Work-at-home exec fired after unapproved move to Mexico

Employee felt he was free to move wherever he wanted and didn’t tell employer he left the country until after it happened

A British Columbia company was entitled to dismiss a work-at-home employee when the employee moved from Alberta to Mexico without the company’s consent, the B.C. Supreme Court has ruled.

Dean Ernst was hired by Destiny Software Productions in March 2007 to be its vice-president, operations. Destiny developed a software system that allowed the secure digital distribution and delivery of recorded music on the Internet and Ernst was hired to market that system to major recording labels. Ernst also trained users on the system, developed product features, created advertising content and travelled to trade shows.

Worked from home in another province

Though Destiny was located in Vancouver, it allowed Ernst to work from his home in Chestermere, Alta., so he wouldn’t have to uproot his family. Ernst indicated he “might be willing” to move to Vancouver eventually. When they settled the employment agreement, Destiny agreed he could work from home on a temporary basis, but it would have the right to demand him to move to Vancouver at some point. Ernst interpreted this to mean he could work from home, wherever his home was.

In December 2007, Ernst and his family went to Cabo San Lucas, Mexico, to take possession of a house they had bought for their retirement. Destiny’s CEO wasn’t happy with the timing of Ernst’s vacation and some sick days he had taken, but approved them.

In March 2008, Ernst said he was taking vacation to visit his sick father in Utah, but then continued on to Mexico. He also went to Mexico with his family on Victoria Day weekend and called in sick on the following Tuesday while he was still in Mexico. Destiny didn’t know he wasn’t in Canada.

In July, Ernst planned on moving into his mother’s house so they could care for her. However, after they put their own house up for sale, family problems changed their plans. They eventually decided to move to their house in Mexico. Ernst went to Mexico to see if he could work from there. He hooked up the Internet and redirected his phone so it appeared as an Alberta number and consulted an accountant about income tax issues.

Employer not happy with move to Mexico

On Aug. 8, Ernst called Destiny’s CEO to inform him of the move. He told the CEO there would be no difference in how he operated in Alberta and it would be business as usual. The CEO was angry and felt betrayed that Ernst had not given him advance warning of the decision. He told Ernst he was concerned about the impact on customers, the perception from having the software system run out of “a third world country,” and issues with paying an employee in another country. Ernst was asked to provide a written proposal of his move that could be discussed by Destiny’s directors. The CEO later testified that if Destiny had not been on the verge of landing a contract with a major label, Ernst would have been fired immediately.

Before responding, Ernst asked another vice-president for approval of two vacation days. The vice-president was not aware of Ernst’s move.

Two weeks later, Ernst had not yet provided a proposal. When asked, Ernst replied that the house in Mexico was his dream, and once he confirmed he could work from home there, it became a reality. He said he didn’t mention it earlier because “we felt it may not become real.” Ernst also said his employment agreement stated he could work from home and said nothing about country restrictions. By early September, Ernst was living full-time in Mexico.

Destiny, unsure of Ernst’s tax situation, sent his September and October pay to his Alberta bank account. The major label contract was signed on Nov. 25, 2008, and Ernst’s employment was terminated three days later. Destiny pointed out that when Ernst was hired, it was expected he would eventually move to Vancouver and he never approached the company for permission to move out of the country. Destiny also indicated it didn’t want to be exposed to tax and work visa liabilities.

The court found the employment contract specifically indicated Ernst could initially work from home but Destiny retained the power to determine the location of his work and the contract indicated he might have to move to Vancouver eventually. The contract also referred to salary adjustment based on “province of residence,” which showed it was expected he would be in Canada. As a result, Ernst breached the employment contract when he moved to Mexico and compounded the situation by refusing to submit a proper proposal, as requested by the CEO. Ernst’s actions in concealing his intention to move and circumventing the proper channels for vacation requests also shook Destiny’s trust in him, which was particularly important for an executive who was working away from the company, said the court.

The court upheld the termination for just cause. However, it also found Destiny didn’t pay Ernst his salary for November and ordered the company to do so. See Ernst v. Destiny Software Productions Inc., 2012 CarswellBC 1058 (B.C. S.C.).

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