Are virtual cashiers a good idea?

A worker called Percy caused considerable controversy lately. That’s because he’s based in Nicaragua but also a cashier at a restaurant in Toronto.

How? He appears live onscreen instead of in-person.

When news spread of this new tech being used at locations in Ontario and B.C., controversy followed, with many complaining it should not be allowed.

But is it legal? And is it a smart approach for employers? Canadian HR Reporter spoke with two legal experts for answers.

The legalities of virtual cashiers

Yes to the first question, much like a call centre that employs people in another country, says Jon Pinkus, employment lawyer and partner at Samfiru Tumarkin in Toronto.

“You are only obligated, as a general rule, to comply with the employment standards of the country in which the employee lives. The only exception would be if an employee working in Ontario, for example, went to work somewhere else with the same employer. If that work is a continuation of the work that they had originally started doing in Ontario, then the Ontario Employment Standards Act may apply.”

Danielle Stampley, a lawyer at Wright Henry in Toronto, says she is not aware of any laws that would prohibit someone from doing a video conferencing setup like Freshii is using.

“When we think about employment law in Ontario, we consider where is the work being performed, and… that's what law applies. So, in this case, if the person were sitting in an apartment in Ontario doing a virtual conference or video conference into Freshii in downtown Toronto, we could say, ‘Well, that person is working in Ontario, therefore, they are subject to the employment standards that apply to Ontario workers,’” she says.

“But the problem here, of course, is that these virtual cashiers are sitting in their homes or some office space in Nicaragua and working; they're doing the work there is the argument. I think it's a strong one.”

Freshii would also benefit from not having to pay payroll expenses typical for an Ontario worker, such as employment insurance and CPP premiums, he says.

“There are deductions at source that I would think could potentially be saved.”

With an Ontario-based worker, the company would also have to comply with the minimum wage along with providing vacation pay and holiday pay, and giving reasonable notice of termination upon termination of employment, says Stampley.

PR challenges for Freshii

If it’s legal, why are people so unhappy with Freshii’s approach?

“I think the controversy is the fact that this is a position that has not normally been outsourced. And that's just a reality of the advancement of technology. So I think that the outrage that you see… is, I think, best contextualized and understood in the context of disagreement with positions being outsourced, in general,” says Pinkus.

It’s a situation where an employer can circumvent the minimum standards that would apply to workers, and have been agreed to legislatively and as a community, says Stampley.

“The employer doesn't have to comply with those standards through the setup, it seems unfair. And I think a lot of people think it's wrong.”

“There's a lot of issues here, not just legal ones, there are also practical ones. And [it’s about] what's really best for your business?” she says. “So, trying to dress something up in a way that makes it sound really wonderful may not be a very effective approach.”

There’s also the “queasiness” of seeing a person earning much less than an employee in Ontario earns, says Pinkus.

“In the context of so much discussion about raising the minimum wage, that struck a chord with people.”

The PR side of it is also a factor. The hiring of a person in Nicaragua to “work” in Canada raises the debate around immigration and filling vacant jobs, says Pinkus.

“Maybe the government and companies need to better communicate why they do this, why it is necessary. If it is, for example, just for cost cutting, that's one thing; if, on the other hand, it's because they had difficulty filling these particular kinds of positions, maybe that would change public impressions,” he says. “If there is a mistake, it doesn't appear to be a legal mistake, but it does appear to be a public relations error.”

Remote work and the future of work

Percy’s location in South America also raises parallels to the rise of remote work that has accompanied the pandemic, with many employees out of the office and choosing to work at a cottage or exotic locale, for example.

“How are we going to navigate a situation where someone is doing the exact same job, doing the same work, but all kinds of different laws may apply, simply depending on where they are situated? So that I think is the next frontier, if you will, in employment law”says Pinkus.

One in four Canadians has been tempted by the idea of working from an exotic locale, finds a recent survey.

From an HR perspective, there are issues around taxation, not just withholdings, when someone moves to work outside of the country, says Stampley.

“Suddenly, you’ve got an employee who's generating income in another country, for your company. And then you have to have someone analyze that question of ‘What is my company's obligation to the Bahamian government for taxes on revenue I'm generating there? What are the withholdings that I should be applying and contributing on my employee’s behalf now that they're in another country?’”

Hiring a head of remote makes a lot of sense these days, say experts.

It’s safe to say updates are needed when it comes to this new tech and labour laws, she says.

“I think the change or the update needs to focus on: Who is benefiting from the work? Where are they benefiting? And how can we protect employees who are doing the work? Because… we have laws in place to ensure that they're treated fairly and if employers are able to very easily shift this work to people working remotely — even more easily than historically have been possible — outside of our communities… then… is that fair from a competitive standpoint, among other employers who are employing people here; [and] also, with respect to what our legislation really is grounded on, which is ensuring a fair relationship between these people?”