After three months of remote work, some employers are moving towards making such arrangements permanent. While this might provide considerable savings with respect to real estate, employers should be aware that they may be required to pay certain remote work costs.
The general rule is that employers cannot make employees pay for an employer’s business expenses—even if the employee agrees to it. This includes a prohibition on withholding wages for any cost of doing business.
To determine whether something is a business expense, it is necessary to consider who benefits from the expense and the purpose of it.
To be clear, an employer must make deductions for income tax, Employment Insurance premiums and Canada Pension Plan contributions. Further, an employee can agree, in writing, to deductions of wages for medical premiums, the repayment of payroll advances or purchases made from an employer, and accidental overpayments. However, business expenses are a no go.
Examples of business costs which we know employers are prohibited from passing on to employees are gas for delivery work and cell phone use for business purposes. However, employees cannot require an employer to pay for part of the employee’s rent, where the employee is working from home (unless, of course, the employer agrees to do so). Such a notional allocation is not considered a business expense.
What is less clear—in light of the rise of employers no longer maintaining workplaces—is who is responsible for the costs associated with things like wifi; computers and other electronics (including repairs); stationery and other office supplies; and office furniture. If the expenses are paid only for work reasons, for something that an employee needs to do their job, it is likely they are business expenses. If the employee would have incurred the expense regardless of their job, it is less probable an employer will be required to pay. It may be that employers will have to cover portions of their employees’ bills for things that the employer declines to, or cannot, provide to the employee themselves.
If an employee makes a successful complaint to the Employment Standards Branch regarding business expenses, the employer would be required to repay the employee for the monies it withheld or that the employee paid out, plus interest. The Employment Standards Branch could also impose penalties and/or fines on the employer.
For assistance in assessing whether your remote work arrangements are compliant with the requirements relating to business expenses, please feel free to contact any of Clark Wilson LLP’s Employment and Labour Law lawyers.