The Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) recently released a landmark decision which held that employees cannot bring constructive dismissal claims against their employers where the claim is inextricably linked to a chronic mental stress injury arising from workplace harassment.
As many employers know, constructive dismissal is when an employee is entitled to take the position that their employment has been terminated due to conduct of the employer that showed an intention to no longer be bound by the employment contract, whether by breach of a fundamental term of the contract or by conduct that otherwise makes the employee’s continued employment intolerable (read more about constructive dismissal here). Where an employee is constructively dismissed and is not provided with pay in lieu of reasonable notice of their dismissal, they are generally entitled to bring a civil claim against their employer seeking pay in lieu of reasonable notice. However, such claims are barred by the WSIA in certain exceptional circumstances, as discussed below. Due to relatively recent amendments to and policies under the Workplace Safety Insurance Act, 1997 (“WSIA”) and the WSIAT’s Decision No. 1227/19 (“Morningstar”), those exceptional circumstances now include constructive dismissal claims against employers based on allegations of workplace harassment that caused a worker to suffer a psychological injury.
Workers’ Chronic Mental Stress Entitlements
We have been tracking the development of workers’ chronic mental stress entitlements under the WSIA, which provides for a comprehensive insurance scheme in respect of workplace injuries, since 2017 (read our initial blog).
On January 1, 2018, amendments to the WSIA came into force that allow workers to claim compensation for “chronic mental stress” injuries arising from their employment under s.13(4), if it was caused by a substantial work-related stressor. Further, the Workplace Safety Insurance Board (“WSIB”) published WSIB Operational Policy Manual Document No. 15-03-14 (“Chronic Mental Stress Policy”) on January 2, 2018, which provides that workplace harassment or bullying is generally considered a substantial work-related stressor capable of causing a chronic mental stress injury for the purposes of s.13(4). Therefore, workers have had a clear entitlement to seek compensation for chronic mental stress injuries arising from harassment in the workplace under the WSIA since early 2018.
We predicted in 2018 that the chronic mental stress entitlements under the WSIA would likely bar certain harassment-related civil actions against employers (read our blog). This is because sections 26(2) and 28 of the WSIA collectively provide that workers’ “entitlement to benefits under the WSIA are in lieu of all other rights of action in respect of a workplace accident”, such that claims by workers against employers in respect of workplace injuries are statute-barred.
Fortunately for employers, the WSIAT’s Morningstar decision has confirmed our prediction by making it clear that workers cannot bring constructive dismissal claims against employers based on psychological injuries arising from harassment in the workplace.
The Morningstar Decision
In Morningstar, Ms. Morningstar brought a civil action against her employer claiming “damages for constructive dismissal, bullying, harassment, and/or a poisoned work environment pursuant to the Occupational Health and Safety Act, the tort of harassment, as well as punitive, aggravated and/or moral damages”. Ms. Morningstar claimed that she was forced to resign from her employment due to mental distress arising from bullying and harassment by her co-workers and management.
Interestingly, Ms. Morningstar also filed a human rights complaint against her employer in respect of the same allegations before her civil claim had been resolved. However, the Human Rights Tribunal of Ontario dismissed her human rights application under s.34(11) of the Human Rights Code (“Code”) because it found that her existing civil claim was already seeking damages in respect of the same violations of the Code as her application.
Ms. Morningstar’s employer subsequently brought a “right to sue” application under s. 31 of the WSIA, asking the WSIAT to determine whether her civil claims were barred by the WSIA.
The WSIAT held that Ms. Morningstar’s civil claims were statute-barred, such that her only way to claim compensation for the psychological injuries that she allegedly suffered from the workplace harassment was to file a workers’ compensation claim for chronic mental stress with the WSIB.
To be clear, the WSIAT stated that the WSIA only precludes employees from making wrongful dismissal claims in exceptional circumstances, where the claim is “inextricably linked” to a workplace injury. In this case, the WSIAT found that Ms. Morningstar’s civil claims were inextricably linked to a chronic mental stress injury.
In reaching this decision, the WSIAT rejected the arguments of Ms. Morningstar’s counsel that her claims should not be barred because she was seeking legal remedies that are not available under the WSIA, including pay in lieu of reasonable notice for constructive dismissal and extraordinary damages for bad faith in the manner of dismissal. The WSIAT clarified that any action seeking damages that arise from a workplace injury which falls within the scope of the WSIA is statute-barred, even if the claim is seeking remedies that are not available under the WSIA.
Morningstar is great news for employers because it means that employees cannot bring constructive dismissals claims against employers where they are based on the employee having suffered a WSIB-compensable psychological injury from harassment or bullying in the workplace. Rather, employees must now seek compensation for such injuries under s. 13(4) of the WSIA. Further, any other causes of action that an employee might otherwise have in such circumstances are also statute-barred where they are based on the same factual underpinnings, as was the case for Ms. Morningstar’s claim for bad faith in the manner of dismissal.
Moreover, Morningstar has made it clear that “simply framing a claim as an action for wrongful dismissal cannot, in and of itself, displace the application of the WSIA.” It is the “fundamental nature of the action”, rather than how it is described or framed, that determines whether it is barred by the application of the WSIA.
Nonetheless, Morningstar is the first decision of the WSIAT to find an employee’s harassment-related civil claims against their employer to be barred by the WSIA, such that constructive dismissal claims involving ostensibly similar factual situations may not be statute-barred. In particular, Ms. Morningstar’s counsel argued that her claims should not be barred by the WSIA because, had she not suffered a psychological injury as a result of the alleged harassment, then there would be no work injury capable of bringing her claims within the scope of the WSIA. The WSIAT refused to entertain this argument on the grounds that it was hypothetical and speculative, since Ms. Morningstar had claimed to have suffered psychological injuries from the alleged harassment. Accordingly, employees in similar circumstances in the future may make the strategic decision not to plead having suffered psychological injuries in order to avoid their claims from being barred by the WSIA. Whether such a strategy would prevent such a claim from being statute-barred, however, will remain uncertain until we have the benefit of further decisions.
This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.