Employees Beware: working remotely may carry risk

By Cereise Ross and Amanda Pizzardi

In 2020, millions of Canadians were forced to adjust to remote working arrangements quickly and, over the past year, some employees have begun to feel that there is no reason to go back to the office – ever. They aren’t wrong. After the pandemic, over “one-fifth of businesses (22.5%) expect at least 10% of their workforce to continue teleworking.”

Many employees might be interested in continuing their remote work arrangements, especially when foreign destinations have tempted visitors with extended stay visas where you can “work and play.” Before employees rush to relocate, they should be aware of the risks that might arise if they work remotely outside of Ontario; namely and as explained below, (1) employees could lose their entitlements and protections under Ontario’s employment legislation, and (2) employers may have cause to terminate the employment of those who relocate outside Ontario.

Risk 1: Ontario employment standards legislation does not contemplate a primarily remote work relationship, especially where remote work is done outside of the province

Many people who work in Ontario are guaranteed basic entitlements under the Employment Standards Act, 2000 (the “ESA”). However, those who perform substantial parts of their work outside of Ontario could discover they are not protected by the ESA.

Section 3(1) of the ESA establishes that the Act is applicable to those who perform work in Ontario or those who perform work in Ontario and outside Ontario, but the work performed outside Ontario is a “continuation” of the work performed in Ontario. This concept of “continuation” might be harder for a remote employee to establish if the working relationship changes to the point there is only a “possibility” that work is or will be performed in Ontario. That may be the case where an employee chooses to work remotely from outside of Ontario.

The possibility that many will continue to work remotely post-COVID creates uncertainty with respect to how Section 3(1) will be interpreted going forward. There is limited case law discussing the impact of remote work on this section. For example, in a 2019 Ontario Labour Board decision, the employee had initially worked out of the employer’s Toronto office. The employer granted the employee’s request to work from home pursuant to a work-from-home agreement, which provided that the employer could call him back to the Ontario office any time at its discretion. Shortly thereafter, the employee relocated to British Columbia where he continued to work remotely. A few years later, the employer notified the employee that he was required to move back to Ontario. The employee rejected this, and the employer confirmed that his employment would cease and would be processed as a resignation. The employee claimed that he was constructively dismissed and was entitled to severance pay under the ESA.

The Board determined that the employee’s employment was not subject to the ESA. At the time his employment ceased, the employee had worked from British Columba for over two years which represented over 90% of his work for IBM. He never performed any of his work in Ontario during that period of time, nor was he expected to do so. The work-from-home agreement did not contemplate that the employee would be moving back and forth from Ontario to British Columbia, instead, it merely contemplated that the employee would be required to return to a traditional work environment at some point in the future. The Board held that section 3(1) contemplated some kind of “back and forth” between Ontario and another jurisdiction, which was not the case here. As such, section 3(1) of the ESA did not have any application to the employee’s employment, and the entitlements under the ESA were not available to the employee.

Risk 2: your decision to work from the beach may give your employer cause to terminate your employment

In a 2012 British Columbia decision, an Alberta resident was hired by a British Columbia-based employer. The employment contract stipulated that the employee could “initially” work from his home in Alberta and anticipated that he would eventually relocate to British Columbia to work at the employer’s head office. While working remotely, the employee relocated to Mexico without informing the employer. When the employer found out, it terminated his employment for cause, alleging (amongst other things) that the employee repudiated his employment contract by deciding, unilaterally, to relocate to Mexico. The employee argued that pursuant to his written employment contract, he was entitled to work from home, wherever that might be, and he did not require permission to move from Alberta to Mexico.

The Court held that the employer had just cause to terminate the employee’s employment. It emphasized that the employment contract did not reflect an intention that the employee could relocate wherever he pleased and that the employer ultimately retained the power to determine the location of work. Therefore, when the employee moved to Mexico, he breached the employment contract.

Takeaways

The law is far from settled on the issue. Given the lack of appellate court decisions and the emerging issues brought on by the pandemic, it remains to be seen how a judge might decide a dispute arising from remote work or if the legislature writes any laws specifically related to the continuation of pandemic-related remote work.  But the existing (meagre) case law Ontario suggests that workers should be careful when contemplating remote work outside of Ontario.

If you are considering relocating to continue your remote work outside Ontario, you can reduce the risks that may come with working outside of Ontario with careful planning and strategic legal advice. This may involve renegotiating the terms of your employment contract or coming to a mutual understanding with your employer. Prior to pursuing these and other options, you should contemplate the following preliminary steps:

1. Have your employment contract reviewed by a lawyer. An experienced employment lawyer can help you understand what risks you face given your contract and position.
2. Discuss your interest in working remotely outside of the province with your employer prior to relocating. (In general, the courts are kinder to the party in a dispute with the cleanest hands.)