Canada’s top bureaucrat says the time is right for Parliament to consider changing the law to make easier to fire public servants for misconduct, poor performance or mismanagement.

Privy Council Clerk Michael Wernick told members of the Senate national finance committee Wednesday evening that changing the rules for firing in the Public Service Employment Act would be controversial and “messy,” but the question of whether the government has the right incentives and disincentives to manage the workforce should be examined.

“It’s a topic for Parliament to wrestle with because if you don’t get it right, the threat to fire someone becomes an instrument of bullying or harassment,” Wernick told reporters after the meeting.

“There obviously has to be safeguards to make sure it is used properly but in cases of serious misconduct or poor performance or mismanagement, it should be possible to terminate people, but I don’t want that to become an instrument for harassment and bullying.”

The government is under tremendous pressure to fire or punish public servants at the centre of the Phoenix pay crisis, considered one of the biggest public management bungles in history.

The three federal executives blamed by Auditor-General Michael Ferguson for mismanaging the Phoenix pay system were not fired for the fiasco that has left thousands of public servants underpaid, overpaid or not paid at all for more than two years.

Two of the executives still work at Public Service and Procurement Canada (PSPAC) but no longer in the pay administration branch and one has retired. Marie Lemay, PSPC’s deputy minister, has said they were punished by not receiving any performance pay or bonuses for 2015-16, the year of the disastrous rollout.

The government and the auditor-general have refused to publicly name the executives and Wernick refused to comment on whether he thought the three should have been fired. Rather, he said the difficulty in firing poor performers has been a longstanding issue in the public service and did not begin with the Phoenix fiasco.

Wernick said the problem is the legal test to fire employees for cause is onerous and the grievance process becomes so “long, arduous and gruelling” that many managers simply give up. The unions would also fight any changes that gave the employer a firmer hand in dealing with behaviour or competence.

“It takes a long time and most managers have a thousand things in their plate they are trying to do that they will often shy away from dealing with them (the poor performers),” said Wernick.

But even unions and some executives have argued that there should be consequences for misconduct or mismanagement. Some argue all public servants are tarnished when no-one is accountable or punished. It’s also bad for morale when poor performers are simply sidelined or shuffled off to another branch or department.

In fact, the Public Service Alliance of Canada has already argued no executives should get performance pay until Phoenix is fixed and rank-and-file employees are paid properly.

In weeks leading to Ferguson’s report, the government quietly changed the rules to claw back the performance pay of deputy ministers, associate deputy ministers and heads of Crown corporations if they are found guilty of misconduct or mismanagement – even after they have retired.

The clawback won’t apply to deputy ministers or associate deputy ministers accountable for Phoenix because they will be grandfathered under the old rules. It also doesn’t cover the Phoenix management team and the other 6,480 executives in government.

There is pressure to extend claw-back provisions to all executives, which would require rewriting Treasury Board policies, but Wernick said such a decision would be up to Treasury Board ministers.

Wernick said executives and the Association of Professional Executives of the Public Service of Canada (APEX) which represents them, should be consulted on any proposed changes. He recently urged executives to ‘speak up’ and be more assertive on the way they are paid and managed.

In the fallout over Ferguson’s report, Wernick has said the public service needs some major structural reforms, such as reducing the levels of executives and examining their overall compensation package, including performance pay. He has also urged streamlining the 80,000 pay rules and special allowances and hundreds of job classifications before a new pay system is built.

In his report, Ferguson found the three executives has plenty of warnings and red flags that Phoenix was in trouble and not ready for rollout but they failed to send any of that information up the chain of command to the deputy minister.

They ignored the pleas of IBM, unions, and employees to stop or delay rollout. They made high risk decisions, such as not fully testing; cancelled the pilot; scraped training; dropped critical pay functions – including the processing of retroactive pay which later proved disastrous – to ensure Phoenix went live on time and within budget.

The report also found that despite all the rules, processes, procedures and controls Phoenix failed. Treasury Board Secretary Peter Wallace said the problem is controls were applied in “form and not substance” and the board will is taking steps to “embed” them in organizations so that doesn’t happen.

Wednesday’s meeting was also the first since Wernick’s clash with Ferguson over his report. Wernick rejected Ferguson’s conclusion that Phoenix was an “incomprehensible failure.” He called Ferguson’s message, which prefaced his Phoenix report, an opinion that wasn’t supported by evidence and questioned how the botched management of Phoenix could be generalized to a widespread cultural crisis.

He stood firm on his position when questioned by senators, calling Ferguson’s message “commentary that was not particularly helpful to Parliament or Canadians.”

He later told reporters that Ferguson is an auditor, not a “management consultant “ or “governance guru.” His conclusions were “inflammatory” and not backed by “evidence and rigour.”

“The opinion pieces stray into general advice like a management consultant or governance expert. I just don’t think the office of the auditor general is the right place to do that.”