Facing a constructive dismissal claim

If you are faced with a constructive dismissal claim alleging workplace harassment and bullying, consider whether the employee may be statute-barred from bringing the claim in the first place.

Since the beginning of 2018, workers are entitled to receive workers’ compensation benefits for chronic and traumatic stress under section 13(4) of the Workplace Safety and Insurance Act (WSIA). In Morningstar v Hospitality Fallsview Holdings Inc., the Workplace Safety and Insurance Appeals Tribunal (WSIAT) confirmed that when the fundamental nature of a constructive dismissal claim is injury resulting from harassment and bullying by coworkers or management, the employee’s right to bring a civil claim is removed by the WSIA. This is a welcome decision for employers.

Facts

In Morningstar, Judith Ann Morningstar was employed by Hospitality Fallsview Holdings in its housekeeping department. She filed a human rights application alleging discrimination on the basis of sex and disability. Soon after filing her application, she resigned from her position, alleging constructive dismissal.

Subsequently, Morningstar filed a Statement of Claim with the Ontario Superior Court of Justice, claiming damages for constructive dismissal, bullying, harassment and/or a poisoned work environment pursuant to the Occupational Health and Safety Act (OHSA), the tort of harassment, as well as punitive, aggravated and/or moral damages. In particular, she claimed that she “was forced to resign from her position… due to the harassment, bullying and abuse she endured during the course of her employment and the resulting mental distress she experienced and continues to experience.”

Morningstar did not explicitly seek a human rights remedy. However, the damages she sought in her claim were very similar to the remedies available in the Ontario Human Rights Code.

Decisions

The employer asked the Human Rights Tribunal of Ontario (HRTO) to dismiss the application pursuant to section 34(11) of the code. This section precludes the HRTO from assuming jurisdiction over an application where the applicant has commenced a civil proceeding with respect to the same alleged breach of the code.

The HRTO dismissed the application, holding that “In essence, the civil proceeding seeks damages for the same violations of the code alleged in the application”. In particular, the HRTO found that:

• the facts and issues alleged in the applicant’s Statement of Claim were the same as those raised in the application
• the question of whether her “human rights were infringed” were not separate and distinct from her constructive dismissal claim
• although the applicant did not explicitly seek a remedy under section 46.1 of the code, the application and the civil claim raised substantially the same allegations of harassment and a poisoned work environment, and the damages sought were similar to the damages available under the code for “injury to dignity, feelings and self-respect”. 

After the HRTO’s dismissal of Morningstar’s application, the company brought a “right to sue” application under section 31 of the Workplace Safety and Insurance Appeals Tribunal (WSIA). Under the WSIA, claims of workplace chronic mental stress are compensable. Accordingly, the company sought an order that Morningstar’s civil claim be declared statute-barred as it was effectively a claim for a chronic mental stress injury arising out of her employment.

The WSIAT found that Morningstar’s civil claim was, in essence, a workplace chronic mental stress claim resulting from harassment and bullying in the workplace. The WSIAT held in favour of the company and found that the action was statute-barred.

Importantly, the WSIAT noted that the right to bring an action for wrongful dismissal is not removed by the WSIA. It is only in exceptional circumstances, where the circumstances of the wrongful dismissal are inextricably linked to the work injury, that the right of action is taken away.

The WSIAT found that the exception applied in this case. In particular, the WSIAT explained that this was not a case of wrongful dismissal in the usual sense but, rather, 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”. If proven, these facts would be “inextricably linked” to a claim for mental stress under s. 13(4) of the WSIA.

In its decision, the WSIAT noted as follows:

“Actions for damages flowing from a work injury are statute barred even when the remedies sought are different from those compensated in the WSIA, when those damages flow from a work injury falling within the scope of the WSIA…

“In this case... the injury for which the [worker claimed] damages, albeit under several heads, all 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...

“The manner in which the action is framed is not determinative as to whether the action is statute barred — the determination is rooted in a consideration of “the fundamental nature of the action” and whether it arises in respect of a work injury.”

Given the above, the WSIAT took away the plaintiff’s right of action.

Key takeaways

This decision confirms that employees cannot bring a civil claim alleging constructive dismissal where the fundamental nature of the claim is related to the employee suffering from a psychological injury due to workplace harassment or bullying. Instead, employees must seek compensation for such injuries under s. 13(4) of the WSIA.

This decision is great news for employers. Where employers are faced with a constructive dismissal case alleging workplace harassment and bullying, it is worth considering whether the matter would be more appropriately dealt with under the WSIA regime. If the employer deems that that is the case, the employer should then consider whether a “right to sue” application would be appropriate under the circumstances.

Employers would be wise to ensure that they understand the WSIA process and seek legal advice before proceeding with such an application.