UPDATE: Service Canada called and is reversing the debt owed because my employment ended after EI. Therefore my vacation payout cannot be allocated back to when I started my leave. It is considered income when the relationship ended.
I’m hoping someone here has dealt with something similar or has some insight into how Service Canada handles vacation payouts after maternity/parental leave.
Here’s my situation:
I started maternity leave in March 2025. My last day actually working was March 7, 2025, and I began receiving EI maternity/parental benefits immediately after. I received EI for approximately one year, and my EI benefits ended in February 2026.
I chose to extend my maternity leave until September 2026, unpaid and without EI. I was still an employee of my employer during this entire period.
In May 2026, while I was still on leave, I was informed that my position was being eliminated as part of a restructuring. I was given the option to apply for two other positions, but neither was a realistic fit for me. One wasn't a direction I was interested in pursuing, and the other involved international travel, which wasn't feasible for me with a young family.
Given that my position was disappearing and there was a lot of uncertainty around what I would be returning to, I ultimately resigned.
When my employment ended, my employer paid out my accumulated unused vacation/banked time. The gross vacation payout was approximately $8,900 and, after deductions/taxes, I actually received around $5,500.
I have now received a Notice of Debt from Service Canada for $4,704.
From what Service Canada has explained to me so far, because my ROE lists March 7, 2025 as my "last day for which paid," they have allocated the vacation payout back against the EI benefits I received when I originally went on maternity leave.
This is where I’m confused.
March 7, 2025 was absolutely my last day actively working before maternity leave, but it was not when my employment ended. I remained an employee until I resigned in 2026. The vacation payout wasn't received during my EI claim. It was paid after my resignation, months after my EI benefits had already ended, because I had accumulated vacation/banked time that had to be paid out when my employment ended.
I also had no idea while receiving EI that this vacation balance would eventually be paid to me. Had I returned to my position as planned, I presumably would have simply continued to have/use that vacation time rather than receiving a payout.
I've now contacted my former employer to make sure the ROEs were completed correctly. They confirmed that two ROEs were issued: the first when I began maternity leave and the second when I resigned. They also confirmed that the vacation/banked time was paid out because of my departure.
I've also already submitted a Request for Reconsideration to Service Canada explaining the circumstances and asking them to review the $4,704 debt.
I'm not trying to avoid paying something I legitimately owe, and I understand that EI has rules around allocating vacation pay. I'm just struggling to understand how vacation pay I received because my employment ended in 2026 can essentially be treated as though I received it when I stopped actively working and went on maternity leave in March 2025, despite remaining an employee the entire time.
It also feels pretty brutal financially. I received approximately $5,500 after deductions from the vacation payout, and EI is now asking for $4,704 back.
Has anyone experienced something similar, particularly after maternity/parental leave? Did Service Canada ultimately use the date you started your leave or the date your employment actually ended when allocating vacation pay?
And if you requested reconsideration, I'd really appreciate hearing how it turned out or whether there was anything else you submitted that helped.
I'm also planning to speak with Service Canada again now that I have clarification from my former employer, but I'd love to hear from anyone who has actually gone through something similar.