What’s Stopping Me From Moving to Costa Rica and Not Telling My Boss?
June 28, 2022
June 28, 2022
Previously printed in The Lawyer’s Daily, a LexisNexis Canada publication.
Imagine you are on a nice sunny beach, feeling the warm ocean breeze on your face, and listening to the soothing sound of … an Outlook e-mail notification!?!?
Due to the COVID-19 pandemic, remote work has become the norm for many, particularly for those in the tech sector. With Canadian travel restrictions easing and many seeking to improve their mental well-being by escaping their home offices, employees are thinking about working from abroad for short and extended periods. Although several countries, such as Iceland, Barbados and Costa Rica (to name a few) have introduced special visas for remote workers, there are important practical and legal considerations that need to be considered before heading away, whether permanently or just even temporarily.
An employer can dictate the work location
The saying that “it’s easier to beg forgiveness than it is to get permission” likely does not apply to one’s work location.
A company may have expressly set out an employee’s work location in a written employment contract or set out required rules for remote work in a remote work policy that an employee will need to follow. However, even if an employment contract or remote work policy does not expressly prohibit an employee from working remotely from another country or require that employee to get permission from their employer, unilaterally working remotely from a new location without permission could result in your dismissal for cause.
In Ernst v. Destiny Software Productions Inc. 2012 BCSC 542, a vice-president of operations living in Calgary was working for a Vancouver-based software company in accordance with a remote work agreement. As the agreement did not specify the location, the employee unilaterally moved to Mexico under the assumption that he could work remotely from there. However, the company did not agree and dismissed the employee after an investigation. The employee sued for wrongful dismissal. The B.C. Supreme Court dismissed the lawsuit, finding that the employee’s failure to return to work in Canada when requested to do so and for failure to disclose he was working in Mexico (when he falsely claimed to be home sick for a few days) amounted to just cause for termination.
Similarly in Staley v. Squirrel Systems of Canada Ltd. 2012 BCSC 739 aff’d Staley v. Squirrel Systems of Canada, Ltd.  B.C.J. No. 860, a software support manager working for a Burnaby-based company without a written employment contract was temporarily allowed to move from B.C.and work remotely from Montreal while the company considered whether it would allow a permanent move. Ultimately, when negotiations regarding a permanent move broke down, the company directed the employee to return to work in Burnaby with two months’ notice. When the employee refused to return to B.C., the company dismissed him for cause for insubordination. The B.C. Court of Appeal confirmed that Squirrel Systems established there was just cause for the dismissal. Nuts.
Dishonesty about the location of remote work can be grounds for a just cause dismissal, particularly if an employee refuses or is unable (e.g., potential COVID-19 quarantine) to return to the employers’ office when directed to do so. Employees are better off informing their employer in advance when seeking to work remotely from a new location.
Considerations when working remotely from a foreign location
While a physical office is less important these days, there are a number of issues for employers and employees to consider related to a remote work location:
1. Taxation: There is a risk that a remote worker’s foreign home office could be deemed as one of their employer’s business locations under either Canadian or foreign tax laws, which could make the company subject to corporate tax requirements. Also, an employee working remotely in a foreign country could be required to file and pay income tax, dependent on the duration of their stay.
2. Immigration: If, and how long, an employee will be able to remotely work in that foreign country likely depends on that country’s immigration laws. The length and ability for an employee to take a working holiday depends on the target foreign country and the employee’s status in Canada.
3. Privacy and confidential information: Foreign countries may have surveillance laws that could result in privacy risks to the employer and employee. For example, the U.S.A. and China have laws that would allow those governments to access and monitor employee information. Further, there could be concerns based on the security of the network the employee will be working over in the foreign country. Is the employee working from a coffee shop? Is there a secure VPN? Is their connection encrypted?
4. Work equipment: If an employee is using a company laptop, border agents might seize such equipment under that country’s immigration laws or the employee might be unable to work if equipment gets damaged.
5. Health and safety: What happens if the employee gets seriously injured in the foreign country? Do they have travel medical insurance? Corporate group medical plans may not apply while the employee is in a foreign country. Further, is the employer liable for such injuries? A provincial worker’s compensation scheme may not apply should an employee working remotely be injured in the foreign jurisdiction if the employer is not requiring them to work specifically from that jurisdiction.
6. Employment laws: The employment law regime that applies to a given employment relationship is usually based upon an employee’s permanent work location. Depending on the circumstances, foreign employment standards laws could be found to apply to the employment arrangement (See John Karpowicz v. Valor Inc., 2016 CanLII 49203 (ON LRB); Shu Zhang v. IBM Canada Limited, 2019CanLII 79641 (ON LRB.)
Do your research, formalize any agreement
As a result of the numerous practical and legal considerations related to temporarily or permanently working remotely from abroad, it is recommended that before employees fly off into the wild blue yonder, that employees and employer formalize a remote work agreement, that appropriately takes into account the foregoing considerations. It is also prudent for parties to do their research into personal risks and implications of a new remote work arrangement.
While every effort has been made to ensure accuracy in this update, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The document is for general information purposes only and does not constitute legal advice.