New BC Supreme Court Ruling Alters Employer Obligations on Mental Stress Claims: What Employers Need to Know

New BC Supreme Court Ruling Alters Employer Obligations on Mental Stress Claims: What Employers Need to Know

BySpraggs Law Posted on

A recent ruling by the BC Supreme Court has significantly impacted how the Workers’ Compensation Act is interpreted, especially regarding mental stress claims in the workplace. In Pickering v. Workers’ Compensation Board (2025 BCSC 376), the Court narrowed the “Labour Relations Exclusion,” which previously shielded employers from mental stress claims related to employment decisions. This change opens the door for employees to more easily file claims for mental stress, and employers need to adjust their approach to managing workplace decisions.

The Decision

The case involved an employee who faced significant workplace harassment and bullying. Despite this, the employer’s management did not effectively address the issue, leading the employee to develop serious mental health conditions. The employee’s mental stress claim was initially denied by WorkSafe BC, citing section 135(1)(c) of the Workers’ Compensation Act, which excludes claims for mental stress caused by labour relations decisions made by employers.

However, the BC Supreme Court ruled that this exclusion could be discriminatory in cases involving chronic mental stress caused by employer decisions that are unreasonable, made in bad faith, or discriminatory. The Court clarified that while the exclusion still applies to “generic” employer decisions (such as discipline or dismissal), it should only apply when these decisions are made reasonably and in good faith. This effectively narrows the scope of the exclusion, making it easier for employees to file claims for mental stress related to certain workplace decisions.

What Are Labour Relations Decisions?

Labour relations decisions involve the everyday management of employees. This includes actions such as:

  • Hiring and Firing: Decisions regarding recruitment and termination of employees.
  • Workplace Policies: The development and enforcement of company policies on behavior, attendance, and other workplace expectations.
  • Scheduling: Determining employee shifts, hours, and time off.
  • Performance Management and Reviews: Evaluations of employee performance and any related disciplinary actions or improvement plans.

While necessary for managing a workforce, these decisions now carry the additional responsibility of being made in a manner that is not discriminatory or harmful to employee mental health. Employers must now ensure that these decisions are made reasonably and with consideration for the potential mental health impacts on employees. This is distinct from the common law duty of honest performance, which requires employers to act transparently but does not impose a general duty of good faith in all aspects of employment.

Implications for Employers

This decision introduces new considerations for employers in British Columbia, with both opportunities and challenges.

Benefits

  1. Support for Employee Well-Being: Employees suffering from mental stress due to work-related factors can now file claims with WorkSafe BC, which could allow them to seek accommodations and assistance in returning to work, reducing reliance on personal or medical leave.
  2. Simplified Claims Process: Mental stress claims processed through WorkSafe BC may help employers avoid lengthy and costly court proceedings, providing a more efficient resolution.

Challenges

  1. The Need for Reasonable and Fair Decisions: Employers must now ensure that employment decisions—particularly those that could affect an employee’s mental health—are made reasonably and in good faith, and not in a manner that could be seen as discriminatory or harmful. This differs from the common law duty of honest performance, which is limited to the manner of dismissal. Employers will need to demonstrate that their decisions are not arbitrary and are made with fairness and consideration for employee well-being.
  2. Increased Risk of Claims: The narrowing of the exclusion makes it easier for employees to file mental stress claims related to workplace issues such as harassment or poor management. Employers should be prepared for an increase in claims, which may lead to additional costs and potential reputational risks.

Ongoing Questions

Despite the clarity provided by the Court, several questions remain unanswered. For example, how will WorkSafe BC assess mental stress claims under this new framework, and what specific actions would constitute “bad faith” or an unreasonable decision? These uncertainties will likely be addressed over time as the new interpretation is applied in practice.

Conclusion

The Pickering v. Workers’ Compensation Board decision shifts the landscape for mental stress claims in British Columbia. Employers must now be more vigilant about the way they manage employment decisions and ensure these decisions are made reasonably and in good faith, without discrimination or negative mental health impacts. Businesses should consider reviewing their workplace policies and management practices to mitigate the risk of claims and support a healthier work environment.

If You Have Question, We Can Help

If you’re an employer or employee in British Columbia and have questions about mental health claims, your rights, and Canadian employment law, our HR Consultant and Employment Law Specialists at Spraggs Law are here to help. Please don’t hesitate to reach out to us at 604 359 1618 or online today.

Please note: This article does not contain legal advice. If you would like advice on your specific situation, please contact Spraggs Law.