The scales of justice recently tipped in favour of employers as the Ontario Court of Appeal ruled in Piresferreira v. Ayotte10 they cannot be held liable for the negligent infliction of mental suffering. In a precedent setting judgment, the Court eliminated a significant portion of the damages initially awarded at trial – an award which exceeded $500,000.00 – and clarified the extent to which employers will be held responsible for the damages that flow from managers engaged in bullying‐type behaviour.

What Happened

In the beginning Marta Piresferreira was a model employee. She routinely exceeded her sales targets for which she received glowing performance reviews and generous bonuses. However, for a variety of reasons, many of which being beyond her control, Piresferreira’s performance began to decline starting in 2004. Like her successes, these poor results were reflected in her performance reviews as her supervisor, Richard Ayotte, became increasingly dissatisfied with her failure to hit certain sales targets.

Ayotte was a self‐described “hands on manager” who often yelled and swore at employees. As Piresferreira continued to struggle in her work, she became a frequent target for Ayotte’s expletive laden outbursts.

On May 12, 2005, the situation came to a head. Upon learning that Piresferreira had failed to secure the attendance of a client for an important meeting, Ayotte launched into a tirade accusing Piresferreira of not doing her job. As Piresferreira attempted to show Ayotte an e‐mail on her BlackBerry indicating that she had in fact made all possible efforts to arrange the meeting, Ayotte shoved her, subsequently telling her “to get the hell out of his office.”11

Feeling shaken and violated, Piresferreira left work for the day. Upon returning to the office several days later, rather than apologizing, Ayotte presented Piresferreira with a Performance Improvement Plan (“PIP”). Piresferreira refused to sign the PIP and instead lodged a formal complaint with her employer’s human resources department. After an investigation which involved meeting with Ayotte but not Piresferreira, Human Resources issued a written disciplinary warning against Ayotte and ordered that he attend counselling sessions on effective communication and conflict management.

Piresferreira was subsequently diagnosed with post‐traumatic stress disorder; she went on sick leave and never returned to work. In a letter dated September 21, 2006, Piresferreira was advised by her employer that she had been deemed to have resigned from her position effective September 19, 2006.

The Trial

The trial judge determined that Piresferreira had been constructively dismissed, but more, that she had suffered assault and battery as well as the intentional and negligent infliction of emotional distress and mental suffering. In addition to being held vicariously liable for Ayotte’s actions, the employer was assessed with further damages for failing to provide its employees with a safe and harassment free working environment, failing to sufficiently investigate the incident and imposing disciplinary measures that were “inappropriately mild.”12 Including legal costs, the judge issued an order compelling the defendants to pay more than $700,000.00.

The Court of Appeal

On appeal, the Court eliminated the damages founded on negligent and intentional infliction of mental suffering. Writing on behalf of a unanimous bench, Justice Juriansz noted that the law does not recognize a cause of action against employers grounded in the negligent infliction of mental suffering. In his view, such a duty would be a “considerable intrusion by the courts into the workplace.”13 There was also no basis to support a finding of intentional infliction of mental suffering. While egregious, Ayotte’s conduct did not reach the necessary legal threshold, that is, it was not “calculated to produce harm.”14 Finally, the damages which had been found at trial to flow from Piresferreira’s assault and battery were too remote: “Piresferreira’s psychological disabilities and her inability to work in any employment were largely caused by matters other than the battery itself.”15 In the end, the Court fashioned an award reflective of past claims for constructive dismissal including 12 months’ reasonable notice, $15,000.00 in damages for the battery and an additional $45,000.00 for the mental suffering related to the manner of Piresferreira’s dismissal – a total of approximately $147,855.00.16

Where We Go From Here

While this decision certainly falls in the ‘win’ column for employers, it nonetheless highlights the importance of eliminating harassment in the workplace. As more and more jurisdictions look to curb inappropriate workplace behaviour through the enactment of workplace harassment legislation, employers must ensure that they have adequate systems in place that effectively allow for the reporting and investigation of such incidents. To the extent that employers fail to address this issue, they could find themselves on the hook for significant monetary penalties.