Avoiding liabilities when offering incentive trips to employees

With remote working becoming the new norm, many companies are seeking out new ways to incentivize and reward employees.

For example, in an effort to elevate employees' work-from-home experience, cruise line Virgin Voyages is inviting workers to an exclusive "work from helm" voyage. The month-long trips will take employees to places like Cannes, Rome, Ibiza, Palma de Mallorca, and Corsica.

Offering getaways to employees, whether for work or relaxation, can be a beneficial incentive for both employees and employers. However, when making such offerings, employers should seek proper legal advice and be mindful of their obligations under appropriate jurisdiction, said Paulette Haynes, founder and managing officer of Haynes Law Firm.

“Employers should do their due diligence, pay attention to the possibility that other legislation in foreign jurisdictions might impact the proposal and then have policies in place that speak specifically to these arrangements, making it abundantly clear what the parameters are,” she said.

For new hires, Haynes recommends outlining these parameters in their employment contracts and in remote work or working abroad policies for existing employees. These outlines should include clear employer expectations and be communicated to employees, including that “the employer still retains the right and the authority to determine where the work is going to be performed,” she said.

“Given the potential liabilities, employers should make these expectations and obligations very plain and clear to employees, as this can minimize some of the risks,” Haynes said.

Clear policies around working abroad

Employers should create a policy or update existing workplace policies to clearly outline the company’s position with regards to working abroad, Haynes said. They should take into consideration that employers continue to have minimum obligations under the Employment Standards Act and must maintain these regardless of where an employee is working.

Even if an employee is working on a cruise ship, for example, this is still a continuation of work performed inside the province in which they reside, Haynes said.

These policies should also include provisions that deal specifically with aspects such as hours of work, overtime, insurance and equipment, and be available and accessible to employees to ensure transparency and clear communication, she said.

“The employer should enter into some sort of written agreement where the terms of this work arrangement are set out. They should also make it clear they will obtain authority over where the work is to be performed, as to avoid exposing the employer to a situation in which an employee feels free to work at different locations other than what was originally intended,” she said.

Considerations when offering employee getaways

Occupational health and safety considerations, whether federally or provincially regulated, remain a legal obligation regardless of where an employee’s workplace is, Haynes said. An employer must maintain a safe working environment for their employee even if that environment is, for example, a cruise ship.

“Employers should be mindful of their obligation to maintain safe workplaces, as they do still have the general duty to take every reasonable precaution to protect their employees.

“That obligation will continue independent of any other occupational health and safety legislation that might apply, and employers should be applying the same due diligence standard to their employees who are working abroad as to their employees who are working in Canada,” Haynes said.

Taxation, legal risks with out-of-country work

If an employee is working abroad, whether on a getaway trip or on a work from anywhere allowance, the employer must look at how long the employee can work in a certain jurisdiction without being subject to taxation, said Nancy Shapiro, partner at Koskie Minsky LLP.

Similarly, if an employee's working remotely in another country, the employee may be subjected to the laws of the country they are working in, so employers should consider risk tolerance and how long an employee can work elsewhere before being subject to that country’s laws, she said.

“Employers should properly do their due diligence for each and every remote work situation and get an opinion from a lawyer in the country the employee will be working in with regards to whether the duration of the stay in the country is going to create any liabilities for the employer,” Shapiro said.

However, when employees are working from a cruise that is travelling from country to country, employers are less likely to run into employment law problems, as their employees won’t be in one location for very long. So, some of the risks and liabilities may be minimized in this case, she said.

Entitlements for termination without cause

If an employer incentivizes employees with a trip when, for example, they hit certain targets or meet certain quotas, an employee may claim this trip as part of their compensation package if they are terminated without cause. If the trip falls during the employee's notice period, they would be entitled to compensation in lieu of the trip, Shapiro said.

So, it is important for employers to address these terms explicitly in the employee’s employment agreement or in a policy associated with the incentive plan, she said.

“It's always best to have documents that are carefully drafted and that address things like termination and resignation and whether an employee will be entitled to those incentives in the event of leaving the company,” Shapiro said.  

Similarly, if an employee is terminated before a scheduled sabbatical or trip that is offered, an employer will have to pay out the sabbatical allowance, as an employee is entitled to anything they would have received during their notice period, she said.