Salgo: Is the federal government treating its term workers fairly?

By Karl Salgo, Associate and Executive Advisor

Published on May 20, 2025 in the Ottawa Citizen.

The public service may be creating second-class public servants with very little job security because others have too much.

Prime Minister Mark Carney and President of the Treasury Board Shafqat Ali: The new cabinet includes a committee named “Government Transformation / Government Efficiency” chaired by the finance minister and including Ali as Treasury Board head. Photo by JUSTIN TANG /THE CANADIAN PRESS

Prime Minister Mark Carney’s promised program review hasn’t even begun but the public service is already shedding staff, mostly contract employees with terms of up to two years. The axe has fallen particularly hard at the Canada Revenue Agency, which relies on term workers for around 20 per cent of its 60,000-strong workforce and is eliminating more than 1,000 of them. That’s in addition to not extending the contracts of about 2,000 contact centre workers, despite complaints about inadequate service levels.

The CRA isn’t alone: Refugees and Citizenship Canada plans to lay off 3,300 workers, and it looks like term workers will disproportionately bear the brunt.

Cutting term employees first when belts tighten seems an obvious move to senior bureaucrats because it’s so much easier than cutting permanent ones — typically just a matter of not renewing contracts that might otherwise have been extended. It costs less, and it can seem comparatively fair because term workers tend to have less seniority and can’t expect job security.

Process has no regard for merit

But this approach can overlook real personal hardship and even injustice, since it has no regard for merit. Moreover, it raises questions about why the government relies more than ever on term workers and whether it is creating second-class public servants who have very little job security because others have too much. If so, broader reform of staffing practices would be a better option.

More than 80 per cent of federal public sector employees are classified as “indeterminate,” meaning their employment has no set end date, which usually translates into forever. But public service rules also allow for other kinds of tenure, notably term and casual. As of 2023, term employees, those under contracts of three months to two years’ duration, accounted for close to 48,000 workers. That’s a lot of people who depend on term work.

Term employment is intended to meet temporary operational needs, such as temporary vacancies, special projects or fluctuating workloads, not to serve as a substitute for normal staffing or a probationary period. Tenure aside, term employees are treated much like indeterminate employees: they’re hired on merit, have similar benefits, and can join public service unions. If they’re in the same job for three years, they’re supposed to get an offer of permanent employment. For many workers, term employment is a route into the permanent public service.

These are all legitimate uses of term employment. But I have to ask why the government’s reliance on term employees has increased so much in recent years. In fact, the number of term workers has grown even faster than the public service as a whole, which has grown at an unprecedented rate. In 2010 term employees constituted nine percent of the public service. By 2023, they comprised 13.5 per cent.

Were there more temporary absences after 2010? More short-term initiatives? More workload fluctuations? COVID was a likely factor after 2020, but the number of term employees grew by around 50 per cent in the decade before the pandemic, while indeterminate employment was stable.

Almost no one is fired for incompetence

I’m sure these additional term contracts complied with all the rules. But I suspect that the growing use of term employees is at least partly driven by how hard it is to hire and (especially) fire indeterminate staff. Available data from the Treasury Board indicates that the number of annual terminations for incompetence or incapacity is only in the double digits, in a workforce of hundreds of thousands of people. In 2016, for example, out of a population of 240,000 public servants, just 61 were fired for incompetence.

Public service employment is notorious for a lack of nimbleness due to a web of rules and associated costs. Similar rigidity can also exist to some extent in the private sector, especially in jurisdictions where unions and labour laws are strong. The growing use of term employees in the government somewhat mirrors private sector trends, where the proportion of part-time workers with fewer mandatory benefits and security has increased, particularly among younger workers.

Does the exaggerated security of some public servants contribute to insecurity for others? There are defensible reasons for public service security of tenure, including continuity, independence from political influence and the socialization of public service values and ethics. And the government can downsize on a large scale if and when it really wants to. But the day-to-day level of inflexibility can be stifling.

I’d argue it also hurts morale. Job security of the kind that says there’s always opportunity here for you if you perform well is good for morale. But keeping dead wood is bad for the morale of people who work hard, and it creates situations in which productivity problems and workplace animosities can go unaddressed for years.

Carney’s new cabinet includes a committee promisingly (if clumsily) named Government Transformation / Government Efficiency, which is chaired by the finance minister and includes the president of the Treasury Board. It’s likely to focus on program review, but Carney has also promised to revisit the rules for bringing new talent into the public service. Let’s hope this happens, and that it’s done comprehensively.

It can’t come soon enough.