Working Remotely Outside of Canada: What You Should Know

With the onset of the COVID-19 pandemic in March came an abrupt shift towards remote work among Canadian businesses. The COVID-19 pandemic has, therefore, not only transformed the workplace but it has also normalized work-from-home arrangements. We expect remote work to continue for the foreseeable future while the pandemic continues to be managed, as this arrangement reduces the overall health and safety risks for both individuals and workplaces.

Aside from the office setting, there may be no obvious difference between working remotely from home in Canada or abroad. However, many practical and legal implications arise regarding an employee’s work location, including employment standards, taxes, and immigration.

As such, we recommend that employees be not only transparent with their employers with respect to their work location, but that employers develop and clearly communicate expectations and policies with respect to work-from-home arrangements. This can help to avoid conflict and reduce the chance of claims such as constructive dismissal or wrongful dismissal.

Legal Implications of Working Remotely From Abroad

Employees should be forthright with their employers by disclosing any changes to their work location. This is particularly important as several practical and legal considerations arise when an employee works remotely from abroad.

Employment Standards

When working from outside Canada, employees might become subject to the employment laws and rights of the host country, which could vary significantly from those in Ontario’s Employment Standards Act, 2000 (“ESA”). The applicability of the ESA to overseas employees hinges on factors such as the employer’s connection to Ontario and the relevance of Ontario’s jurisdiction to the employment dispute.

Since the initial pandemic phase, there have been further clarifications and potentially new legislations in various jurisdictions aimed at addressing the complexities of remote work, including the determination of applicable employment standards for remote workers. Employers and employees should stay informed about these developments to ensure compliance with both Canadian and international employment laws.

Depending on the jurisdiction, these rights could be more or less generous than those provided by the Ontario’s Employment Standards Act, 2000 (“ESA”), for example.

In determining whether the ESA continues to apply to an employee working abroad, a court will look at the following four (4) factors: 

• Whether the employer company resides in Ontario;
• Whether the employer company carries out business in Ontario;
• Whether the matter at issue (i.e., termination, constructive dismissal, etc.) took place in Ontario; and
• Whether the contract related to a dispute was made in Ontario.

Taxes

The tax implications of remote work can be intricate for both employees working abroad and their employers. The presence of an employee in a foreign country could trigger tax liabilities in that jurisdiction alongside Canadian tax obligations. Moreover, countries are increasingly scrutinizing the tax obligations of remote workers and their employers, with some implementing specific measures to address the taxation of remote work income. It’s advisable for both parties to consult with tax professionals to navigate these obligations effectively.

Immigration

Employees working remotely from abroad should be aware of any permits or visas they are required to secure to carry out remote work outside of Canada legally. Further, temporary foreign workers contemplating carrying out work from their home country or another international location should also be mindful of the implications this may have on their current Canadian work permit, and whether they are permitted to work from outside their location within Canada. For example, temporary foreign workers are generally issued employer-specific work permits, which often narrowly restrict their work location.

Recent developments have seen countries adapting their immigration policies to either tighten or facilitate remote work by foreigners, reflecting a global reassessment of immigration norms in the context of remote work.

Remote Work Location Restrictions

Since the start of the pandemic, many countries have actively targeted remote workers and encouraged migration by advertising work-from-home arrangements. Some countries introduced specialized visa programs for remote workers to encourage employees further to work from abroad by facilitating a more seamless process.

With the opportunity to work from almost anywhere, employees should be mindful of any restrictions imposed by their employer with respect to their work location. For example, while an employee may be permitted to work remotely full-time, the employer may reserve the right to modify the work arrangement and require the employee to physically attend the workplace on short notice. In some cases, the employee may be unable to return in a timely manner if abroad.

This is particularly important, where employers have the right to recall employees with limited notice. In this case, employees could find that they are subjected to quarantine requirements. Failure to return to the physical workplace in a timely manner may result in a breach of the employment contract and may justify termination of the employee’s employment. This could result in the employee having limited options to pursue their employer for wrongful dismissal.

Given this, employers are encouraged to not only set clear parameters regarding work locations for employees, along with any associated rationale. Employers may further consider requiring that an employee notify and/or formally request approval to any changes to their work location.

Transparency and Policy Development

It remains crucial for employees to maintain transparency about their work location with their employers. Concurrently, employers should strive to develop, communicate, and enforce clear policies regarding work-from-home arrangements to preempt potential conflicts and mitigate risks of claims such as constructive dismissal or wrongful dismissal.

Updates for Employees and Employers

Employers are encouraged to revisit and potentially update their employment agreements to reflect the realities of remote work, ensuring that any changes are backed by proper consideration to ensure enforceability. Likewise, employees should adhere to company policies and be forthright about their work locations to avoid potential disputes.

Takeaways for Employees and Employers About Working From Abroad

Employers looking to outline their specific expectations, particularly with respect to remote work locations, may consider improving their existing and future employment agreements. Any amendments made with existing employees will be considered enforceable only if the employer offers new “consideration” to the employee, such as a signing bonus or an additional pay increase.

Employees are encouraged to abide by company policy and to be honest and transparent with their employers with respect to their work location, especially if they are considering work remotely from outside of Canada. If, however, employees feel that their rights (including those listed within the contract) have been violated, it would be wise to consider having this reviewed with employment counsel before deciding how to respond.

If you have any questions with respect to work location, whether you are an employer or employee, and the impact one’s location might have with respect to employment rights, termination of employment, wrongful dismissal, or otherwise, please contact Toronto employment and immigration lawyers, Sultan Lawyers, at (416) 214-5111 or submit a contact form on the website.