Ontario’s Divisional Court is affirming employees’ right to sue for wrongful and constructive dismissal in the civil courts in cases of chronic mental stress arising from workplace harassment.
“That’s important because workplace compensation claims by employees suffering from mental stress as a result of harassment might increase an employer’s premiums slightly, but not nearly as much as the damages they might have to pay in a wrongful dismissal case based on an employer’s harassment or failure to prevent the harassment,” says Brendan McCutchen, a member of the legal team at Wright Henry LLP who represented Judith Morningstar, the aggrieved employee in the case.
The divisional court decision overturns a Workplace Safety and Insurance Appeals Tribunal ruling that denied Morningstar, a housekeeper at Hospitality Fallsview Holdings Inc., the right to sue for harassment that allegedly forced her to resign from her employment. “The WSIAT just got it completely wrong,” says McCutchen. “And that’s obvious from the divisional court’s reasons.”
The workplace tribunal acknowledged that the Workplace Safety and Insurance Act, which bars employees from suing for injuries sustained at work, doesn’t take away the right to bring wrongful or constructive dismissal cases seeking reasonable notice or pay in lieu thereof in the civil courts.
The tribunal reasoned, however, that the right to sue didn’t obtain where a claim was “inextricably linked” to an injury governed by the statute. In the panel’s view, Morningstar’s civil suit was statute-barred as it amounted to a claim for compensation for chronic mental stress, an injury for which the tribunal specifically provides compensatory benefits.
“The WSIAT’s decision meant that employees who suffered mental injuries as a result of harassment would not be able to advance claims for reasonable notice in the courts,” says Danielle Stampley, a member of the Wright Henry team who represented Morningstar.
But the divisional court concluded that the tribunal’s approach was “unreasonable.” It said the tribunal had erred by focusing on the “factual linkage” between the constructive dismissal action and the workplace injury: this ignored the fact that Canadian law permitted different “causes of action” to proceed on the same facts. Here, the type of claims (constructive dismissal) and the remedy (reasonable notice or damages in lieu) weren’t available under the workplace act, which was a compensatory regime.
The upshot was that the workplace act barred civil claims based on tort law but not claims based on employment or contract law. “So long as a plaintiff does not sue in constructive dismissal improperly to get around the limitations of the [act] the claim should be permitted to proceed, even where tort aspects of a claim are barred,” stated the court.
In practical terms, the divisional court’s reasoning recognizes a clear legal distinction between claims seeking compensation for mental stress arising in the course of employment (which fall under the act) and damages for wrongful dismissal based on an employer’s harassment or failure to prevent the harassment that caused the injury.
As Stampley sees it, that makes sense. “The WSIAT’s reasoning produced an absurd outcome by which individuals who experienced harassment and suffered no injury because they had nerves of steel could claim constructive dismissal, while those who suffered chronic or traumatic mental stress because of the harassment would not be able to advance their case for reasonable notice.”
Whether or not the divisional court decision stands up remains to be seen. “We’re seeking leave to appeal to the court of appeal,” says Gerald Griffiths, a labour and employment lawyer at Sherrard Kuzz LLP who represented the employer.
And there’s a decent chance leave may be granted. “The court of appeal frequently defers to the divisional court in leave cases,” says Stampley. “But this is an important issue and the court of appeal cares about it.”
Whatever the court of appeal decides, there’s no doubting the case’s impact. “In the last decade, workplace harassment and bullying claims have permeated employees’ radar and become a growing basis for wrongful dismissal claims,” says McCutchen. “Employers see success in this case as nipping these types of claim in the bud and significantly diminishing their liability.”