, the word “may” does not translate easily into French. This is clear from s. 11 of the Interpretation Act , which reads: 11 The expression “shall” is to be construed as imperative and the expression “may” as permissive. 11 L’obligation s’exprime essentiellement par l’indicatif présent du verbe porteur de sens principal et, à l’occasion, par des verbes ou expressions comportant cette notion. L’octroi de pouvoirs, de droits, d’autorisations ou de facultés s’exprime essentiellement par le verbe « pouvoir » et, à l’occasion, par des expressions comportant ces notions. [ 86 ] The French version of the FAA uses the verb pouvoir (“ [NAME_15] peut recouvrer les paiements …”), which, according to s. 11 of the Interpretation Act , is used primarily (but not exclusively) to grant powers, rights, or authorizations to do things. [ 87 ] In light of these two possible meanings of “may” in s. 155(3), this provision must be interpreted in part through its context and purpose, to decide which of the two meanings that it bears. [ 88 ] There are four contextual clues to its interpretation: the general legal approach to employee overpayments, the provision’s history and purpose, previous cases, and other provisions in the FAA . a. Legal approach to employee overpayments outside s. 155(3) of the Financial Administration Act [ 89 ] There are two pieces of legal context that are helpful in understanding s. 155(3) of the FAA . They pull in different directions. [ 90 ] The first is that the common law rule is that the Crown as employer may deduct previous overpayments from an employee’s pay. In the private employment relationship, an employer’s right to recover overpayments from an employee’s wages turns on whether the overpayment was the result of a mistake of law or a mistake of fact; see the lengthy discussion of this point in Ottawa Board of [NAME_20] v. [COMPANY_21] , 1986 CanLII 6742 (ON LA). However, despite some older decisions implying the contrary, “In both England and in the U.S. it is well settled that payments mistakenly made out of the government’s consolidated fund are recoverable regardless of whether the mistake was one of fact or law” (see [NAME_23], “Mistake of Law Payments in Canada: A Mistaken Principle” (1979) 10 Man. L.J. 23 at p. 29; see also Auckland Harbour Bd. , [1924] A.C. 318 (P.C.), at 326). This rule has been adopted in Canada as well (see [COMPANY_24] v. [NAME_24] , 1996 CanLII 6607, and [NAME_25], “[ADDRESS] and Fall of Auckland Harbour Board v [NAME_26]”, 2019 97-1 Canadian Bar Review 43 at pp. 54 to 56 and particularly footnote 55). [ 91 ] This legal context indicates that s. 155(3) just codifies that common-law rule, and therefore “may” simply grants the Receiver General that power. [ 92 ] The second is that this common law rule has been superseded by employment standards legislation in most jurisdictions in Canada. In most jurisdictions, employers are prohibited from deducting money from an employee’s wages, even to recover an earlier overpayment. The purpose behind these provisions has been eloquently stated in [NAME_27] and [NAME_27] , decision of [NAME_27] dated March 30, 1982 [unreported]. The referee stated the following at pages 3 and 4 of his decision : The purpose of s. 8 [of the Employment Standards Act in force in [NAME_20] at that time] is to protect an employee’s wages. Its origin can be traced to the United Kingdom Truck Act , 1931 (U.K.), c. 37, enacted to put an end to various abusive practices, particularly the practice of employers paying employees in kind or in tokens redeemable only at stores controlled by the employers. This aspect of the protection of an employee’s wages is now provided for by s. 7 of the Employment Standards Act . Section 8 is more specifically designed to prevent employers who might have claims against their employees from taking unfair advantage of them by simply deducting the amount of their claims from wages due to them. In such circumstances, were it not for s. 8, the onus would be on employees to challenge such deductions. Section 8 prohibits this transfer of the onus to employees. If an employer has a claim against an employee, the employer has to pursue his claim in the proper forum. It is employer self-help practised on wages due to employees that is prohibited. Section 8 is therefore not designed to extinguish rights which employers might have against employees. Employers are at liberty to sue their employees for torts or breaches of contract or in any other cause of action, whether or not such claims are employment-related. Likewise, there is no reason why an employer having a potential or actual cause of action could not agree with his employee to an out-of-court settlement whereby a payment would be made by the employee to the employer. Section 8 does not affect primary rights of employers; it simply forbids the abuse by the employer of his role as paymaster to help himself to the sum he claims is due . [Emphasis added] [ Sic throughout] [ 93 ] As Arbitrator Sims stated tersely in [COMPANY_28]. v. [COMPANY_28] , 2025 CanLII 15303 (AB GAA): … An Employer cannot simply deduct from an employee’s paycheque monies it thinks it is owed. For recovery they must either obtain the employee’s consent or else establish their right to reimbursement through a legal process. In a unionized workplace this almost always means through arbitration.… … [ 94 ] However, I said that this is the rule in most jurisdictions, not all. In the federal jurisdiction, the Canada Labour Code (R.S.C., 1985, c. L-2) (which applies to the private sector), s. 254.1(2)(d), provides that an employer may deduct overpayments of wages. In the public sector, there are no statutory minimum employment standards, and no statute prohibits the Crown as the employer from making deductions from an employee’s wages. In other words, [NAME_18] has not seen fit to prohibit the federal Crown from using its role as paymaster to also collect overpayments allegedly owed to it. [ 95 ] This context indicates that s. 155(3) is discretionary. It is an indication that [NAME_18] has preserved some measure of protection for employees against abuse of the Crown’s role as paymaster to collect overpayments; by making that provision discretionary instead of mandatory, it ensures that some tribunal (in this case, the Board) can review the exercise of that discretion to ensure it is not abused. b. History and stated purpose of s. 155(3) of the Financial Administration Act [ 96 ] As I set out earlier, s. 155(3) of the FAA provides that the Receiver General may recover overpayments made out of the Consolidated Revenue Fund on account of salary out of any sum due or payable by the Crown to the person to whom the overpayment was made. [ 97 ] The Receiver General for Canada is the Minister of Public Works and Government Services; see Department of Public Works and Government Services Act (S.C. 1996, c. 16), s. 3(3). [NAME_1] has not disputed that the Receiver General has delegated the authority to recover overpayments to the employer for its employees. [ 98 ] More broadly, s. 155 of the FAA addresses deductions and set-offs. Subsection 155(1) states that where any person is indebted to the Crown, the appropriate Minister may authorize the retention of the amount of indebtedness by deducting from or setting-off any sum of money payable by the Crown to that person. This provision was first enacted in An Act respecting debts due to the Crown (S.C. 1932), c.

18. That statute was then rolled into the FAA , along with three other statutes, when the FAA was enacted in 1952. The impact of s. 155(1) is to “… to provide machinery for deducting, from money becoming payable by Her Majesty in the course of the administration of one department or agency, money becoming payable to Her Majesty in the course of the administration of another department or agency”; see [COMPANY_29]. v. The Queen , 1978 CanLII 3623 (FCA) at footnote 15. [ 99 ] What is now s. 155(1) of the FAA (at the time, s. 95 of the statute of the same name) used to state that the [NAME_2] could authorize the Receiver General to retain the deduction or set-off only if the [NAME_2] had first obtained a legal opinion from the Minister of Justice that a person was in fact indebted to the Crown. [NAME_18] removed that requirement in 1983 in part because of the volume of work that it generated and in part because a legal opinion on the amount of the debt was typically not necessary since most debts were for fixed statutory benefits paid in error; see [NAME_30]. (November 24, 1983). “Financial Administration Act.” Canada, [NAME_18], House of Commons , Edited Hansard , 32nd [NAME_18], 1st session. [ 100 ] [NAME_18] introduced the provision that is now s. 155(3) of the FAA in 1961 for much the same reason as it amended what is now s. 155(1) — namely, administrative convenience. The FAA (then and now) contains a provision permitting the [NAME_2] to recover any advance paid to a contractor for goods and services out of moneys payable by the Crown to that person; see s. 38. [NAME_18] decided to use a similar mechanism for the overpayment of salary and wages. [NAME_18] also decided that a legal opinion by the Minister of Justice was not required because the calculation of this overpayment can be done easily. The federal government’s representative describing this provision in 1961 explained as follows (see [NAME_31]. (June 19, 1961) “Financial Administration Act.” Canada, [NAME_18], House of Commons , Edited Hansard , 24th [NAME_18], 4th session): Mr. [NAME_31], this is designed to provide an efficient means to recover overpayments made from the consolidated revenue fund with respect to salaries, wages, pay and pay and allowances. The committee will note that by subsection 3 of section 36 of the act the comptroller is authorized to recover any accountable advance or any portion thereof which is not repaid or accounted for out of any moneys payable by Her Majesty to the person to whom the advance was made. It was felt desirable that the comptroller should have similar authority to make recovery for the overpayment of salary and wages. To follow the procedure laid down in subsection 1 of section 95-I am speaking now of the present section and not of the amendment which is la-requires [ sic ] that the opinion of the Minister of Justice be obtained indicating that a debt exists and after such opinion is received the matter must be referred to the [NAME_2] to obtain direction authorizing the set-off of this debt against any moneys payable by Her Majesty. The establishment of overpayment of salary or wages is a matter which I submit to the committee can be very readily determined and it appears unnecessary in such cases that the matter should be referred to the Minister of Justice and also to the [NAME_2] before recovery of such overpayment is effected. Such recovery would not affect the legal remedies of any individual should there not in fact have been overpayment. I should like to emphasize that this preserves for the individual all the equities that may exist at the time the alleged overpayment is made . [Emphasis added] [ 101 ] The emphasized passage in that quote makes it clear that s. 155(3) is about the manner in which a Crown employer may recover an overpayment to its employees. It creates a process right, not a substantive right. It sets out, in statute, the process (including by whom) for the Crown to do what it was already entitled to do — recover overpayments from wages. [ 102 ] The conditions on which the employer may exercise this process right are set out in the provision itself. I will quote the provision again, this time listing the conditions that must exist for the employer to collect an overpayment from an employee by offsetting their future earnings: … […] 155(3) The Receiver General may recover any [1] over-payment [2] made out of the Consolidated Revenue Fund [3] on account of salary, wages, pay or pay and allowances out of any sum of money that may be [4] due or payable by Her Majesty in right of Canada to the person to whom the over-payment was made. 155 (3) [NAME_15] peut recouvrer les [1] paiements en trop faits [2] sur le Trésor [3] à une personne à titre de salaire, de traitements ou d’allocations en retenant un montant [4] égal sur toute somme due à cette personne par [NAME_13]. … […] [ 103 ] In this case, [NAME_1] does not dispute any of those four preconditions (namely, that he was overpaid, that the payment was made out of the Consolidated Revenue Fund, that it was for salary, and that it was collected from money due to him). [ 104 ] There are, other conditions to an employer using s. 155(3) of the FAA . For example, t he employer must also collect the overpayment within the period prescribed by the appropriate statute of limitations; see [NAME_32] v. Canada (Border Services Agency) , 2009 FC 1156 at para.

38. That is not raised in this case, and [NAME_1] is not arguing that the collection is limitation-barred. [ 105 ] This legislative context and history supports the employer’s position in part. Subsection 155(3) is about the procedure that the Crown uses to collect an overpayment, not whether the Crown is entitled to collect that overpayment. However, nothing in this legislative context and history suggests that s. 155(3) is mandatory in the sense that the employer (exercising delegated authority from the Receiver General) is required to collect an overpayment out of [NAME_1]’s wages. c. Previous cases [ 106 ] Previous decisions of this Board and its predecessors have stated that the word “may” in s. 155(3) means that it is discretionary. However, those cases must be read in context. In those cases, the Board was confirming that it retained the jurisdiction to prevent an employer from collecting an overpayment for estoppel or other similar doctrines. [ 107 ] [NAME_1] cites [NAME_12] v. [NAME_2] (Department of Human Resources and Skills Development) , 2010 [NAME_12]

93. In that case, the employer deducted $11 564.85 from [NAME_1]’s wages because it had over credited her with annual leave. The Board allowed the grievance because s. 155(3) of the FAA applies only to salary, wages, pay, or pay and allowances — not leave credits. Therefore, the Board concluded: … 50 In stating the above, I should specify that the employer is not without recourse entirely. If the employer is unable to recover the leave credits through a mechanism mandated by the collective agreement and is unable to effect the recovery under the provisions of the FAA , it is not obliged to turn a blind eye to the error in all circumstances. The employer would be entitled to use its management rights in order to recover the wrongly credited surplus leave credits. However, such an exercise of its rights would be subject to reasonableness.… … [ 108 ] The Board went on to consider the doctrine of estoppel in case it was wrong about that conclusion and concluded that there was detrimental reliance. Then, at the end of its decision, it stated: … 69 Given the absence of anything in the law or the collective agreement dealing with the issue, general management rights prevail and those rights give the employer some discretion to correct errors. However, discretion must be exercised reasonably and the recovery of a debt caused by the negligence of the employer and allowed to balloon over the years, despite inquiries by [NAME_1] regarding her entitlements, is an unreasonable exercise of discretion. In the case of [NAME_1], detrimental reliance can be found in the fact that [NAME_1] took the leave that she believed she was entitled to. 70 Finally, although subsection 155(3) of the FAA states that the Receiver General may recover any overpayments, it does not state that it must or that it shall. The provision is not restrictive in any manner, and as such, it permits the employer to use its discretion in a given situation or circumstance. 71 [NAME_1] testified that the recovery of $11 564.85 created an undue hardship as her husband was a part-time employee. Counsel for the employer had an opportunity to cross-examine the witness and to question [NAME_1] on the extent of her financial hardship year by year. She chose not to. A reasonable person, on a balance of probabilities, could determine that an employee at the AS-02 group and level who receives an unexpected bill for $11 564.85 would experience financial hardship. I accept that the employer used a minimal amount of discretion in reducing the recovery rate from 10 percent to 2.5 percent. However, in this case, because of the excessive time, the employer took to discover its administrative error and because it was not vigilant or using all its resources to confirm [NAME_1]’s annual leave credits, I find that the employer’s decision to recover the full amount ($11 564.85) of the salary overpayment was unreasonable. … [ 109 ] Paragraph 70 of that decision is clearly obiter dicta (not necessary to decide the case). It also must be read in context with the rest of the decision. The Board found that the leave credits were not covered under s. 155(3) of the FAA , so the issue was left to residual management rights. The passage in paragraph 70 simply confirms that it is not restrictive and does not require the employer to collect an overpayment. [ 110 ] The Board cited and then affirmed paragraph 70 of [NAME_12] in [NAME_12] v. [NAME_2] (Department of Veterans Affairs) , 2015 PSLREB 38 at paras. 26 and 27. However, the Board in [NAME_12] was clear that the discretion in s. 155(3) of the FAA permitted it to apply the doctrine of estoppel — not that it gave the Board the jurisdiction to decide whether the employer should waive the overpayment on compassionate grounds. [ 111 ] The Board reached the same conclusion in [NAME_33] v. [NAME_2] (Department of Human Resources and Skills Development) , 2011 [NAME_12] 57, in which it stated: … 34 The Financial Administration Act allows the employer to exercise its discretion when deciding whether to proceed with a recovery. The provision is not restrictive, and in this case, it enabled the employer to exercise its discretion with respect to [NAME_1]’s specific situation. It should be noted that the [NAME_34] has, on more than one occasion, applied the principle of estoppel to situations in which employees were misled by the employer’s representations, namely, in [NAME_35] , [NAME_12] , [NAME_36] and [NAME_37] . … [ 112 ] This is also how the Federal Court applied s. 155(3) in [NAME_38] v. Canada (Attorney General) , 2016 FC 553. In that case, the Court decided that the employer was estopped from collecting an alleged overpayment of overtime and used the discretion in s. 155(3) as the basis for its ability to prevent the employer from collecting that overpayment because of the doctrine of estoppel. [ 113 ] The closest that the previous cases come to [NAME_1]’s position in this case is in [NAME_39] v. [NAME_2] ([NAME_40]) , 2025 FPSLREB 148. In that case, the Board stated at paragraph 165 that s. 155(3) of the FAA “… is not restrictive, and the employer must exercise its discretion to recover the amount in [NAME_1]’s specific situation.” The Board reduced the amount of the remaining overpayment by $22 000 because that reduction was “… a balance that reflects both the overpayment and the employer’s discretion, mitigated by [NAME_1]’s detrimental reliance and financial vulnerability.” However, [NAME_1] could not precisely itemize the expenses that she incurred in reliance on the representation that she was entitled to the overpayment, and the Board found that her detrimental reliance in that case was something between $15 000 and $25 000 (see paragraph 164). d. Other provisions of the FAA [ 114 ] The employer relies on ss. 23 and 25 of the FAA in support of its argument. In essence, s. 23(2.1) of the FAA gives the Governor in Council, on the recommendation of the [NAME_2], the authority to remit any debt other than a tax or penalty (which are governed by s. 23(2) instead). Section 25 of the FAA grants the [NAME_2] the power to make regulations dealing with writing off debts; however, s. 25(3) goes on to state that writing off a debt does not affect any right of the Crown to collect or recover it. The employer argues that these provisions show that it “… it is not open to the Board to read an authority for debt remission or write-off into s. 155(3) of the FAA …”. [ 115 ] I agree. However, that is not what [NAME_1] is arguing in this case. [NAME_1] argues that the employer unreasonably failed to consider forgiving the overpayments in light of his age, looming retirement, and financial circumstances. However, his main argument is that the employer acted unreasonably in the manner in which it addressed the overpayments. That second point is not captured by ss. 23 or 25 of the FAA . [ 116 ] In addition to ss. 23 and 25, I also reviewed other provisions in the FAA that use the term “may”. I found s. 155.1 of the FAA to be instructive. That section deals with interest on amounts owing to the Crown. In essence, s. 155.1(1) provides that interest is payable on overpayments, subject to any other statute or regulations (namely, the Interest and Administrative Charges Regulations (SOR/96-188)). Interestingly, s. 155.1(3) of the FAA reads as follows: Debt due to Her Majesty Créances de Sa [NAME_14] 155.1(3) Any interest or administrative charge payable pursuant to this section is a debt due to Her Majesty and may be recovered pursuant to section 155 or in any court of competent jurisdiction. 155.1(3) Les intérêts et frais administratifs payables sous le régime du présent article constituent des créances de Sa [NAME_14] recouvrables en conformité avec l’article 155 ou devant tout tribunal compétent [Emphasis added] [ 117 ] The English version of s. 155.1(3) shows the difference between mandatory and permissive language: interest is a debt, but it may be recovered in two different ways. The choice of collection method is discretionary, but the collection is mandatory. [ 118 ] This is very different from how s. 155(3) is worded. Section 155(3) does not state that an overpayment is a debt or that it must be recovered. e. Conclusion: s. 155(3) is discretionary, and the Board has the jurisdiction to consider whether the employer reasonably exercised that discretion [ 119 ] I acknowledge that the context and purpose clues that I have set out are finely balanced. However, I have concluded that the Board has the jurisdiction to consider whether the employer has reasonably exercised its discretion to collect an overpayment using the mechanism available to it in s. 155(3) of the FAA . [ 120 ] Despite the ambiguity of the word “may”, I have concluded that the use of “may” in s. 155(3) means that it is discretionary, as it is most typically used. I say this in particular in light of the wording of the other provisions of the FAA that I discussed earlier, which provide the most textually based indication of the meaning of s. 155(3). [ 121 ] This conclusion is also consistent with the Board’s earlier decisions. While those decisions were almost all about the doctrine of estoppel, that doctrine still requires that the Board have the jurisdiction to consider whether the employer unreasonably exercised its discretion under s. 155(3) of the FAA because it was estopped from doing so. The Crown cannot be estopped from carrying out a statutory duty to collect money (see Kenora (Town) Hydro Electric Commission v. Vacationland Dairy Co-operative Ltd. , [1994] 1 SCR 80). For estoppel to have applied in any of the cases that I set out earlier, s. 155(3) must be discretionary, and the Board must have the power to consider whether the employer reasonably exercised that discretion. [ 122 ] I have concluded that those reasons outweigh the other contextual clues I set out earlier and that an employer’s decision to collect an overpayment using s. 155(3) of the FAA is discretionary. [ 123 ] The Board’s jurisdiction to assess that exercise of discretion flows from the nature of a grievance about an overpayment. At the risk of stating the obvious, an employer has to pay an employee their salary, minus agreed-upon (like benefits premiums) or statutorily-required (like income tax) deductions. For unionized employees in the federal public administration, this obligation is set out in a collective agreement. In this case, it is set out in clause 67.02 of the relevant collective agreement, which states that an employee is entitled to be paid for their services. An employer breaches that provision of the collective agreement by recovering any alleged overpayment. Section 209(1)(a) of the Federal Public Sector Labour Relations Act (S.C. 2003, c. 22, s. 2) gives the Board the jurisdiction to adjudicate a grievance alleging a breach of a collective agreement. That is the basis of the Board’s jurisdiction to hear this grievance. [ 124 ] The employer has a defence to the claim that it failed to pay [NAME_1] — namely, it overpaid him and it is entitled to collect that overpayment from [NAME_1]’s salary because of s. 155(3) of the FAA . In hearing this grievance, the Board has to assess that defence by the employer by deciding whether the employer has proven that it overpaid [NAME_1]. In Canada (Attorney General) v. St-Onge , 2024 FCA 207, the Federal Court of Appeal pointed out that the Board has never clearly articulated the legal basis on which the employer can recover an overpayment (whether it is unjust enrichment, restitution for money paid under a mistake of fact, or something else). I do not propose to decide that issue that in this case because [NAME_1] admitted that he was overpaid and the parties made no submissions on this point. [ 125 ] If the employer makes out that defence, the burden then shifts to [NAME_1] to make a reply to the defence showing why he should not have to repay the overpayment. One of those replies can be that the employer should not have exercised its discretion to collect the overpayment, whether because it should be estopped from exercising that discretion or for some other reason. [ 126 ] For these reasons, I have concluded that the Board has the jurisdiction to decide whether the employer properly exercised its discretion under s. 155(3) of the FAA . B. Directive on Terms and Conditions of Employment [ 127 ] The employer argues that the T&C Directive requires it to recover any overpayment. Unfortunately, it does not say where or how. [ 128 ] Subsection 3.15.1 of the T&C Directive says that the Receiver General for Canada has the authority to recover overpayments in accordance with the FAA . Then, subsections 3.15.2 and 3.15.3 set out which overpayments are recovered in full from first available funds and which may be recovered over an extended period. Subsection 3.15.4 sets out special rules for overpayments that resulted from the Phoenix pay system. These subsections just say when a manager with delegated authority may agree to a repayment plan; they do not require recovery. [ 129 ] The T&C Directive lacks the clear language necessary to suggest a binding, legal obligation on the part of the employer to collect all overpayments in whatever way it sees fit. All it does is provide rules about payment plans for overpayments; it does not require the collection of overpayments or discuss the forgiveness of overpayments. C. The employer acted unreasonably in this case [ 130 ] The parties dispute whether the employer acted unreasonably in this case by collecting this overpayment. [ 131 ] [NAME_1] argues that the employer acted unreasonably by failing to consider his personal financial circumstances. I disagree. I am not aware of any principle in law or equity whereby a creditor is not permitted to collect a debt owing to them simply because the debtor is struggling financially, and [NAME_1] has not identified any such principle. [ 132 ] The closest case in support of that argument that I was able to identify is [NAME_41] v. [NAME_20] (Disability Support Program) , 2014 ONCA 240. In that case, the [NAME_20] Act , 1997 (S.O. 1997, c. 25, Sch. B) provided that an overpayment of disability support payments “may be recovered”. The [NAME_20] of Appeal concluded that the recovery of these overpayments was discretionary in that that both the director of the [NAME_20] and the Social Benefits Tribunal hearing an appeal of the director’s decision had the power to reduce the overpayment or not collect any of it. After that decision, the [NAME_20] Tribunal has found that it will consider “… whether collection of the overpayment would cause undue hardship” when deciding whether to collect only a part, or none, of the overpayment; see, for example, 1703-02224 (Re) , 2017 ONSBT 5315 at para. 17. [ 133 ] However, that line of cases involves a different statutory regime from the FAA . In fact, the [NAME_20] of Appeal in [NAME_41] stated that the discretion to forgive an overpayment existed in that case because the [NAME_20] Act , 1997 was different from the [NAME_20] Act (R.S.O. 1990, c. F-12). The [NAME_20] Act , like the federal FAA , prohibits a debt write-off, except in limited circumstances. [ADDRESS] of Appeal concluded that this rule did not apply in [NAME_41] because: … [61] The term “write-off” is not helpful. The issue is not whether the Director has discretion to write-off a Crown debt (she does not) but whether she has discretion not to collect part or all of one. The two are not the same. A write-off is an accounting term. It recognizes a reduced or zero value of an asset on the enterprise’s, in this case the government’s, books. A debt that is written off can still be collected. A determination not to collect or recover a debt is just that, though in many cases uncollectable debts are recommended for write-off. [62] Although the Minister of Finance has the authority to decide not to collect or to compromise a Crown debt, his authority is not exclusive. Section 5(1) of the Financial Administration Act contains the qualifying phrase “subject to any other Act affecting such obligation”. The ODSPA is an “other Act” affecting the collection of Crown debt. [63] Moreover, in [NAME_17] , the Supreme Court rejected the very argument the respondent makes in the present appeal. After referring to the federal Financial Administration Act , Binnie J. wrote, at para. 60: The FAA is a statute of very general application. It does not preclude [NAME_18] from enacting more specialized legislative schemes for the management and enforcement of debts owed to the Crown under particular statutory programs. The IRPA is an example of such a specialized collection regime. [ 64 ] Similarly, the ODSPA establishes a specialized collection regime under a special statutory program, the ODSP. The provincial Financial Administration Act does not override the debt collection provisions of the ODSPA or preclude their application. The Director has discretion not to recover overpayments and the Financial Administration Act does not take this discretion away. … [ 134 ] None of those statutory elements are present in this case. As I said earlier, s. 155(3) of the FAA is about the mechanism for collecting an overpayment, not about whether the overpayment exists or should be waived. [ 135 ] In light of the difference between the FAA and the [NAME_20] Act , 1997 , I have not followed the [NAME_41] line of cases. [ 136 ] In short, I am unable to find any basis in law or equity for ordering the employer to not collect an overpayment because of an employee’s financial circumstances. [ 137 ] However, I have concluded that the employer acted unreasonably in five ways in this case. [ 138 ] First, the employer acted unreasonably by informing [NAME_1] of the overpayments in a piecemeal fashion spread over 11-plus months, especially in the face of his request to stop dealing with his case piecemeal and to tell him how much the employer thought he owes. In [NAME_42] - [NAME_42] ([NAME_43]-SACC-CSN) v. [NAME_2] ([NAME_40]) , 2025 FPSLREB 152 (“the Overpayment Policy Grievance ”), the Board concluded that it was unreasonable for an employer to demand the repayment of an alleged overpayment without first checking to make sure that it has correctly calculated the overpayment (see paragraphs 254 and 265). This case is similar. The employer correctly calculated the overpayment but told [NAME_1] about only part of it. In my opinion, the effect is the same as what the employer did in the Overpayment Policy Grievance — it is giving inaccurate information to an employee about the amount that they owe. The Board also concluded at paragraphs 305 and following that providing information that is not “… clear, easy-to-understand, and sufficiently precise …” is also inappropriate. While the Board’s reasons on those points may be obiter , I agree entirely with those statements and rely on them anyway. [ 139 ] Second, the employer acted unreasonably by collecting the $212.78 overpayment without telling [NAME_1] that it did so. I am not aware of any legal or equitable principle that permits a creditor to collect something from a debtor without informing the debtor that it is doing so. In [NAME_17] , the Supreme Court of Canada stated that the Crown could not enforce a debt owing from a sponsor of a permanent resident without first notifying the sponsor of its intention to do so. While the Court based that ruling on the rules of procedural fairness, which are not raised in this grievance, it still supports the proposition that surreptitious debt collection by the Crown is anathema to reason and fairness. [ 140 ] Third, the employer acted unreasonably by recovering $223.27 from [NAME_1] on June 7, 2023, despite telling him that he had until June 16 to ask for a reduced recovery date. [ 141 ] Fourth, the employer acted unreasonably by requiring him to acknowledge the overpayment before asking for more generous terms of the rate of its recovery. As the Board pointed out at paragraph 296 of Overpayment Policy Grievance , when an employee acknowledges an overpayment, that restarts the limitation period and extends the employer’s time to recover. It was unreasonable to put [NAME_1] in the position of having to waive a possible limitation period defence in order to have the employer consider allowing him to repay the overpayment over time. [ 142 ] Finally, the employer acted unreasonably by asking [NAME_1] to repay two overpayments that it knew was barred from doing by a limitations period, without advising [NAME_1] of that fact. Again, I refer to the Overpayment Policy Grievance , in which the Board criticized the employer for doing this. At paragraph 301, the adjudicator stated this: “… I find it impossible to accept its argument that it would be unreasonable for it to include important information in the recovery letters, to allow for an informed decision.” I go further in this case: it is unreasonable for the employer to take advantage of [NAME_1]’s ignorance of limitation periods by implying that he needs to repay a debt that is statute-barred. D. The employer’s unreasonable actions do not void the overpayment [ 143 ] [NAME_1] submits that the employer’s unreasonable behaviour means that he does not have to repay the overpayment. I disagree. [ 144 ] To repeat a phrase that I said earlier, I am not aware of any principle of law or equity that the unreasonable manner in which a creditor tries to collect a debt reduces the amount of the debt. [NAME_1] has not provided any authority for this proposition either. [ 145 ] Additionally, s. 23(2.1) of the FAA spells out the remission of debts because the collection of those debts would be unreasonable or unjust. The Board’s jurisdiction in this case is to address the employer’s use of s. 155(3) of the FAA , and the Board has no jurisdiction to deal with the Crown’s refusal to exercise discretion under s. 23(2.1). In other words, it is not for the Board to decide whether the collection of this debt should be waived in the interests of justice; that rests with the Governor in Council, on the recommendation of the [NAME_2]. [ 146 ] Finally, the remission of a debt is an extraordinary step. The remission of some debts, but not others, is a “… departure … from the principle of equality of treatment before the law” (from [NAME_44] v. Canada (National Revenue) , 2019 FCA 300 at para. 4). I am not satisfied that the manner in which a debt is collected affects whether the debt is still owed. E. Consequences of the employer’s unreasonable actions in collecting the overpayments [ 147 ] In addition to seeking an order from the Board that he no longer have to repay this overpayment, [NAME_1] also seeks damages for the mental anguish that he has suffered as a result of the manner in which the employer collected the overpayment. [ 148 ] [NAME_1] did not make submissions about the basis for any claim for damages, and the employer did not respond to that requested remedy either. [ 149 ] Therefore, I direct the parties to provide additional submissions on these three issues: 1) whether the Board can award damages to a [NAME_1] for the unreasonable manner in which the employer has collected an overpayment; 2) if so, has [NAME_1] suffered damage as a result of the unreasonable manner in which the employer collected this overpayment; and 3) if so, what is the appropriate quantum of damages in this case. [ 150 ] For all of the above reasons, the Board makes the following order: (The Order appears on the next page)

VII. Order [ 151 ] The Board remains seized of this grievance. May 22, 2026. [NAME_3], a panel of the Federal Public Sector Labour Relations and Employment Board