With the COVID-19 pandemic and the ability to conduct many types of work online, employers are increasingly offering employees the option of remote working. Flexible working arrangements, if organized properly, can offer benefits to both employers and employees. For example, employees may save time and money by not needing to commute, and employers may be able to downsize physical office space, saving on rent.
However, remote working arrangements can create various legal issues, from employment to taxation. These issues may be amplified if the worker moves outside the province or overseas to work.
This article looks at the circumstances in which the Ontario Employment Standards Act (ESA) ceases to apply to employees that move outside the province and why this matters.
ESA applies if employee’s work is performed in Ontario
The ESA covers most employees working in Ontario. This legislation provides certain protections and rights to employees, such as minimum wage, vacation pay, reasonable notice in the event of termination and potentially severance pay.
With some exceptions, including for federally-regulated employees, the employment standards in the ESA apply to an employee and their employer if one of two conditions applies:
“(a) the employee’s work is to be performed in Ontario; or
(b) 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.”
Is the employee travelling for work or have they moved out of Ontario?
This raises the question of which employment laws apply if the employee moves outside Ontario. Employment legislation standards vary considerably in Canada and other countries, which may make a material difference.
If an employee normally works in Ontario but occasionally travels outside of the province for work, their employment relationship likely remains governed by the ESA. This is because the work performed outside Ontario is a continuation of the work they performed inside Ontario.
But what about where the employee relocates outside the province? Do they remain covered by the employment standards of the ESA?
Employee started to work from home and then moved to British Columbia
This issue was considered by the Ontario Labour Relations Board (OLRB) in the case of Shu Zhang v IBM Canada Limited.
The employee started working for IBM in 2009. He was a software developer working in the employer’s Markham lab.
In 2010, the employee started working from home after accepting the employer’s work-from-home agreement terms. This allowed IBM to terminate the employee’s right to work remotely at its discretion, in which case the employee had four weeks to return to the office.
In 2015, the employee relocated to British Columbia. He reported to a manager in the United States.
Employer ordered employee back to Ontario but he refused
In 2017, IBM told the employee he had to return to the office, this time the Ottawa lab. The employer offered to pay his relocation expenses. He responded that he would not be returning to Ontario for personal reasons. IBM said that his employment would cease in five months, and it would be processed as a resignation.
The employee claimed he had been constructively dismissed and was entitled to severance pay under the ESA. IBM argued that the Ontario ESA did not apply and that the employee had received his entitlements under British Columbia law.
Employee argued British Columbia work was a continuation of his Ontario work
The employee argued that the work he did in British Columbia was a continuation of the work he had previously done in Ontario. As such, the ESA continued to apply. He pointed to the fact he worked in the Ontario time zone.
IBM asserted that the ESA did not apply because the employee’s work was not a continuation of his work in Ontario. He had moved indefinitely to British Columbia and had lived there for over two years by the time he had stopped working for IBM.
Employee’s work needs to be performed in and outside Ontario to fall under ESA
The Vice-Chair of the OLRB said that the second condition of the test requires (i) that the employee’s work is to be performed both inside and outside Ontario; and (ii) that the work outside Ontario is a continuation of the work performed in Ontario.
She characterized the employee’s situation as follows:
“His move to British Columbia was neither of a fixed, nor of a short, duration. In the circumstances, the applicant was not an employee to whom the [ESA] applied simply because he worked remotely with a group of colleagues in Ontario and another group of employees in the United States, or because IBM retained the right to require him to return to a traditional work environment at some point in the future at an undefined location.”
ESA did not apply to the employee
The Vice-Chair explained that there was no “back and forth” between British Columbia and Ontario in this case. Given the extended period of time he spent in British Columbia, the location where he performed his work, the ESA did not apply.
As a result, the Ontario legislation did not apply to the alleged dismissal, ruling out severance pay under the ESA.
Contact Haynes Law Firm in Toronto for Advice on Remote Work Arrangements
Paulette Haynes quite literally wrote the book on non-standard employment arrangements, so if you are an employee or an employer in need of advice on remote working, telecommuting or hybrid working, look no further. Haynes Law Firm helps employers set up remote work policies to minimize the risk of constructively dismissing employees upon seeking their return to the office. Employees should also understand their rights and options when it comes to flexible working.
To discuss how Haynes Law Firm can assist you or your organization, please contact us online or by phone at 416-593-2731.