Does the Ontario Employment Standards Act, 2000 Apply? The Implications of Employees Relocating to Work Remotely in Another Jurisdiction

Millions of Canadian employees have been forced to work from home as a result of measures designed to prevent the spread of COVID-19. Many of these employees continue to perform the same jobs they had before the pandemic started, just from different locations. However, the location where an employee preforms work often factors into which provincial employment standards legislation applies to the employment relationship.

For instance, a provincially regulated employee in Ontario who relocates to another province to work remotely may no longer fall under the jurisdiction of Ontario’s Employment Standards Act, 2000 (ESA).

Let’s take a deeper dive into the scope of Ontario’s employment standards legislation.

The Scope of the Ontario Employment Standards Act, 2000

The application of the ESA is described under Subsection 3(1). Subsection 3(1)(a) states that the ESA applies to an employee whose “work is to be performed in Ontario.” According to the Employment Standards Act Policy and Interpretation Manual, “the fact that some work is performed in Ontario may be insufficient to bring the employee in under the jurisdiction of [Ontario’s ESA]. For example, if the employee’s work in Ontario is merely a continuation of the work performed in another jurisdiction, then the laws of the other jurisdiction may apply rather than [Ontario’s ESA].”

Subsection 3(1)(b) further states that the ESA “applies to employees whose work is to be performed in Ontario” as well as outside Ontario, but the work performed outside Ontario must be “a continuation of the work to be performed in Ontario.” The ESA’s interpretation manual provides various examples to illustrate the application of the ESA to work performed outside Ontario. It notes, for example, that a salesperson who is based in Ontario will be subject to the ESA’s jurisdiction, even if that person works both in Ontario and Québec in the course of his or her employment. However, an employee who works for an employer in England, and then relocates to Ontario to work remotely, is deemed to be protected by the ESA, but only for the time that the employee worked in Ontario.

2019 Ontario Labour Relations Board Decision

The Ontario Labour Relations Board’s 2019 decision, Zhang v IBM Canada Ltd, demonstrates the possible implications of an employee’s relocating to a different jurisdiction to work remotely. In Zhang, the employee was hired to work out of the employer’s office in Markham, Ontario. However, in 2010, the employee entered into a work-from-home agreement with his employer. According to its terms, the employer could terminate the agreement “at [its] discretion,” in which case the employee would “be required to transition fully to a traditional work environment within a four-week period.”

In November 2015, with the employer’s permission, the employee moved to British Columbia, where he continued to work from home. In September 2017, the employer asked the employee to relocate to work at its office in Ottawa, pursuant to the terms of the work-from-home agreement. After refusing to relocate, the employer treated the employee as having resigned from his position. The employee then sought severance pay under Ontario’s ESA, alleging that she had been constructively dismissed. However, the Board first had to determine whether the Ontario ESA applied when the employment relationship ended.

Vice-Chair Caroline Rowan first found that Subsection 3(1)(a) of the ESA did not apply at time of the alleged constructive dismissal, since the employee’s work was not “to be performed in Ontario.” She noted that since moving to British Columbia, the employee had never performed any of his work in Ontario, and that both the employer and employee had both agreed that the employee would work from British Columbia.

Second, Vice-Chair Rowan found that Subsection 3(1)(b) of the ESA also did not apply because the employee’s work was not to be conducted both in and outside of Ontario. She stated that Subsection 3(1)(b) requires that the employee’s work is to be performed in Ontario and outside Ontario, and that the latter is a continuation of the work performed in Ontario. Thus, the ESA “has no application where the work is to be performed only outside of Ontario with a mere possibility that that could change down the road.” [Emphasis in original.] Vice-Chair Rowan continually stressed that there was never any ‘“back and forth’” once the employee moved to British Columbia. She even said that if the employee had accepted the transfer back to Ontario, “the circumstances would be different.”

Interestingly, the Board made no mention about whether the plaintiff’s employment agreement stated that Ontario law applied to the employment relationship. Instead, the Board focused on the terms of the work-from-home agreement. Vice-Chair Rowan noted that this agreement “did not require a return to Ontario at some future date.” [Emphasis in original.] Instead, it contemplated that the employer retained the right to require the employee to return to a traditional work environment at a future date. This suggests that the terms of the work-from-home agreement may factor into whether an employee’s work performed outside Ontario is a “continuation of the work to be performed in Ontario.”

Takeaways for Employers

Employers may want to be mindful of the potential implications of allowing an employee to relocate to a different jurisdiction to work remotely. As employment standards can vary from province to province, so too can an employer’s obligations and an employee’s rights. Take, for example, the overtime implications of employees moving to jurisdictions with different wage and hour obligations. In Manitoba, Saskatchewan, Alberta, and British Columbia, provincially-regulated employees are generally entitled to overtime pay after working eight hours in one day. However, in Ontario, provincially-regulated employees are entitled to overtime pay only after they have worked 44 hours in one work week. Thus, an Ontario employer could be required to pay an employee more overtime pay if the employee relocates to one of Canada’s Prairie or Western provinces.

In order to clarify expectations, employers may want to consider entering into work-from-home agreements with their remote workers. In drafting such agreements, employers may want to consider the particular provincial law that applies to the employment relationship, as well as whether the employer is agreeable to the employee performing work in another jurisdiction.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.

Hugh A. Christie is the managing partner of the Toronto office of Ogletree Deakins.

Michael F. Lee is a 2020 graduate of the University of Western Ontario, Faculty of Law, and is an articling student in the Toronto office of Ogletree Deakins.