Constructive Dismissal Claim Based on Harassment Barred by WSIA

Normally, the trade-off between workers' compensation coverage and the right to sue does not impact claims for wrongful dismissal. However, in a recent landmark decision, the Workplace Safety and Insurance Appeals Tribunal ("WSIAT" or the "Tribunal") found that a worker's right to sue for constructive dismissal based on workplace harassment was prohibited by section 31 of the Workplace Safety and Insurance Act (the "Act" or the "WSIA").

In Decision No. 1227/19, the Tribunal was confronted with an application by the employer asserting that the worker's right to sue was taken away by the WSIA, because it overlapped with an claim for mental stress benefits under the Act. The worker had worked in the housekeeping department of the employer's hotel and casino. She claimed that over a period of 17 months she was exposed to continuous harassment and abuse by co-workers, which was exacerbated by management's lack of action to address her concerns. Ultimately, an internal investigation was conducted by the employer, but the Ministry of Labour interceded (following contact by the worker), ordering that an independent investigation be conducted. In the meantime, the worker went off sick and, in February 2018, she resigned, claiming that she was constructively dismissed. Thereafter, she commenced the wrongful dismissal claim, in which she not only claimed pay in lieu of reasonable notice, but also damages for "diminished self-worth, depression, anxiety, difficulty coping with emotional stress and mental anguish, feelings of guilt and self-blame, insomnia, loss of consortium and loss of enjoyment of life", resulting from the bullying and harassment she had faced in the workplace.

In considering the employer's application for an order barring the worker's action, WSIAT considered the Board's Policy on "Chronic Mental Stress", which explains the circumstances in which benefits are payable under section 13(4) of the Act. The employer argued that the worker's claim was essentially one for chronic mental stress under the Act, and that her right to commence an action for constructive dismissal and other damages was, therefore, removed by the legislation. Section 26 of the Act provides that a covered employee's entitlement to benefits under the Act is "in lieu of all rights of action (statutory or otherwise) that a worker ... has or may have against the worker's employer ... for or by reason of an accident happening to the worker or an occupational disease contracted by the worker while in the employment of the employer", while section 28 prohibits a worker from commencing an action against a Schedule 1 employer "in respect of the worker's injury or disease". The worker argued that the Board or the Tribunal, as the case may be, must look at the causes of action and determine if any of them are "inextricably linked to a work accident" in order to assess whether the prohibition applies. The worker asserted that even if there was no mental stress damage (as would be required for a claim under the Act), the worker would still have claims for constructive dismissal and for the other damages claimed in her action.

After reviewing the parties submissions and the jurisprudence, the WSIAT concluded that the worker's claims did, in fact, fall within the jurisdiction of the WSIA. Therefore, her action was barred. In reaching that conclusion, the Tribunal found:

• The employer was at all material times a Schedule 1 employer;
• All of the parties to the alleged harassment and bullying were acting in the course of their employment at the relevant times; and
• That the circumstances alleged by the worker, if proven, would bring her claim within the scope of the chronic mental stress entitlement provided by the Act.

The Tribunal noted that, following the jurisprudence on sections 26 and 28 of the Act, it is only where an alleged wrongful dismissal is inextricably linked to a work injury that the bar to litigation applies. In the Tribunal's view, that was the case here. In that regard, the WSIAT found:

... The Respondent’s action against the Applicant is not for wrongful dismissal in the usual sense, but rather is for constructive dismissal, meaning her employment was effectively terminated by the harassing and bullying conduct of co-workers and management which caused her mental distress to such a degree that she was forced to take sick leave and ultimately to resign. I find that these facts, if proven, are inextricably linked to a claim for injury governed by the terms of section 13(4) of the WSIA, as cited above. In other words, I find that the worker’s Statement of Claim is, in essence, a claim for injury resulting from alleged workplace harassment and bullying and thus is within the scope of section 13(4) as amended to provide for entitlement for chronic mental stress arising out of, and in the course of, the Respondent’s employment. Moreover, I find that the other remedies sought by the Respondent are also claimed on the same facts, of harassment and bullying in the workplace. Accordingly, I find the worker’s right of action is taken away by the WSIA, pursuant to section 26 in this case.

This principle applies "even when the remedies sought are different from those compensated in the WSIA, when those damages flow from a work injury falling into the scope of the WSIA" (para. 33). Since the "injury" from which the employee allegedly suffered flowed directly from the workplace harassment and bullying, it fell within the Act, irrespective of how her damages were characterized in the wrongful dismissal claim (which would include so-called moral, aggravated and punitive damages). It is the nature of the injury that is at issue, not the specific heads of damages claimed, that determines whether the right to sue has been removed.

The Tribunal also rejected the argument that the bullying and harassment alleged by the worker was not an "injury" within the meaning of the Act. The WSIAT found that the actions of the worker's colleagues was "wilful or intentional incidents" which were captured by section 2 of the Act. Moreover, the mental stress provisions of the Act deemed that an employee who could make out such stress was entitled to benefits as "if the mental stress were a personal injury by accident" (s. 13(4.1)). The assertion, that it was not only the workplace harassment, but the employer's failure to adequately address that behaviour, that constituted the basis for the claim and which fell outside the Act, was also rejected. In the Tribunal's view, "these allegations of mishandling of the harassment complaint by the employer are a component of the original harm claimed" (para. 42). In her Statement of Claim, it was clear that she alleged the employer's actions in response to her complaints "supported and reinforced" the harassment. This was not unlike the negligence claim in a previous WSIAT decision where the employee claimed that his injury was worsened by the employer's failure to provide appropriate modified work. The Tribunal had rejected that claim, as well, finding that the underlying claim still flowed from an injury incurred in a work accident.

In the result, the Tribunal allowed the application and found that the worker's action against the employer was taken away by the Act.

In an interesting twist, the Human Rights Tribunal of Ontario ("HRTO") reached a similar decision to dismiss a human rights application from the same employee about 2 months earlier. Under s. 34(11)(a) of the Human Rights Code, an applicant is barred from bringing an application to the HRTO if "a civil proceeding has been commenced in a court in which the person is seeking an order under section 46.1 with respect to the alleged infringement and the proceeding has not been finally determined or withdrawn". The HRTO considered the nature of the allegations in the employee's constructive dismissal action, and found that "the civil proceeding seeks damages for the same violations of the Code alleged in the Application". In the result, the HRTO application was also dismissed. As a result of these two decisions, the worker was effectively reduced to seeking benefits under the WSIA, without any other recourse (aside from an appeal or judicial review of these decisions).

For employers, these decisions should provide some comfort that they won't be faced with overlapping or duplicative proceedings from employees who claim constructive dismissal based on workplace harassment and/or discrimination. When confronted with a WSIA or human rights claim from an employee who has commenced a wrongful dismissal action, it will be imperative to review the allegations in each to determine whether one or more bars may prevent the former employee from seeking damages in multiple venues.

Need guidance on workplace harassment or human rights issues? Contact [email protected] for expert advice.

* * *

Operating as Ceaser Work Counsel since early 2014, Lance Ceaser is a 15+ year management-side labour and employment lawyer operating from London, Ontario, where he resides with his lovely spouse, a dog and 2 cats. Lance has provided timely, cost-effective advice to organizations of all sizes in virtually every sector of industry and the public sector throughout his career.