Remote Work Abroad - Ontario Employment Law Implications

The COVID-19 pandemic has precipitated a mass shift to remote work across Canada. As employees are adjusting to the new reality of not reporting into the office daily, many are realizing that they are no longer "tied down" to the location of their workplace. If an employee can work from the comforts of their home, could they not also work from the comfort of a sunny destination during Ontario's cold winters? What about a ski resort in British Columbia?

While the location where an employee resides may no longer matter for the purpose of attending at the office, it may still impact which employment laws will govern the employment relationship. In turn, this may affect both the employer's and employee's rights and obligations to one another.

Ontario Employment Standards Act

In Ontario, the Employment Standards Act, 2000 (the "ESA") sets the minimum standards for employees, including rules about minimum wage, hours of work, and termination entitlements, amongst others. Section 3(1) of the ESA provides that the legislation will apply to an employee and their employer if:

• the employee's work is to be performed in Ontario; or
• the employee's work is to be performed in Ontario and outside Ontario but the work performed outside Ontario is a continuation of work performed in Ontario.

In the era of COVID-19 and remote work, the question arises of whether an employee must be physically present in Ontario in order for their work to qualify as being performed in Ontario or a continuation of that work, as required by the ESA.

Although there has not yet been much time for the Courts to consider the issue, some pre-COVID-19 jurisprudence on the topic provides insight into how the Ontario courts and tribunals may answer that question.

John Karpowicz v. Valor Inc., 2016 CanLII 49203 (ON LRB):

In this case, the key issue was whether the ESA applied to an employee that lived and worked in Michigan, U.S.A throughout his employment relationship, but occasionally visited the employer's head office in Ontario for meetings. The employee's employment agreement stipulated it was governed by the laws of Ontario and made references to the ESA.

The employee argued that both he and his employer wanted the laws of Ontario to apply, and this was reflected in the employment agreement. Since he did perform some work in Ontario, the employment relationship should therefore be governed by the ESA.

The Ontario Labour Board rejected this argument. It held that the employee was clearly based in Michigan and performed almost all of his work there. In reality, the substance of the work performed by the employee was outside of Ontario, and only incidental work was performed in Ontario. As a result, the ESA was of no application despite the provisions of the employment agreement.

In reaching this conclusion, the Labour Board noted that if the situation were in the reverse i.e. the employee primarily performed work in Ontario and travelled to Michigan to attend meetings, the ESA would likely apply.

McMichael v. The New Zealand & Australian Lamb Company, 2018 ONSC 5422

In this wrongful dismissal action, one of the issues was whether the ESA governed the employment relationship between the parties. The employee had been employed as a Vice-President of Operations at the employer's processing facility located in Los Angeles, California, and had resided in California throughout his employment. However, the employment agreement between the parties specifically stated that the employment relationship was governed by the laws of Ontario.

The employer argued that despite the wording of the employment agreement, the ESA did not apply as the employee had always resided and worked in California.

Interestingly, the Court rejected this argument and held the provisions of the ESA applied.

The Court found that by agreeing to Ontario as the governing law, the parties had agreed that the provisions of the ESA would apply to them regardless of where the employee was situated when he performed his employment duties. In reaching this conclusion, the Court emphasized that as long as the choice of law is bona fide and legal, and there is no reason for avoiding the choice on the grounds of public policy, then the chosen law will govern the contract. On the facts of the case, there were no public policy grounds for not applying the ESA.

Shu Zhang v. IBM Canada Limited, 2019 CanLII 79641 (ON LRB)

In August 2019, the Ontario Labour Board again considered the issue of whether the ESA would apply to an employee who worked out of province.

In this case, the employee initially worked for the employer at its office in Ontario. However, about two years prior to the end of his employment, the employee entered into the Work at Home Agreement with the employer which permitted him to work remotely from his home in British Columbia. While working from British Columbia, the employee worked with a team of colleagues in both the U.S.A. and Ontario, and under the direction of staff based in Ontario. During the two-year period he worked in British Columbia, the employee never attended at the employer's offices in Ontario.

At the end of the employment relationship, the employee claimed he was entitled to severance under the ESA.

The Labour Board rejected the employee's claim, holding that the ESA did not apply. It found that at the time the employee's employment ended it was not possible to say that the employee's employment "is to be performed in Ontario". Likewise, as the employee's work was intended to be and in fact was performed exclusively outside Ontario, it could not be said it was a continuation of work performed in Ontario.

Notably, the Labour Board did not discuss whether the employee had an employment agreement with the employer that contained a governing law clause.

Key Takeaways:

The pre-COVID-19 jurisprudence suggests that there is no clear-cut answer to the question of how much an employee must work while physically present in Ontario in order for the relationship to be governed by the ESA. Rather, the unique circumstances of the work arrangement will likely be highly relevant, including the extent to which the employee's employment duties relate to work performed in Ontario, how often the employee performs employment duties while physically present in Ontario, and whether the employee's employment agreement contains a governing law clause in favour of Ontario.

Keeping the above in mind, employers are encouraged to think carefully before permitting employees to work remotely from outside of Ontario for extended periods of time. On the flipside, employees should be aware of how working out of province may impact their employment entitlements.

In every case, employers and employees alike should seek legal advice before making major employment decisions. Lee Workplace Law would be happy to help