Workers’ Compensation & Claims for Mental Stress

Written on behalf of Peter McSherry
A man on a couch shielding his eyes with his hand, representing work stress
Background Shape/Fill/Blue Shaded

The Workplace Safety and Insurance Act provides Ontario employees with insurance benefits for workplace illnesses or injuries, and in exchange for that coverage, it removes the right of an employee to bring a civil claim against their employer for said injuries. This is commonly understood for physical illnesses or injuries suffered on the job, but what about issues relating to mental health caused or contributed to by one’s work environment?

Civil Cases

Civil claims, that is, cases in which an employee sues his or her employer in court for damages due to termination and other wrongful conduct, will allow for three possible remedies.

The first is for a “notice” claim based on the implied term of fair notice of termination. That sum can be as high as two years’ salary, as demonstrated by recent decisions.

The second claim for “aggravated” damages for unfair conduct at the time of termination can be considerable. Extreme cases have gone as high as $200,000.

A third claim for punitive damages is rare and is based on malicious action by the employer. When these damages are awarded, the sum also be as high as $400,000, which again is unusual.

Enter Workers’ Compensation Law

Approximately 70% of Ontario workers are covered by workers’ compensation insurance. The theory of this plan is to allow for a “no-fault” scheme of payment of 70% of income should the employee become injured at work. Ontario was a progressive jurisdiction in allowing for this type of insurance, as early as 1930.

In exchange for this benefit, the worker gives up the right to sue the employer for damages for negligence which may have led to the workplace accident.

For many years, this law was, in essence, irrelevant to claims of mental distress. Claims of this nature were allowed only where the employee witnessed a calamity at work, such as the death or severe injury of a co-worker, causing severe psychological trauma.

That law changed due primarily to challenges brought with respect to the constitutionality of such limitations. Ontario now does allow for workers’ compensation benefits based on emotional distress, under s. 13 of the Act. The test for recovery is difficult but nonetheless, potential recovery is possible.

Impact on Civil Cases

The possibility of recovering workers’ compensation benefits for a workplace injury, including intentional wrongdoing on the part of the employer, makes bringing a civil claim a difficult case for the employee.

Employees will be required to apply for worker’s compensation benefits before bringing an action in civil court. If the employee sues for emotional distress damages without first making a benefits claim, his claim can be stopped by the employer and he will be forced to file a workers’ compensation claim. The limitation period for filing such a claim is six months.

If this filing is missed, the claim for emotional distress damage may fail. The employee must then not only file his workers’ compensation claim but also start a civil lawsuit to preserve the civil claim. Should the workers’ compensation case fail, as most do, then the limitation period for the civil action will be preserved.

Employees’ Take Away

The law on this subject is overly complex. If you are covered by workers’ compensation law, you will need legal advice to guide you through this morass of law. You may lose your entitlement to emotional distress damages should you sue before filing for workers’ compensation benefits. Should you file and lose, your civil claim may still be allowed. Timing and procedure are keys to success, and so it imperative that anyone seeking to claim in respect to workplace mental stress seeks legal advice as soon as possible.

Let Legal Advice Guide Your Actions

If you are covered by workers’ compensation and have been treated unfairly, get advice and do so quickly. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation