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When introducing "work from anywhere" policies, factor in these considerations for employees working in Canada.
Whether to escape to a sought-after destination (Kelowna, BC was the fastest-growing urban centre in Canada in 2021), seek out more affordable housing (Kingston, ON tops the list in 2022) or move to the cottage permanently (take note, prices are going up), Canadians moved between provinces more last year than in the last three decades—and employers are in hot pursuit.
For those able to work remotely, packing up and becoming a “digital nomad” sounds good, but of course, there’s a catch for employees and employers alike.
Prudent employers need to confirm their employee’s chosen “Place of Residence.” If it’s outside their company’s main jurisdiction, there are a range of implications, from taxation, payroll and employment standards to health and safety, benefits and more.
Note: Below we summarize a few considerations for employees working in Canada. If your employee is working outside of Canada, there are additional considerations.
Tax rates differ from province to province. When an employee moves to another province, the first thing the employer needs to ask is whether the move is permanent or temporary, as this determines the employee’s residency status and, ultimately, the province where the employee pays taxes.
Questions for employers to consider
The Canada Revenue Agency says payroll taxes are calculated based on where the employee reports to work. In the case of remote work, the taxes are calculated based on whether you have an office in the same province as the employee:
Worker’s Compensation and health and safety legislation vary considerably from one province to the next. In general, applicable rules are based on the employee’s physical work location (including their remote office) and not on the province from which they are paid.
Employers need to consider Employment Standards (ESA), which vary from one province or territory to the next and govern things like statutory holidays, overtime, sick leave, vacation entitlements, a notice of termination, severance pay and more.
Question for employers to consider
The gold standard for employers is to include guidelines around changes of residence in your employment contracts. As a remote-first company with offices across Canada, we added the following section to our employment contracts in case any current or future employees want to move to other provinces across Canada, even temporarily, and to ensure we are prepared to support them:
LOCATION & CHANGE OF RESIDENCE
Given that we’re a remote-first environment, there might come a time when you make the decision to move to a province outside the one in which you currently reside. If this is the case, we ask that you inform our Company at least 30 days prior to your move. This notice period gives us the opportunity to ensure we consider tax and payroll implications, among others. Similarly, if you are planning to work outside your current province for an extended period, we ask that you advise us as soon as possible.
Before approving a request from an employee to move to another jurisdiction (or hiring an employee based in another province), be sure to review the requirements and standards of the applicable province or territory to ensure you are prepared. Further, make sure your employment contract reflects the possibility of remote work from another jurisdiction.
And if an employee asks to work from another country, conduct an especially detailed review of the country’s employment legislation, health and safety requirements and tax implications.
Many of these items cross over between your Finance & Accounting, HR, Legal and IT teams, and this team effort should be coordinated.
If you’re hiring in any of these areas for your team, we’re here to locate the talent you need – in any jurisdiction.