May 6, 2004

Merit Increases and Maternity Leave

Question: Can an employer decide not to give an employee a merit increase if the employee was on maternity for most of the year, but met all her performance targets in the months she did work? In this case, the employee worked four of 12 months of the performance year.

Answer: In general the law provides that employees who have been on maternity leave are entitled to reinstatement in their former job or to a job in “a comparable position with no less favourable wages and benefits.” Maternity leave cannot interfere with the accrual of seniority or benefits attached to length of service. In other words, employers are not permitted to treat the start of maternity leave as the end of employment, and the employee’s return to work as the start of a new job, forcing the employee to start building seniority all over again.

On reinstatement employees returning from maternity leave are entitled to any general salary or benefit increases that have been given to all employees of their class in their absence. For instance, if all employees were given improved dental benefits while an employee was on maternity leave, that employee would be entitled to the same increase in benefits on her return.

But the situation is different where the salary or benefit increases are tied to the employees’ performance of work. Employers are not required to treat employees who have been on maternity leave as though they were working throughout their absence. They may be treated as any other employees who have been on leave from work without pay.

Accordingly employers are not required to give employees returning from maternity leave any salary increases other employees of their class have been given in their absence as a result of good performance. The returning employees have not performed the work, and therefore have not earned the increase.

But the situation is more confusing where the employee has met all performance targets during the year when she was working, but did not work for the full year. It would be a good idea to look over the merit increase policy, if there is one, to determine how employees on other forms of leave without pay would be treated under the policy. Employees on maternity leave may be treated the same. Also consider giving the employee a pro-rated increase, reflecting her good performance during her four months’ work, as this may avoid employee dissatisfaction and future legal problems.

Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or pi@israelfoulon.com. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today

LEGAL DISCLAIMER: This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation.
Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.

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