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June 12, 2012
By Sheryl Smolkin
For many of us, telecommuting has become the norm. However, the British Columbia Supreme Court recently ruled that a company was entitled to dismiss a work-at-home employee who moved from Alberta to Mexico without company approval.
Destiny Software Productions Inc. developed software that permits the secure digital distribution and delivery of recorded music over the Internet. In March 2007, Dean Ernst was hired as vice president of operations at $125,000 per year to market that system to major recording companies and labels.
His two year employment contract anticipated he would initially work out of his home near Calgary, but if moving to Vancouver was required, he would be reimbursed for moving expenses. When Destiny hired Ernst, they also hired the team from his former company “Promo Only.” None of these people worked out of the company office in Vancouver.
In July 2007, Destiny moved to new office space in Vancouver and sent an e:mail to employees suggesting that they relocate so they could work face-to-face. Ernst responded that due to the cost of housing in Vancouver, his family’s ties to their community and his mother’s poor health, he would prefer not to move.
In December 2007, Ernst took possession of a house in Cabo San Lucas, Mexico that he and his wife had originally purchased as a retirement home. He did not mention this to anyone at Destiny and returned to work on January 15, 2008. On several occasions over the next six months he called in sick when in fact his family was vacationing in Mexico.
In July 2008, the family sold their Alberta home and made a permanent move to Cabo San Lucas. To test if he could work seamlessly from Mexico, Ernst hooked up the internet and redirected his telephone so it looked like an Alberta number. He also met with an accountant about income tax issues.
In early August 2008, he advised Destiny’s President Steve Vestergaard by telephone of the move for the first time and that he intended to continue working for Destiny from Mexico in the same way as he had from Alberta.
According to testimony at presented in court, Vestergaard was very angry at being “blindsided.” He was also concerned about the impact on customers, possible perceptions that the software system was being run out of a third world country and payroll issues associated with having an employee outside Canada. However, he didn’t fire Ernst on the spot because Destiny was trying to close on an important contract with Warner Music and the company could have gone bankrupt if the deal fell through.
The Warner contract was signed November 25, 2008 and three days later Ernst’s employment was terminated. When he brought an action for wrongful dismissal, Destiny argued there was just cause for the termination because his unilateral actions violated his employment contract.
Madame Justice Adair found that the language of the employment contract clear envisaged a temporary Calgary work-at-home arrangement and the company retained the power to determine the location of his work, including a possible future move to Vancouver. Furthermore, there was no indication that he would be permitted to work from a location outside Canada.
In an April 2012 decision, the judge ruled that when Ernst moved to Mexico, he breached the employment contract and his termination was justified. His claim for wrongful dismissal was dismissed.
Many of us fantasize about working from home in a more temperate climate, if only we could find a boss who would go along with the deal. However, I can’t imagine unilaterally making the decision to work from another country and simply assuming my employer would redirect my pay cheques.
By doing so, Ernst forfeited a lucrative career. At trial he testified that he now has little income other than from a small consulting contract. He still lives with his family in Mexico because they have been unable to sell their home in Cabo San Lucas.