Back to the office? Not without notice: BC Court of Appeal confirms work-from-home can be a binding term of employment
The British Columbia Court of Appeal has upheld a finding of constructive dismissal against a Vancouver real estate developer that directed a longtime remote employee to return to in-office work without providing her reasonable notice, and has confirmed that a former employee’s decision to start a series of new businesses — none of which had yet generated revenue — was a reasonable form of mitigation. The decision in Cressey Construction Corporation v. Parolin, 2026 BCCA 199, carries significant implications for employers navigating the post-pandemic landscape of flexible and remote work.
Background
The appellant, Cressey Construction Corporation (“Cressey”), is a Vancouver-based real estate development and construction company. The respondent, Tracy Parolin, worked for Cressey for 18 years. She began her career there in 2005 as a Development Manager and, in April 2018, was promoted to Director of Marketing. Her employment contract’s terms were mostly oral, except for a job description of the Director of Marketing’s role and responsibilities.
Following the arrival of twins and an associated maternity leave in 2013, Ms. Parolin began working reduced hours that enabled her to manage her childcare responsibilities. At the outset of the COVID-19 pandemic, Ms. Parolin, like other Cressey employees, began working from home. When her co-workers returned to the office in June 2020, Ms. Parolin did not join them. Due to health concerns related to one of her children, Ms. Parolin continued to work from home.
When the employee who had approved her arrangement left Cressey in 2021, Ms. Parolin confirmed she could continue to work from home with the Executive Vice President, who told her that as long as the job was getting done, it did not matter where she worked. He also assisted Ms. Parolin in setting up her home office.
By March 2023, Ms. Parolin was working full-time hours from home. On May 10, 2023, she met with Cressey’s Vice President of Development, Mr. Kendall, to discuss a pay increase she had been seeking since her promotion. At that meeting, Mr. Kendall directed her to return to working at the office, Monday to Friday from 9:00 am to 5:00 pm. He also told her she would receive a salary increase of $1,400 per year, bringing her salary from $93,600 to $95,000, and characterized her role as more akin to a Marketing Manager than a Director of Marketing.
As a result of the May 10 meeting, Ms. Parolin considered herself constructively dismissed. She informed Cressey of this, and her last day working for the company was May 17, 2023.
The trial judge found that Ms. Parolin was entitled to 19 months’ pay in lieu of reasonable notice and concluded that Ms. Parolin had not failed to mitigate her loss. Cressey appealed both findings.
Work from home as an express oral term of employment
One of the most significant aspects of this decision is the Court of Appeal’s confirmation that Ms. Parolin’s employment contract, at minimum, contained an express — not implied — oral term permitting her to work from home, and that this was an essential term of the employment contract. An essential term cannot be unilaterally changed without reasonable notice.
Cressey argued that any work-from-home arrangement was merely an informal accommodation, not a binding contractual term. The Court disagreed. The parties’ words and actions supported the trial judge’s finding that Ms. Parolin had made out her pleaded claim that her employment contract contained an express oral term permitting her to work from home. Ms. Parolin sought permission to work from home and Cressey agreed. The oral work-from-home term was not complicated, was clearly understood by the parties and was therefore sufficiently certain to be enforceable.
This is an important point for employers. The Court was not finding that working from home was an implied or inferred term of the contract — it found it was an express oral term, agreed to between the parties through their words and conduct over three years.
Constructive dismissal: location of work matters
The Court held that Cressey constructively dismissed Ms. Parolin when it mandated she return to the office full-time five days a week without providing her reasonable notice. In the circumstances of this case, Cressey’s revocation of Ms. Parolin’s ability to work from home was a unilateral change to an essential term of her employment contract and amounted to constructive dismissal.
The Court went on to say that by directing Ms. Parolin to return to work full-time in the office, Cressey breached an essential term of Ms. Parolin’s employment contract. Ms. Parolin’s contract did not permit Cressey to make this change without notice and Ms. Parolin did not consent or acquiesce to the change. Therefore, there was a unilateral breach.
Ms. Parolin had been working from home with Cressey’s approval for approximately three years. Her work-from-home situation allowed her to fulfil her childcare responsibilities and scale up her hours to full-time work. Cressey was aware of Ms. Parolin’s ongoing childcare needs. A change to her location of work, without notice, would have had a significant impact on her ability to manage her childcare and work responsibilities, and it was reasonable to conclude objectively that someone in her circumstances would have seen this as a substantial change to her contract.
Notably, the Court confirmed that it was open to the trial judge to conclude Ms. Parolin was constructively dismissed on the basis of the unilateral revocation of her work-from-home term alone. A unilateral and substantial change to an essential term of an employment contract is sufficient on its own to ground constructive dismissal — it did not need to be combined with a finding of demotion.
Mitigation: starting a business can be reasonable
The Court of Appeal also dismissed Cressey’s argument that Ms. Parolin had failed to mitigate her damages by choosing to pursue business ventures rather than seek alternative employment.
A dismissed employee is entitled to consider her own long-term interests, so she will not fail to mitigate merely because she chooses to take some career risks that might not minimize the compensation that her former employer will owe to her. Establishing a business is a means of mitigation, and the fact that the early years of self-employment do not live up to monetary expectations does not mean the attempt at mitigation was unreasonable.
While in most cases the reasonable course of conduct will be to seek alternative employment, there may be more than one reasonable course of action. The question is whether the course of action taken by the plaintiff is reasonable in the circumstances.
Ms. Parolin had extensive experience in the development sector. She worked at Cressey for nearly two decades and, before that, worked for other real estate development companies in Vancouver, Toronto, and Vienna, Austria. The Court found it was entirely open to the trial judge to conclude that her business ventures in the development and technology sectors were a reasonable use of those skills.
Perhaps equally significant for employers is the Court’s treatment of what constitutes “comparable employment” for the purpose of assessing mitigation. Cressey failed to satisfy the requirement to demonstrate that Ms. Parolin could have obtained comparable employment. The positions Cressey pointed to were not comparable because they required in-office work. It would be unfair to require Ms. Parolin to seek out and accept full-time in-office work when she had bargained with her employer to work from home because of her childcare-related needs, and it was the unilateral breach of that term that constituted her constructive dismissal.
Key takeaways for employers
This decision is an important reminder that the post-pandemic shift to flexible and remote work has generated real legal risk for employers who seek to recall employees to the office without proper process. Several lessons emerge:
- Informal arrangements can become binding terms. Where an employer approves and supports a remote work arrangement over an extended period — particularly where it is accommodating an employee’s family or health circumstances — that arrangement can crystallise into an express oral term of the employment contract. The absence of a written agreement does not mean the arrangement is informal or revocable at will.
- Notice is required before changing essential terms. An oral term of flexible hours and home-based work location can only be changed with reasonable discussion and/or notice. The fact that a term is oral does not reduce an employer’s obligation to provide notice before unilaterally changing it.
- “Comparable employment” includes comparable working conditions. When assessing whether a dismissed employee has failed to mitigate, employers cannot simply point to a position with a similar title and salary. If the essential term that gave rise to the constructive dismissal was the employee’s work location, positions that reinstate the very conditions that caused the dismissal may not qualify as comparable employment.
- The mitigation bar is high for employers. The employer bears the onus of proving failure to mitigate, and the burden is by no means a light one because the party already in breach of contract is demanding positive action from one who is often innocent of blame. An employee who makes genuine, organised efforts to start a business — even an unsuccessful one — may satisfy the duty to mitigate.
- Document and communicate any changes clearly. Employers wishing to modify existing flexible or remote work arrangements should do so explicitly, in writing, and with sufficient advance notice. The absence of contemporaneous documentation of expectations (such as any assumption that remote work was temporary) will weigh against the employer.
Employers dealing with return-to-office mandates, hybrid work disputes or constructive dismissal claims involving flexible work arrangements are encouraged to reach out to our Labour & Employment Group with any questions regarding the implications arising from this decision.
We are always available to help you assess your specific situation and develop a strategic approach to managing workplace change in a way that minimizes legal risk.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact the authors, or a member of our Labour & Employment Group.
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