Introduction

Recently, Superior Court of Quebec Judge Claude Dallaire confirmed that employees who work remotely for a foreign employer may be unable to seek reinstatement in the event of unjust dismissal[1].

Because other jurisdictions generally award monetary damages instead of reinstatement in case of unjust dismissal, this decision may not be particularly surprising for employers unfamiliar with Quebec law. However, section 124 of the Act respecting labour standards (the Act) enables employees who claim that they have been unjustly dismissed to file a complaint and request reinstatement.

The decision made by the Superior Court is, therefore, crucial for foreign companies that employ remote workers in Quebec.

Context

The issue arose when Petros 724 Inc (the Employer)[2]., a US-based company that sells business management software and offers technical assistance, terminated the employment of one of its workers after selling its assets in Canada. The employee, who was laid off because of the Employer’s withdrawal from Canada, was initially hired to develop the Canadian market. However, she never had the opportunity to do so. Instead, her work was confined to assisting American clients.

Because she believed her termination was due to a monetary claim she had made rather than the Employer’s decision to withdraw from the Canadian market, she filed a complaint for unjust dismissal and requested she be reinstated.

The First-Level Decision

The Employer argued that the Tribunal administratif du travail (the TAT), which handles unjust dismissal claims, lacked jurisdiction to hear the complaint. Before explaining the grounds for dismissal, the Employer contended that section 2 of the Act, which outlines its scope, did not cover corporations like the Employer. Section 2 provides that:

“2. This Act applies to the employee regardless of where he works. It also applies

(1) to the employee who performs work both in Quebec and outside Quebec for an employer whose residence, domicile, undertaking, head office or office is in Quebec;

(2) to the employee domiciled or resident in Quebec who performs work outside Quebec for an employer contemplated in subparagraph 1.”

As the employee performed her work exclusively outside of Quebec, the TAT had to determine whether the employee’s residence could be deemed to be the employer’s office in Quebec (s. 2(2) of the Act).

In the initial ruling[3], the TAT found that the employee was subject to the Act as her place of residence, from where she worked, effectively constituted the Employer’s office in the province. It also found the termination unjust and ordered the employee’s reinstatement. The Employer requested a review of the decision, which resulted in the TAT overturning its initial ruling[4].

The employee, dissatisfied with the second decision, sought the intervention of the Superior Court of Quebec.

The Superior Court’s Decision

After reviewing both decisions, the Superior Court of Quebec determined that the second decision was reasonable.

Judge Dallaire stated that an employee working remotely from home with a phone and a computer is not enough to consider her residence as the employer’s office. To qualify as the employer’s office, there must be specific elements that demonstrate the employer’s intention to conduct their business at the employee’s residence, such as receiving deliveries, using the address on official documents and advertising accessible to the public.

As a result, the Act does not apply to the employee, and the TAT could not reinstate her into her former employment.

What Is in it For Foreign Corporations?

This is an interesting decision for corporations outside of Quebec who employ or wish to hire remote employees residing in Quebec. The Superior Court of Quebec has clarified that the Act, which provides for a reinstatement remedy, may not apply when:

  • the employer does not have a residence, domicile, undertaking, head office, or office in Quebec;
  • the work is performed outside of Quebec, for example when it is solely for the benefit of clients outside the province; and
  • the employee’s residence is not the employer’s office in any way.

Foreign corporations that wish to avoid any confusion regarding the status of their remote employees’ residences should take necessary measures. This could include clarifying in the employment agreement, company policies, or company practices that the employee’s home is not the employer’s office. However, corporations doing business in Quebec with remote employees who, for example, work for clients in the province will find that the Act applies to their employees.

The plaintiff in this case has requested leave to appeal to the Court of Appeal of Quebec. We will keep an eye on further developments and share them as they become available.

[1] Marchetta v Tribunal administratif du travail, 2023 QCCS 3254

[2] The corporation’s name was Visual Training Solutions Inc. when the facts occurred.

[3] Marchetta v Visual Training Solutions Inc., 2021 QCTAT 2402.

[4] Marchetta v Visual Training Solutions Inc., 2021 QCTAT 5451.