As the federal government forges ahead to replace the Phoenix payroll system, internal documents obtained by CBC News through access to information suggest clearing the backlog could take another three to five years.

The briefing note also suggests it could take 10 or more years for the system to achieve "overall stability."

The document was prepared in August 2018 for a deputy minister in Employment and Social Development Canada (ESDC) ahead of a meeting with the Treasury Board official in charge of helping find a system to replace Phoenix.

"ESDC is encouraged by some recent incremental progress in the pay environment, yet remains extremely concerned about the pace of resolving the crisis," said the memo.

The memo said pay uncertainty is hampering recruitment and retention and that's threatening the department's ability to do its work.

Tens of thousands of workers burned

This week marks three years since the launch of Phoenix, the IBM-customized system that went live on Feb. 24, 2016.

Since then, tens of thousands of workers have been burned by Phoenix with some going months with little or no pay while others were overpaid.

Lynn McDaniel, a CRTC help desk technician, says she thought at one point she might lose her home because the government wasn't paying her at all.

Now, she actually owes the government about $6,500 because she was overpaid while she was off work being treated for cancer and having a mastectomy.

McDaniel is still off work because she is suffering from anxiety and depression, which she attributes in part to the financial stress Phoenix caused.

Lynn McDaniel says the financial stress caused by Phoenix has impacted her mental health. (Robyn Miller/CBC)

Hearing the backlog could take another three to five years to clear is unsettling because her pay issues still aren't resolved.

"It makes me feel so sad," McDaniel said, adding her anxiety levels increase every time she thinks about returning to work.

"I know that when I'm going back to work that there's that risk that the pay interruption will happen again.

"I'm hoping there is an improvement there, but until you're in it, you don't know. It's out of your control and that's the stress, is knowing that there's nowhere to turn."

Government seeing progress

Public Services and Procurement Canada is in charge of stabilizing the current Phoenix system as work to replace the system entirely continues.

Steven MacKinnon, parliamentary secretary to the procurement minister, pointed out that the memo didn't come from his department but said he hopes the backlog will be cleared sooner than it suggests.

Steven MacKinnon, parliamentary secretary to the procurement minister, says the government has added permanent and temporary fixes. (CBC)

"On one level you can extrapolate from a given month's reduction and say it'll take X months at this rate," he said.

"We're hoping to increase the rate of improvement month over month over month."

MacKinnon didn't give an exact timeline but said the government is seeing a reduction in the backlog each month, due in part to a new "pay-pod" system.

That system assigns Phoenix pay system troubleshooters to work directly with specific federal departments.

MacKinnon said pods will be set up in all government departments by the spring.

Impact on recruitment and retention

​The new president of the Treasury Board acknowledged the pay uncertainty has caused problems in hiring and retention at the government.

"It's fair to say that there has been anxiety in the past over what's happened, but we have dealt with that head-on," Jane Philpott said.

She noted that certain departments have also been recognized by The Globe and Mail as some of Canada's top employers for youth.

"That work on stabilization has to continue of course, and we're seeing that happening." Philpott said.

"But we've recognized that we do need to move onto a new system and have a very positive process in place to do so."

PSAC wants damages for employees

The president of the Public Service Alliance of Canada said he isn't entirely surprised by the memo's projected timeline.

He is calling on the government to negotiate damages for the mental anguish caused by Phoenix.

"It greatly disappoints me. It's totally frustrating for our members," said Chris Aylward.

"After three years of not being paid properly, our members are still suffering pay issues, payday after payday after payday."

As of Feb. 22, there were 275,000 pay transactions "beyond normal workload" at the Public Service Pay Centre, according to the procurement department.

The Treasury Board hopes to present the government options for a replacement payroll system by the spring, ahead of the October election.