Is working from home a fundamental term of employment?
Question: If an employee is hired for a work-at-home position, could it be considered constructive dismissal if the employer decides after a while that it wants the employee to work at the office every day?
Answer: Constructive dismissal occurs when a unilateral act of the employer breaches the employment contract and the breach is reasonably regarded as having made a significant change in an essential term. The question whether an employer’s unilateral act amounts to constructive dismissal in any given set of circumstances is described in Potter v. New Brunswick (Legal Aid Services Commission) as a “highly fact-driven exercise.”
In the circumstances raised here, the employer could be found to have constructively dismissed the employee if it was an express or implied term of the employment contract that the employee be entitled to work from home. However, if the arrangement was merely an indulgence on the part of the employer or a temporary or trial arrangement, subject to unilateral change by the employer, there would be no breach of contract and no right to claim constructive dismissal.
If no written contract exists or the location for performance of the work is not expressly addressed in a written contract, the employee would need to establish that the parties intended to confer a contractual right on the employee to work from home. Her ability to do so would depend on the facts. However, the case law does provide some indication of what would be involved in doing so.
In Smith v. Viking Helicopter Ltd., it was held that an employer has the right to determine the location at which work is performed in the absence of contrary contractual intent. The court held that an employee has no vested right to work at a particular location and must expect “reasonable dislocations … including the place where it is to be performed.” Smith involved the transfer of an employer’s operations from Ottawa to Quebec for economic reasons. An employee who refused to move because of his Ottawa roots and connections was found to have resigned and not to have been constructively dismissed. The appellate court pointed out that the trial judge had erred by treating the employee’s personal situation as reflecting terms of his employment.
In Rasanen v. Rosemount Instruments Ltd., the Ontario Court of Appeal held that an employee had not been constructively dismissed when he was transferred from Toronto to Calgary following a corporate reorganization. Although the employee had legitimate personal reasons for remaining in Toronto, those reasons could not be imposed on the employer to prevent it from operating reasonably in the conduct of its business.
In Brown v. Pronghorn Controls Ltd., the Alberta Court of Appeal held that an employee had resigned when he refused to accept a transfer from Red Deer to Sedgwick, a two-hour drive away. Although there was no express contractual term stipulating a location for performance of the employment contract, the court found an implied term allowing the employer to relocate the employee. In concluding that the employee had no contractual right to remain in Red Deer, the court took into account several factors, including the dynamic nature of the employer’s operation, the fact that it operated from several offices throughout Alberta and Saskatchewan in both rural and urban centres, the fact that field work was known to be a requirement of employment, and the fact that the employee had previously moved from Swift Current to Red Deer.
In Wilson v. UBS Securities Canada Inc., the court refused to imply a term allowing the employer to relocate the employee. The court found that relocation was not an expectation when the employee was hired; that the employer’s subsequent affiliation with an international firm did not alter the parties’ expectations; and that prior relocations had been negotiated with employees on a case-by-case basis. In the circumstances of the case before the court, the employer had repudiated the employment contract when it closed its Vancouver office and advised the employee that she would be expected to move to San Francisco.
Assuming that the employee was able so show an express or implied contractual right to work from home, the employee would still be required to prove that right was an essential term of the employment contract and the breach was objectively significant. This would involve an assessment of the facts from the viewpoint of a reasonable person in the position of the employee. The employee’s own perception of the significance of the employer’s conduct is not determinative.
However, if the employee regarded her ability to work from home as crucial, the employer had been made aware of its importance to the employee at the time of hire and the employee accepted employment on the basis of the employer’s promise to permit work at home, a change to in-office work would very likely constitute constructive dismissal.
In analogous circumstances, withdrawal of rights of specific importance to employees has been found to amount to constructive dismissal.
In Corey v. Dell Chemists (1975) Ltd., a requirement that an employee start work at 8:00., five days a week, was a constructive dismissal where a four-day workweek and a 9 a.m. start time was a term of the employment contract. The evidence showed that it was a paramount consideration for the employee to give priority to her childcare obligations and that the employer had understood and agreed to her terms.
In Wedewer v. Hoodoo (Rural Municipality No. 401), an employee was found to have been constructively dismissed when his employer withdrew its tacit permission for him to take time off work as required for seeding and harvesting. The employee’s ability to take time off to complete essential work on his farm was a fundamental term of his employment contract.
The most effective way to avoid the uncertainty that surrounds such fact-based decisions is to expressly address the matter during the hiring process. If an employer wishes to retain the right to withdraw work-at-home privileges at some later date, it should expressly reserve that right. Conversely, if an employee regards the work-at-home arrangement as critical to her acceptance of the position, the employee should advise the employer of that fact and obtain a written promise acknowledging that the arrangement is an essential term of the contract.
It is worth noting that care should be taken in drafting any express right. As indicated in Ernst v. Destiny Software Productions Inc., a right to work from “home” may mean different things to different people. In that case, the employee asserted that his contractual right to work from “home” encompassed a right to work from Mexico when he relocated there from Alberta. Although he was ultimately unsuccessful, the ambiguous nature of the parties’ communications opened the door for argument that could have been closed by more precise drafting.
For more information see:
• Potter v. New Brunswick (Legal Aid Services Commission), 2015 CarswellNB 87 (S.C.C.).
• Smith v. Viking Helicopter Ltd., 1989 CarswellOnt 750 (Ont. C.A.).
• Rasanen v. Rosemount Instruments Ltd., 1989 CarswellOnt 768 (Ont. H.C.).
• Brown v. Pronghorn Controls Ltd., 2011 CarswellAlta 1933 (Alta. C.A.).
• Wilson v. UBS Securities Canada Inc., 2005 CarswellBC 875 (B.C. S.C.).
• Corey v. Dell Chemists (1975) Ltd., 2006 CarswellOnt 3513 (Ont. S.C.J.).
• Wedewer v. Hoodoo No. 401 (Rural Municipality), 2004 CarswellSask 738 (Sask. Q.B.).
• Ernst v. Destiny Software Productions Inc., 2012 CarswellBC 1058 (B.C. S.C.).