In the recent decision of Morningstar v WSIAT (“Morningstar”), the Ontario Divisional Court (“Court”) partially overturned a decision from the Workplace Safety and Appeals Tribunal (“WSIAT”), Decision No. 1227/19 , which held that an applicant’s claim for constructive dismissal arising out of chronic mental stress due to a poisoned work environment was barred by the Workplace Safety and Insurance Act (“WSIA” or the “Act”). In Morningstar, the Court held on judicial review that the applicant’s claim for constructive dismissal which was based on claims of chronic mental stress arising out of a poisoned work environment was not barred under the Act, therefore allowing the applicant to pursue a constructive dismissal claim and aggravated, moral, and punitive damages against her employer.
The applicant in Morningstar previously filed an action with the Ontario Superior Court of Justice claiming she had been subject to workplace harassment and constructive dismissal as well as aggravated, moral, and punitive damages, and damages for breaches of the Occupational Health and Safety Act and the Employment Standards Act. In response to the action, the employer brought an application before the WSIAT for a declaration that the employee’s civil action in the Superior Court of Justice was statute-barred by the WSIA, and to prevent her from bringing the action.
The WSIAT found that the applicant’s claims were barred by the Act. In providing their reasons for this holding, the WSIAT stated that the applicant’s claim for constructive dismissal due to chronic mental stress arising out of workplace harassment was, in effect, a claim for an injury that was covered under the WSIA. More specifically, the WSIA was amended in 2018 to allow benefits under the WSIA for chronic mental stress and traumatic mental stress resulting from work injuries.
The applicant subsequently filed for judicial review of the WSIAT decision in Court. Upon seeking the review, the applicant conceded that her claims for harassment and other claims relating to the Occupational Health and Safety Act were properly barred, however she argued that the WSIAT erred in barring her claims for constructive dismissal and the damages pertaining to that claim. On judicial review, the Court overruled the WSIAT decision, and held that the applicant could pursue her claim for constructive dismissal and the accompanying aggravated, moral, and punitive damages.
Judicial Review Decision
In arriving at their decision that the applicant’s claim for constructive dismissal was not barred by the Act, the Court analyzed the policy behind the WSIA and highlighted the “historic trade-off” underlying the scheme of the WSIA. Under the WSIA, employees can receive workplace insurance benefits by proving that their injury or disease is work-related, however they do not need to prove that their employer was at fault for their injury or disease. In exchange for this, employers are protected against civil suits brought against them by an employee for work-related injuries by paying into the accident insurance fund.
Based on this trade-off, the Court stated that the types of lawsuits against employers which are “statute-barred” are tort claims related to workplace injuries. Furthermore, the WSIAT generally does not bar actions for wrongful dismissal, as the Act does not provide a remedy for wrongful dismissal or constructive dismissal actions. The Court stated that the WSIAT has recognized that bona fide claims for constructive or wrongful dismissal should be permitted to proceed as they are not tort actions, are distinct claims from personal injury claims, and they provide for damages that are not compensated for under the WSIA.
The Court found that the prior WSIAT decision was unreasonable largely because it did not focus on the bona fide claims of a cause of action for constructive dismissal. The Court stated that instead, the WSIAT had erroneously focused on whether the facts set out by the applicant about her chronic mental stress arising from workplace harassment and bullying were linked to the workplace injury. The Court concluded that it would be unreasonable to bar an action for constructive dismissal simply because the same facts that relate to that action also support an action for personal injury, stating that Canadian law permits different causes of action to be advanced based on the same facts. Only in exceptional cases has the WSIAT jurisprudence found that a wrongful dismissal claim would be statute-barred, and only “where the circumstances of the wrongful dismissal claim are inextricably linked to the work injury.”
The Court further noted that as long as a plaintiff does not make a claim for constructive dismissal to get around the limitations of the WSIA, the claim should be allowed to proceed even where tort aspects of a claim are barred. In this case, there was no indication that the applicant made a constructive dismissal claim for this reason.
Takeaway for Employers
Morningstar clarifies that an employee has the right to sue an employer for constructive dismissal where the claim is based on chronic mental stress arising from workplace harassment and bullying.
WSIAT Decision No. 1227/19 previously permitted employers to sidestep civil claims for constructive dismissal that were based on incidents of harassment or bullying in the workplace that resulted in mental stress for the employee. On judicial review, the decision in Morningstar swung in the opposite direction in favour of employees, and now permits such claims of constructive dismissal to proceed. Presumably, a WSIB claim for chronic mental stress benefits could be pursued concurrently with a civil claim for constructive dismissal, as the potential amounts that the employee could receive in both claims are for different legal claims.
Morningstar clarifies that employers cannot rely on their workplace insurance coverage as a safety net to shield them against constructive dismissal liability for an employee’s chronic mental stress arising out of workplace harassment. This decision should remind employers that they must continue to comply with their health and safety obligations to employees under the Occupational Health and Safety Act to mitigate and root out workplace harassment.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.