Employment lawyer explains how to draft and enforce leave repayment clauses that survive scrutiny in Canadian courts
A recent B.C. Civil Resolution Tribunal decision confirms that, in the right circumstances, employers can successfully enforce parental leave top-up repayment clauses when an employee does not return to work as agreed.
The case, British Columbia Hydro and Power Authority v. Jindrak, saw the tribunal order a former employee to repay more than $4,000 in parental leave benefits after he declined to return to work due to the employer’s changed COVID-19 vaccination policy.
The employee said the suspension of the policy, and comments made by other employees and the CEO, amounted to constructive dismissal and made repayment “unreasonable and unjust”.
The tribunal did not agree, instead finding that he did abandon his position by not returning to work, and ordered him to pay the repayment amount.
Constructive dismissal as shield against repayment
As employment lawyer Aaron Zaltzman of Whitten & Lublin explains, even a well-drafted clause can become unenforceable if the employer’s own conduct fundamentally changes the job or ends the relationship.
In Jindrak, the tribunal held that BC Hydro had not repudiated the employment contract and had invited the employee back, which helped preserve its right to seek repayment of the parental leave allowance.
According to Zaltzman, disputes more often centre on what triggered the end of employment than on the wording of the clause itself – where employers typically overreach, he says, is trying to link repayment to without-cause dismissal.
“Termination without cause is just a decision that the employer makes … regardless of anything the employee’s actually done,” Zaltzman says.
“So, it’d pretty unfair to require a repayment provision if the employer is the one who decides to terminate.”
Some clauses extend to dismissals for cause to prevent employees from gaming the system, he says: “They get themselves fired for cause and not have to repay it. They'll forfeit their severance, obviously, but if they're going to resign, they weren't going to get that anyway.”
According to Zaltzman, repayment disputes can become particularly intense when an employee claims constructive dismissal during the period they are still “on the hook” for a bonus or top-up.
In those circumstances, he says, employees may argue that they were effectively forced out and that not only do they not owe repayment, the employer owes them severance.
“And if a constructive dismissal is found, it is treated as a termination without cause.”
Changes to job and constructive dismissal
The Jindrak decision turned on whether changes to the workplace and comments about unvaccinated employees made the job “unbearable” for the returning employee, as he alleged.
The tribunal in this case concluded that they did not, but in practice, Zaltzman says parental leave cases are a frequent point of contention between employers and returning employees, because so much can change while an employee is away.
“It could be that they have changed their job, they've changed their pay, maybe they've created a bad work environment,” he says of employers.
“Those are three very common general reasons for constructive dismissal.”
He points to remote work policies as a recurring example of leave-related disputes – especially following the pandemic.
“In the last few years, remote work has been a big one,” he says, describing a scenario that has seen employees going on parental leave while able to work remotely, receiving top-ups, then returning to a workplace that has a new in-office attendance rule.
“Then they're in a position where they feel like they've been constructively dismissed, but they're also worried because they've received top-ups with a repayment obligation,” he says.
“After they've received it and agreed to receive it, the employer has gone and changed something and put them in a position where they don't want to go back to work. That's been a pretty common one, and we've had some pretty bitter disputes in those cases with employers.”
Best practices: communication with employees on leave
Looking ahead, Zaltzman says careful drafting and transparent communication can reduce litigation risk without abandoning repayment tools entirely. He underscores that repayment clauses should be structured in a way courts will view as fair.
“Proportional, pro rata repayment is always a good practice,” he says.
“That’s much more likely to be upheld by the courts, much more likely to be agreeable, and creates a much better basis for any potential negotiation.”
Employers should also be proactive about flagging upcoming changes for employees on parental leave or other extended absences, he adds.
“Constructive dismissal on return from maternity leave or parental leave is already quite common,” he says.
“If there are changes that are unavoidable,[it’s about] making sure that the employee knows about them well in advance, so that he or she can make a decision … you don't want them to be in a position where they come back and suddenly know that there's a bunch of changes, and now maybe they have to think about making this claim.”
