Ontario court overturns dismissal of worker’s constructive dismissal claim

An Ontario worker who suffered a workplace psychological injury cannot pursue legal action for harassment that caused the injury but can sue for constructive dismissal, the Ontario Superior Court of Justice has ruled.

The 60-year-old worker was hired to work in housekeeping at a Hilton hotel in Niagara Falls, Ont., in May 2015. A year later, she was promoted to a supervisory role. Before she started working at the hotel, she had fought and survived uterine cancer.

Starting in June 2016, some of the worker’s co-workers began saying that an odour emanated from her. They engaged in acts that humiliated the worker, including spraying her with Lysol and covering the seat of her chair with towels and bathmats. They spread rumours about what was causing the odour as well as her job performance and also interfered with her administrative work.

The worker discussed the matter with her doctor, who changed her medication to eliminate the odour. The worker was also worried that her cancer had come back, but her doctor reassured her that that wasn’t the case.

The worker felt that the odour problem was solved, but her co-workers continued to harass and humiliate her, eventually complaining to management about the smell. Her manager didn’t seem to care about what was going on and made offhand suggestions that she use feminine products — which the manager denied — shower, and wash her uniform. This further humiliated the worker, particularly since she had explained her medical issue to the manager.

At a meeting with managers, the worker was forced to apologize to one of her harassers who had earlier admitted to misconduct. At a second meeting, management told her to work “more cohesively” with team members. This became too much for the worker, so she took a two-week medical leave on the recommendation of her doctor.

While the worker was on medical leave, the hotel conducted an internal investigation into her allegations of harassment. When she returned, she was presented with the results — the investigation concluded that there had been no harassment, her co-workers had acted out of concern for health and safety, and her manager had not harassed her. The report recommended that the worker be assigned a designated chair at meetings, her colleagues not place towels on chairs, workplace complaints should be reported immediately, and the hotel should accommodate its employees.

The investigation report caused the worker further humiliation and distress. On Nov. 8, 2017, she went on leave.

Worker didn’t return

The worker filed a complaint with the Ontario Ministry of Labour, which ordered Hilton to perform an independent workplace investigation. This investigation concluded in December, but Hilton waited an additional month before disclosing the full report — which found that the worker’s co-workers and managers had engaged in workplace harassment. The harassers were required to take sensitivity training, but the worker would still have to report to the same manager and work with the people who had harassed her.

Hilton asked the worker to return to work but she refused, accusing Hilton of constructively dismissing her by failing to provide a safe work environment. She said that it would be “medically inadvisable” to return to work and resigned on Feb. 16, 2018.

The worker sued for constructive dismissal, alleging breaches of health and safety legislation as well as employment standards legislation, along with harassment and a poisoned work environment. In addition to damages for constructive dismissal, she sought aggravated, moral, and punitive damages for the tort of harassment.

Hilton applied to the Ontario Workplace Safety and Insurance Tribunal to dismiss the worker’s action because the province’s Workplace Safety and Insurance Act (WSIA) prevented workers from launching civil actions against their employer related to an injury for which they are entitled to receive workers’ compensation benefits under the WSIA. In this case, the worker’s mental injury derived from stress for which she could have applied for workers’ compensation benefits, Hilton argued.

The tribunal noted that wrongful dismissal actions were not normally barred by the WSIA except in exceptional circumstances. However, it found that these were exceptional circumstances — the action was for damages for constructive dismissal, not wrongful dismissal, which in this case “flow directly from the harassment and bullying she alleges in the workplace, the employer’s response to these allegations which contributed to the injury sustained, and the mental stress she experienced as a result.” This made the foundation for the worker’s cause of action “inextricably linked to workplace harassment” and an injury that is compensated for under the WSIA. As a result, the WSIA prevented the worker from commencing legal action for damages related to her mental injury, said the tribunal.

The tribunal added that allegations of Hilton mishandling the harassment complaint was “a component of the original harm claimed” and contributed to the injuries the worker suffered that caused her to take medical leave.

The worker applied to the tribunal for reconsideration, but a different vice-chair denied the request. The second vice-chair agreed that the facts in the worker’s claim were “inextricably linked to a personal injury arising from a workplace accident” and that personal injury was psychological. They also agreed that the circumstances were exceptional and the wrongful conduct by Hilton was linked to the compensable accident and it didn’t matter if the worker’s action was framed as constructive dismissal.

Trade-off doesn’t prevent constructive dismissal claims

The worker appealed to the Ontario Superior Court of Justice. The court noted that the Ontario workplace insurance scheme under the WSIA provided no-fault benefits for workplace injuries based on “collective employer liability” and provided a trade-off of employees’ right to sue in exchange for the certainty of benefits for workplace injury. However, employers should not be permitted to “insulate themselves from legitimate claims outside of the realm of tort,” said the court.

The court found that the tribunal took an unreasonable approach to the worker’s claim, as it focused on the linkage of the facts to the workplace accident, rather than the legitimacy of the constructive dismissal claim. The court pointed out that the tribunal didn’t acknowledge the fact that the WSIA does not compensate claims for constructive dismissal.

Canadian law allows different causes of action based on the same facts, the court said.

The court also found that although the WSIA bars a legal action for personal injury that can be compensated, it was unreasonable to bar an action for constructive dismissal “simply because the same facts that relate to that action also incidentally support an action for personal injury.” The worker’s constructive dismissal claim was not for personal injury and Canadian law allows different causes of action based on the same facts, the court said.

The court agreed that the action for the tort of harassment and the poisoned work environment are properly barred by the WSIA, but the constructive dismissal claim was not. It declined to remit the matter back to the tribunal and determined that the worker should be permitted to pursue her constructive dismissal claim in the Superior Court of Justice.

For more information, see:

• Morningstar v. WSIAT, 2021 ONSC 5576 (Ont. S.C.J.)