Divisional Court Reverses Landmark WSIAT Decision and Restores Right to Sue in case of Alleged Constructive Dismissal

September 20, 2021

In late 2019 the Workplace Safety and Insurance Appeals Tribunal (“WSIAT” or the “Tribunal”) issued a landmark decision that took away an employee’s right to sue their employer for damages with respect to chronic mental stress flowing from workplace harassment and an inadequate employer response to same, resulting in a claim for constructive dismissal.  The original decision was upheld on reconsideration by the WSIAT and eventually both Tribunal decisions were appealed to the Divisional Court by the employee.

By way of background, in 2018 the employee commenced a civil claim against her employer for damages as a result of harassment and constructive dismissal, together with aggravated, moral and punitive damages for breaches of the Occupational Health and Safety Act and the Employment Standards Act, 2000.  On appeal, the employee did not dispute the WSIAT’s finding that her claims as they relate to lost wages for her time off on medical leaves prior to her alleged constructive dismissal are barred.  However, her position on appeal was that the Tribunal erred in barring her claims for constructive dismissal and the damages flowing from same.  You can read more about the tribunal’s findings in our previous blog post.

The Divisional Court agreed with the employee. The court applied the standard of reasonableness in reviewing the Tribunal’s decision.  In the court’s view, the Tribunal had improperly applied the “inextricably linked ” test to the facts of this case in determining that, because the facts were linked to the workplace injury,  it therefore meant her constructive dismissal action was barred.

Rather the court looked to the purpose and history of the statutory scheme governing the Workplace Safety and Insurance Board (“WSIB”).  The Court noted that the scheme of the WSIB is based on a compromise that prohibits injured workers from suing their employers in tort for damages resulting from workplace injuries but does not bar wrongful dismissal actions, such as a constructive dismissal claim.  As these actions are rooted in contract law and employment law and not tort.

The court held that while “an action for personal injury can properly be barred by the Act […] it would appear to be 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 court went on to say that:

Such a test ignores Canadian law permitting different causes of action to be advanced on the same facts. To focus on the facts as linked to the workplace accident, but to disregard both the claim for constructive dismissal in its own right and the nature of the benefits sought in the action, arrogates to the WSIAT more authority than was ever intended to be granted to it. The policy behind the Act and the wording in ss. 26, 28, and 31 of the Act require more analysis than a test involvement mere ‘factual linkage’ permits.

It is well-established in Canadian law that the same facts can support concurrent liability in more than one cause of action. A plaintiff has the right to assert alternative causes of action that offer advantageous legal consequences unless the plaintiff thereby improperly attempts to avoid some limitation of liability by so doing: Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147, at paras. 48-54. As the general run of WSIAT cases acknowledge, so long as a plaintiff does not sue in constructive dismissal improperly to get around the limitations of the Act, the claim should be permitted to proceed, even where tort aspects of a claim are barred. Contrary to the reasoning of other WSIAT decisions in which claims in contract are barred, nowhere in the decisions under review is there any assertion that the applicant is attempting to disguise her injury claim as one sounding in constructive dismissal in order to avoid the limitations of the historic trade-off.

Although the court found in the employee’s favour, as of today it is understood that the employer intends to appeal the decision to the Ontario Court of Appeal.

Morningstar v. WSIAT, 2021 ONSC 5576

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