The federal government says public servants who have been overpaid by the Phoenix pay system have until Jan. 31 to have their 2017 issues processed to avoid having to return their gross pay.

A spokesperson for Public Service and Procurement Canada, the department which oversees Phoenix, said employees whose issues are processed by the end of the month will only have to pay back the net difference between their salary and the system error — in effect, only the money they've actually received.

The spokesperson said if overpayments are not processed by the end of the month, employees will have to return "the gross amount of the overpayment (the amount prior to deductions)" because of federal tax law.

The Public Service Alliance of Canada, the biggest public sector union in Canada, has published advice on its website telling employees to report overpayments by Jan. 15 to avoid getting stuck with having to repay the gross amounts.

'Employees simply don't trust the system': union

"The problem is they can't process those overpayments even when the employees call the pay centre and have their overpayment recorded," said Chris Aylward, the union's national executive vice president.

Aylward said this is enough time for the government to sort out some T4 slips by the February deadline, but employees don't necessarily believe their issues will be resolved by tax time.

"It's OK for the government to say, 'Just get it done by the end of the month and everything will be OK.' The employees simply don't trust the system, they don't trust what the government is saying," Aylward said.

"When they know they can't get a proper paycheck every two weeks, it's difficult to trust that your taxes will be correct as well."

Chris Aylward, vice president of the Public Service Alliance of Canada, is calling for a national public inquiry into Phoenix. (Matthew Kupfer/CBC)

Susan Skaarup, an employee at the Department of National Defence, is trying to clear up a $28,000 overpayment issue and is uncertain whether the January deadline will help her.

"I don't have a lot of faith in them being able to fix this in time for the 2017 tax year. It's my 2016 and 2017 tax years that have been compromised," she said.

She said someone has started working on her file both at the pay centre and in her department after she contacted her MP and CBC News.

PSAC is calling for the government to only try to recover the net pay difference from employees affected by Phoenix, instead of gross pay — exempting them from existing rules given the size of the Phoenix issue.

Only applies to 2017 tax year

At the end of November 2017, the government reported the total number of outstanding financial and non-financial Phoenix claims had reached 551,000 — affecting approximately 156,000 government workers, more than half the public service workforce.

The federal government has set up a web page and infographics to answer Phoenix tax questions.

The January processing date only applies to overpayments during 2017.

Public Service and Procurement Canada said people who have outstanding issues after Jan. 31 will not need to begin repayments until after tax authorities have reassessed their file to credit their account "an amount equal to the excess withholdings on the gross overpayment."

The department said it would follow up with employees in the summer of 2018 to establish flexible repayment plans.