How Working Abroad Can Impact Your Employment Rights

The pandemic has forced a large number of workers to work from home. Many workers now say that they would like this flexible work arrangement to continue once the current public health crisis is behind us. Without the need to attend the office, some location-independent workers have relocated to other parts of the province, country, or world. A number of reasons can motivate this choice, such as lower cost of living, better weather, and currency arbitrage, where a worker is paid in one currency but pays of the goods and services he or she needs in a lower currency.  Bermuda, Barbados, and Estonia are actively recruiting these digital nomads with special visas allowing them to work and reside in these countries for up to 12 months.

Legal Considerations When Working Abroad

Lost in the conversation is the question of which employment laws apply to these workers. The Ontario Employment Standards Act (ESA), for instance, applies to employees and employers if the employee’s work is performed in Ontario or if 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.

The Ontario Labour Relations Board, the tribunal responsible for interpreting and enforcing the ESA recently ruled on how to interpret the second applicability threshold, whether the work done outside Ontario is a continuation of work performed in Ontario. In Shu Zhang v IBM Canada Limited, 2019 CanLII 79641, the Board had to determine whether the ESA applied to an employee who had been hired in Ontario but who had been working remotely from home in BC for 28 months prior to his termination. The Board could not find that the work the employee was doing was work being done in and outside of Ontario nor that it was a continuation of work performed in Ontario. The employer had agreed to allow the employee to work from outside Ontario but retained the right to call him back to a traditional work arrangement if it so chose. The Board found that a mere possibility of having to return to Ontario was not enough to create a connection to Ontario.  Furthermore, once the employee moved to BC he never returned to Ontario to work in any capacity, not even to attend a meeting. Interpreting the relevant section of the ESA, the Board stated:

In my view, subsection 3(1)(b) of the Act contemplates some kind of back and forth between Ontario and elsewhere, and not a move from one province to another for an indefinite period of time with only a possibility of a return to a traditional work environment at an undefined location. (para. 29)

The Board also found that the fact that the employee remotely attended meetings held in Ontario from his home office in BC was not enough for the Ontario ESA to apply.

The Risks of Living in a Different Jurisdiction

It seems clear from the decision that an employee who leaves the province to work remotely may lose the protection of the ESA. The decision also states that time spent outside of Ontario in these situations may not count towards the calculation of the employee’s length of service.

There are countries in the world with more robust employment standards than Ontario’s. France famously guarantees workers five weeks of paid vacation a year and a 35 hour a week schedule. The challenge a worker might face would be in enforcing his or her employment rights in the foreign jurisdiction. While IBM, the respondent, in this case, has offices and assets throughout the world, many companies have no assets outside of Ontario. Enforcing a labour tribunal’s award may be quite difficult, leaving the employee without a real avenue for enforcing his or her workplace rights, either at home or in the foreign jurisdiction.

Employers should also be aware of the possible ramifications of employees engaging in labour law arbitrage and of the legal exposure they may face by letting employees work remotely from foreign jurisdictions.