The Crown agency says on its website that Marilyn McLaren has ended the contract and returned $27,300.
McLaren retired last February from MPI and received a six-figure severance package.
But she was brought back on a one-year, $50,000 contract, but had not done any work.
The new CEO told a legislature committee that McLaren was meant to be on standby in case he quit or fell ill.
The government said she was required to be available on 48 hours of notice to provide advice, but the Opposition replied it was unbelievable that MPI was paying someone for no work.