Since the COVID-19 pandemic, when remote work became a “new normal,” many employers changed their recruitment strategies to reach throughout Canada. This includes jurisdictions where the employer may not have a regular business presence.
Recruiting remote workers can expand an employer’s talent pool and allow for greater flexibility. However, there are some important factors employers should consider when introducing remote work arrangements outside their own jurisdiction. Let’s go into the common questions and important information about managing remote workers across multiple jurisdictions.
What is considered a remote worker’s province or territory?
A worker’s province or territory for employment income tax and payroll deduction purposes is the province or territory where the employer maintains their “place of business” or the “establishment of the employer.” According to the Canada Revenue Agency (CRA), the establishment or place of business is any place or premises in Canada that is:
- Owned, leased, or rented by the employer; and
- Where one or more workers report to work or from which one worker or more is paid.
If the employee reports to work in person
If a worker reports to an employer’s establishment in person, then the worker’s province or territory of employment for employment income tax and payroll deduction purposes is the one where the establishment is located and where the worker reports to work.
If the employee works remotely full time
For full-time remote workers, the worker’s province or territory of employment for income tax and payroll deduction purposes is the one from where the worker’s wages are paid.
These rules may differ when an employer pays non-employment income. Certain forms of income are subject to the rules for the employee’s province or territory of residence.
Which employment legislation applies to the remote worker?
If federally regulated
The Canada Labour Code applies to employers who are federally regulated, regardless of province or territory.
If governed by provincial or territorial legislation
Most often, the law of the province or territory where the remote worker is physically located and where the work is performed governs the employment relationship. For example, a remote worker who physically lives and works exclusively in Alberta but has been hired by an Ontario-based employer is governed by Alberta’s Employment Standards Code.
However, some employment standards legislation provides exceptions. For example, under Ontario’s Employment Standards Act, 2000 (ESA), an employee who has a home base in Ontario but travels outside Ontario in the course of their employment is likely still subject to the ESA, as their work outside the province is a continuation of their work performed in Ontario.
If a worker moves
If a worker moves to a different province or territory and then performs work from that province or territory, it’s likely that the employment standards legislation of that new province or territory will apply. The precise answer depends on the legislation of the worker’s home province, as well as the circumstances of the worker’s employment.
Which health and safety legislation applies to the remote worker?
Generally, employers must comply with the occupational health and safety legislation of the jurisdiction where they are based, and of each jurisdiction where the company has at least one employee working.
In some jurisdictions, “workplace” is defined broadly, so it still applies when a worker is working from home. Employers must ensure a remote worker’s home workstation is assessed for health and safety risks (like ergonomic risks) and that those risks are eliminated or minimized. Employers should also know how to respond to remote work injuries.
Statutory health and safety obligations differ among provinces and territories. Employers should investigate and understand the potential differences and nuances regarding legal obligations in a particular province or territory.
How should workers’ compensation premiums and compensation be paid?
It is generally the province or territory where the work is performed that determines the province or territory where workers’ compensation premiums are payable.
All workers’ compensation boards in Canada have signed an interjurisdictional agreement (IJA) on workers’ compensation that regulates the payment of premiums and workers’ compensation with respect to employers and workers who work across Canadian provinces and territories. Under this IJA, employers prorate insurable earnings so that premiums are paid to each workers’ compensation board in the jurisdictions where workers perform work, regardless of whether the employer has a physical office there. The IJA does not apply to certain employers or to industries or occupations that are not insured by particular jurisdictions.
If work is performed in multiple jurisdictions
If a worker performs work in more than one Canadian province or territory, an employer can prorate a particular worker’s earnings and can pay premiums on the prorated earnings based on where the work was performed.
Different considerations may apply when an out-of-province arrangement is only temporary; some workers’ compensation legislation includes coverage for employees who are injured at work while temporarily working outside a particular province or territory.
Employers should consult the workers’ compensation board in their current jurisdiction to confirm the process and arrangements when contemplating having a new or existing employee work in a different jurisdiction.
What should be included in employment contracts?
For new remote hires who will be employed or working remotely in another province or territory, include the following provisions in employment contracts:
- The worker may work from a remote location in a particular province or territory, but not remotely from a different province or territory without the employer’s express written approval.
- Whether the remote working arrangement will be permanent or temporary, or whether the worker will have a hybrid working arrangement whereby the worker will work both onsite and remotely.
- General employment contract provisions, such as hours of work.
- The statutes that will govern the employee’s employment.
- Details about mandatory travel to the office for something that cannot be done virtually, such as training. Include details about commuting costs and other considerations.
- Requirements for reliable access to a high-speed Internet connection and procedures to follow in case of an outage.
- The time zone in which the employee is expected to work.
- Employment expenses (for example, furniture, equipment, or Internet) and who will cover these costs.
Amend existing contracts or draft new ones for employees who already have employment contracts and who intend to begin working in a different province or territory.
When should a remote work policy be given?
Implement a remote work policy from the HR Fundamentals library for existing workers who already have an employment contract in place, and for workers who are permitted remote work generally.
Remote work arrangements outside Canada
Diligently review requests to work outside Canada and engage the appropriate subject matter experts. Questions requiring due diligence include:
- Is the employee legally authorized to work in the proposed country?
- If the employee is covered under a medical plan by the employer, will coverage be affected by working outside the country?
- Are there tax implications to the employer or the employee?
- How do any employment laws (workers’ compensation, employment standards, health and safety, and so on) in the proposed country affect the employment relationship?
Employers should consider the nuances in legislation among Canada’s provinces and territories before implementing any new out-of-jurisdiction working arrangements. Considering potential jurisdictional issues beforehand and putting the requisite agreements, policies, and procedures in place at the start can help you avoid unforeseen legal issues. When in doubt, contact Live HR advice. Our award-winning team of HR advisors can help you navigate a range of areas, including legislative interpretation and compliance, talent acquisition and management, compensation and benefits, and more.
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