Constructive Dismissals: Changes in Canada

Constructive Dismissals: Changes in Canada

Due to the recognition of mental stress in the workplace, the Workplace Safety and Insurance Board (“WSIB”) provided workers with the ability to claim for chronic mental stress benefits commencing in 2018. While this was undoubtedly good news, this new benefit had the unintended side effect of barring workers from suing for workplace harassment-related constructive dismissals in Ontario.

The recent decision of Morningstar versus Hospitality Fallsview Holdings Inc (“Morningstar”) fundamentally limits the damages workers and employees can receive for workplace harassment and bullying.

Constructive Dismissals: Pre-Morningstar Damages

Previously, when workplace harassment caused a poisoned workplace environment and mental distress such that an employee could not return to work, affected employees were able to bring a claim in civil court. With such a claim, employees were able to ask for damages such as compensation based on common law reasonable notice, intentional infliction of mental distress damages, aggravated damages, and punitive damages.

The Morningstar Decision And Implications For Constructive Dismissals

In Morningstar, the Ontario Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) decided in favour of the employer and held that in cases where employees are claiming constructive dismissals due to workplace harassment, the employee has no right to sue. Instead, if such employees want to seek damages, they must file an application under the Workplace Safety and Insurance Act (“WSIA”).

The WSIAT had determined that underlying Ms. Morningstar’s constructive dismissal was mental stress caused by workplace harassment—the related benefits which are now covered by the WSIB. While wrongful dismissal claims can still be brought before a court, a workplace injury-related constructive dismissal—which falls under the WSIAT’s jurisdiction—is only for the WSIAT to hear.

It was also determined that an employer’s inaction in addressing workplace harassment is not a separate issue from the mental distress suffered by the employee.

Implications on Victims of Workplace Harassment

As a result of Morningstar, workers and employees experiencing mental distress due to workplace harassment will now be pushed to receive their compensation by way of chronic mental distress benefits under the WSIB. However, an audit between January and May 2018 found that 94% of chronic mental stress claims were denied, suggesting it may be more difficult for workplace harassment victims to be compensated in cases of constructive dismissals moving forward.

Additionally, if employers challenge an employee’s or worker’s right to sue and are successful, the employee or worker will not be able to obtain the types of damages which are available to them in civil court, including damages for intentional infliction of mental distress, aggravated damages, and punitive damages. Therefore, employees and workers will likely find the compensation they were expecting to receive to be significantly reduced.

If Morningstar undergoes a judicial review and a different decision is ultimately reached, such implications may not apply. However, for now, it appears to be the unintended effect of providing workers with chronic mental stress benefits.

Contact Us

If you are an employee interested in your rights and options regarding workplace harassment, or an employer wishing to defend against allegations of workplace harassment, our team of experienced constructive dismissal lawyers at Achkar Law can help.

Contact us by phone toll-free at 1 (800) 771-7882 or email us at [email protected] and we would be happy to assist.