A couple of years ago, the Workplace Safety and Insurance Appeals Tribunal (“WSIAT“) statute-barred a constructive dismissal claim for chronic mental stress arising from a poisoned work environment, along with claims for aggravated, moral and punitive damages, which meant that employees would not be able to pursue such claims before the courts.
Recently, in Morningstar v WSIAT, the Divisional Court overturned the WSIAT decision, finding that the claim was not statute-barred by the Workplace Safety and Insurance Act (“the WSIA” or “the Act”).
Ms. Morningstar was employed by Hospitality Fallsview Holdings Inc. in its housekeeping department. In 2018, she resigned from her position. She claimed constructive dismissal as a result of harassment, bullying, and a poisoned work environment, which she alleged resulted in mental distress forcing her to resign.
The defendant company filed an application under section 31 of the WSIA seeking a declaration that Ms. Morningstar’s civil action was statute-barred since it was a claim for chronic mental stress, which the company argued fell under section 13(4) of the WSIA. Section 13(4) states that “a worker is entitled to benefits under the insurance plan for chronic or traumatic mental stress arising out of and in the course of the worker’s employment.”
The WSIAT decision
In Decision No. 1227/19, the WSIAT held in favour of the employer:
“I find that the Respondent’s action against the Applicant reflects a claim for personal injury arising from a work accident consisting of alleged workplace harassment and the employer’s alleged failure to address it. As such, her claim falls within the jurisdiction of the WSIA and thus her right to bring a civil action against the employer is barred by statute in these circumstances.” (para 61)
The WSIAT found that while the WSIA does not remove an employee’s right to sue their employer for wrongful or constructive dismissal, the right to sue could be taken away where “the foundational facts for the cause of action are inextricably linked to workplace harassment, an injury that is compensated under the WSIA” (para 34).
Ms. Morningstar’s application for reconsideration in Decision No. 1227/19R was denied, and she applied to the Divisional Court for judicial review.
Divisional Court decision
Ms. Morningstar argued that the WSIAT erred in barring her claims for constructive dismissal as well as the aggravated, moral, and punitive damages.
The Court was unanimous in partially quashing the WSIAT rulings and held that “[t]he applicant’s claim for constructive dismissal deserves the opportunity to be tested in courts”, although it found the harassment and other claims were properly barred under section 31 of the WSIA (paras 123-124). The Court stated:
“the claim for constructive dismissal does not appear to be a tort claim in the guise of an employment or contract dispute. The damages sought by the applicant are not benefits available under the Act and represent headings of damage for constructive or wrongful dismissal that have been recognized in Canadian law.” (para 124)
In coming to this conclusion, the Court analyzed the policy behind the WSIA, including the purpose of the “historic trade-off”, which is to prevent injured workers from suing in tort for damages and effectively double-dipping. In addition, the Court considered WSIAT decisions on applications relating to the right to sue in wrongful and constructive dismissal matters.
The Court found that the WSIAT’s decision was unreasonable due to its focus on the “factual linkage” between the constructive dismissal claim and the workplace injury, which “so distorted the claim being advanced by the applicant” and “ignores Canadian law permitting different causes of action to be advanced based on the same facts.” (paras 94 and 105) Instead, the Court proposed the “inextricable linkage test” should have been applied, and the focus should be on “the bona fides of a cause of action for constructive dismissal or on the availability of benefits under the [WSIA]” (para 83).
In short, the Divisional Court allows Ms. Morningstar to pursue her constructive dismissal action as the constructive dismissal claim and corresponding remedies sought by her were not available to her pursuant to the WSIA. Importantly, the Divisional Court emphasized that the WSIA’s compensatory regime does not bar claims and remedies based on employment or contract law, and stated:
“so long as a plaintiff does not sue in constructive dismissal improperly to get around the limitations of the [WSIA], the claim should be permitted to proceed, even where tort aspects of a claim are barred” (para 95).
While this decision is welcome news for employees, it is not for employers.
By overturning the WSIAT’s decision, the Divisional Court found that employees have the right to sue their employers for constructive dismissal in situations where their claim is linked to chronic mental stress arising from workplace harassment. While an employee may be entitled to compensation pursuant to the WSIA, a constructive dismissal claim and the corresponding remedies sought by the employee may not be available under the WSIA.
The WSIAT’s decision below was welcome news for employers, as they could potentially bar such claims from being pursued in court, and limit any potential damages pursuant to the WSIA.
Based on the Divisional Court’s decision, employers can no longer apply the same litigation strategy. Now, in order to statute-bar such a constructive dismissal claim, employers would have to show that the claim is an improper attempt by the employee to get around the WSIA and its compensatory regime.
By Nadia Zaman