Can an employee sue in court and claim WSIB benefits? Labour and employment lawyer Rishi Bandhu weighs in. 

When stress-related injuries are caused by events in the workplace, an employee may be entitled to benefits under the Workplace Safety and Insurance Act (WSIA).  The legislation provides a compensation scheme, funded by employer premiums, which pays benefits to employees who have lost income due to a workplace injury.  It’s effectively a no-fault scheme to provide income security to employees. The trade-off is that the Act prevents employees from suing employers for causing the workplace injury.  

A recent decision considered whether an employee could sue her employer for constructive dismissal due to workplace harassment when the same allegations grounded a claim for income replacement benefits under the WSIA.  The Workplace Safety and Insurance Tribunal (WSIAT) initially said no, but the Ontario Divisional Court overturned that decision.  

Ms. Morningstar’s story 

Ms. Morningstar started working for a hotel in the Niagara Falls area in 2015, becoming a supervisor the following year. Throughout, she was subjected to repeated bullying and harassment from housekeeping staff. They complained about her body odour; Mrs. Morningstar was a cancer survivor and was concerned that the issue may have meant she had a serious medical complication.  

She was further humiliated by management’s response, which lacked sensitivity.  

The conduct continued and Mrs. Morningstar left the workplace, originally on medical leave. Her doctor later informed her that she could no longer return, forcing her to resign from her position. 

Ms. Morningstar filed a claim for constructive dismissal. In her view, the employer’s conduct demonstrated that their employment relationship was at an end. She had an earlier claim before the Ontario Human Rights Tribunal, but it was deferred to a future date because the issues overlapped with those in her constructive dismissal claim.  

Further complicating matters, her former employer applied to WSIAT to bar Ms. Morningstar from suing in court for constructive dismissal. It asserted that she could not proceed with a civil lawsuit to obtain a remedy for psychological injuries that were allegedly caused in the workplace.      

WSIAT sided with Ms. Morningstar’s former employer. Where the Workplace Safety and Insurance Board (WSIB) provides benefits to compensate for a workplace injury, an employee is prohibited under the Act from suing the employer. Ms. Morningstar’s alleged injuries may not have been physical, but they resulted from the workplace.    

This ruling was a gut-check for employees, because the Workplace Safety and Insurance Board has a long history of denying the majority of claims that it receives concerning mental health. 

However, this was not yet the end of Ms. Morningstar’s story. 

The Divisional Court Disagrees

In the recent decision Morningstar v. WSIAT, 2021 ONSC 5576, the Ontario Divisional Court which has the power to overturn Tribunal decisions, made another surprising ruling. 

Ms. Morningstar had appealed to the Divisional Court, arguing that she should have been allowed to file a constructive dismissal claim. 

The Court agreed.  

After a thorough analysis of WSIAT’s own past decisions, they found that the Tribunal’s decision in this case was fundamentally unreasonable. The decision largely hinged on the Court’s analysis of whether the facts behind her constructive dismissal application were inextricably linked to her injury. 

The Court ruled that while a personal injury claim can be barred by the Workplace Safety and Insurance Act, a constructive dismissal should not be. If it was, it meant the Tribunal was overstepping its bounds. The Court freed Ms. Morningstar to pursue her constructive dismissal claim once more. 

What this means for employers and employees 

It appears that Ms. Morningstar’s legal proceedings will continue, for now. The Superior Court or Court of Appeal may ultimately have the last word. 

The Divisional Court’s decision, however, provides important direction regarding how employment law plans to handle mental health claims. 

For employees, the news is a welcome relief. When the WSIB began to delve into workplace mental health claims, it quickly became clear that they were ill-prepared to handle the sheer volume of applications. The overwhelming majority of benefits claimants received denials. 

Decisions like this one ensure that employees who are struggling with their mental health due to workplace bullying and harassment have more than one path towards resolution. 

For employers, the decision may leave them somewhat exposed, but the best method of protection is to avoid such claims entirely. It underlines the importance of having a comprehensive workplace mental health strategy in place, along with a thorough workplace violence and harassment policy, regular workplace training and a reporting system that deals with complaints effectively. These are considered best practices for most workplaces, but can also serve as a strong defense against any claims, should they arise. 

 The team at Bandhu Law works with both employers and employees who are dealing with workplace violence, harassment and mental health issues. They can help resolve situations before problems escalate into years of legal proceedings. For more information, contact  Bandhu Law Professional Corporation by phone at 905-849-0025 or by email at info@blpc.ca. 

Rishi Bandhu practices labour and employment law out of Oakville, Ontario. Rishi is a 1998 graduate of high distinction from the University of Toronto, Trinity College; he received his LLB from Osgoode Hall in 2003. He was called to the Ontario Bar in 2004.