The bus has left the station: Why employers must address psychological health and safety

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The psychological health and safety (PHS) regulation and enforcement bus has left the station, and we’re witnessing a decisive turning point regarding work-related psychological health and safety.

Employers are facing a critical choice: get on board or risk being run over by legal requirements, enforcement actions and the mounting dangers and costs of inaction.

The National Standard: No excuses for inaction

In 2011, Canada’s first national mental health strategy, Changing Directions, Changing Lives: The Mental Health Strategy for Canada, put workplace mental health conversation on the map, resulting in the first global standard on psychological health and safety.

The National Standard of Canada for Psychological Health and Safety in the Workplace (CAN/CSA-Z1003-13/BNQ 9700-803/2013) is a comprehensive framework for organizations seeking to address psychological safety systematically. Currently voluntary, the standard’s principles influence workplace psychological health and safety regulatory approaches. It has been adopted by forward-thinking organizations across many sectors.

The standard guides employers on protecting workers from psychological harm and promoting psychological health. Adopting its prime components can constitute “duty to care” and demonstrate due diligence regarding psychological health and safety in legal proceedings, even for organizations that do not fully adopt the management system.

Organizations that implement the standard prepare for future requirements, reduce disability, attendance and turnover costs, create positive employee experiences, and maximize productivity and sustainability.

Adopting or adapting the National Standard could guide organizations adhering to environmental, social and governance (ESG) principles and expanding the “S” to protect workers’ psychological and physical health (e.g., stress-related illness).

The catalyst for change: How workplace safety laws evolve

History shows that enforcement of occupational health and safety (OHS) legislation often remains moderate until a high-profile incident captures public attention. Then, a situation requires a response, even though expectations and requirements were in place with little to no enforcement or expectation for employers to demonstrate due diligence before the event.

Consider these historical examples:

• Me Too movement and harassment legislation: The global Me Too movement that gained momentum in 2017 profoundly impacted Canadian workplace harassment legislation. This social movement demonstrated how widespread public awareness can rapidly accelerate legislative change without a defining incident. The federal government amended the Canada Labour Code through Bill C-65, and Ontario amended its Occupational Health and Safety Act to expand workplace harassment definitions and increase employer obligations for investigations.
• Workplace violence legislation: Following the tragic shootings at OC Transpo in Ottawa and the murder of nurse Lori Dupont in Ontario, governments that had been slow to adopt violence prevention legislation responded with enhanced workplace violence prevention regulations. These incidents highlighted critical gaps in employer responsibilities to protect workers from violence, leading to new legislative frameworks.
• Westray mine disaster and criminal code amendments: In 1992, an explosion at the Westray coal mine in Plymouth, N.S., killed 26 miners and led to a public inquiry that revealed severe safety violations. In response, the Criminal Code was amended in 2004 with Bill C-45 (the Westray Bill), establishing criminal liability for organizations and individuals who fail to take reasonable steps to prevent bodily harm to workers.
• Metron Construction scaffold collapse: When a scaffold collapsed at a Toronto high-rise on Christmas Eve in 2009, killing four workers and seriously injuring another, only one worker was properly tied off with a fall arrest system. This case resulted in a significant corporate criminal negligence conviction under the Westray amendments, with the company fined $750,000 plus victim surcharges, and a supervisor sent to prison. This watershed case dramatically changed how courts view corporate responsibility for worker safety and led to an overhaul of the OHS system in Ontario.

As Martin Shain predicted in 2009’s Stress at Work, Mental Injury and the Law in Canada, we now witness psychological health and safety following this established pattern. Multiple jurisdictions across Canada have started recognizing the importance of protecting workers’ psychological health through regulatory frameworks.

This isn’t a passing trend; it’s the next frontier in workplace health and safety jurisprudence. Whether they know it or not, employers have an obligation to protect against incidents like that which occurred at a telecommunications company in France that resulted in 35 employees committing suicide. That incident put the company’s reputation at risk, resulting in legal negligence costs and the CEO going to jail.

The lesson for employers across all sectors is to engage in activities that demonstrate due diligence and accountability. This approach ensures they are prepared for potential random audits by maintaining documentation that meets the required standards. Failures like OHS due diligence gaps can lead to substantial legal penalties and devastating, long-lasting reputational damage.

The current legal landscape: More advanced than many realize

Many employers are unaware of how far psychological health and safety regulations have advanced.

Consider the current state:

• The Canada Labour Code recognizes psychological health as a workplace responsibility.
  • Section 122 of the Code states: “The purpose of this Part is to prevent accidents, occurrences of harassment and violence and physical or psychological injuries and illnesses arising out of, linked with or occurring in the course of employment…”
• The Work Place Harassment and Violence Prevention Regulations that came into force in 2021 require federally regulated employers to:
• Conduct workplace assessments that include psychological hazards.
• Develop prevention policies addressing psychological harm.
• Provide training on psychological safety.
• Follow specific investigation procedures for incidents involving psychological harm.

Some provinces have similar language in their OHS legislation. Alberta references the purpose of its act as “the promotion and maintenance of the highest degree of physical, psychological and social well-being of workers.” Manitoba has proposed updates that further define psychologically safe workplaces. Quebec has included references to preventing psychological harassment in its labour standards legislation for over a decade, while its act contains provisions regarding the “protection of physical and mental well-being of workers.”

As they prepare to update their OHS legislation, some provinces are examining the Australian model where states have adopted a general Code of Practice, making it mandatory for employers to conduct psychosocial risk assessments regularly, implement controls to mitigate psychosocial hazard risks and demonstrate due diligence if they are audited.

Some unions negotiate PHS requirements into their collective agreements (e.g., Canadian Union of Public Employees, UNIFOR, B.C. Nurses Union) to ensure employers adopt the CSA Z1003 or similar provisions to protect workers.

Current and pending legislative changes are creating expectations for a comprehensive framework to protect workers’ psychological health and safety, just as we expect for physical hazards. However, few organizations currently meet these expectations.

The evolution of workers’ compensation

Perhaps most telling is how workers’ compensation boards across Canada have evolved to recognize and compensate for psychological injuries:

• Most provincial compensation systems now accept claims for work-related psychological injuries, including those stemming from chronic workplace stress.
• Many jurisdictions have removed the requirement for a traumatic event as a precondition for a psychological injury claim.
• Some provinces have established presumptive legislation for post-traumatic stress disorder (PTSD) claims by first responders.
• Many jurisdictions have lowered the threshold for establishing if a psychological injury is work-related.

In January, Ontario’s Workplace Safety and Insurance Board added two PHS modules to its Health and Safety Excellence program to incentivize employers to be proactive with PHS risk assessments and establish PHS control programs.

The numbers show the need

The human and economic toll of workplace psychological health issues is undeniable. In a recent report, Boston Consulting Group suggested the direct and indirect costs of psychological health in Canada exceed $220 billion per year.

Moreover, a Telus Mental Health Index report showed the productivity losses associated with mental health issues are substantial:

• Employees reporting workplace conflict lose 55 working days in productivity per year.
• Workers citing manager relationships as their primary source of work stress lose 49 working days.
• Those fearing termination or layoff lose 48 working days.
• Workers stressed by colleague relationships lose 47 working days.
• Employees overwhelmed by work volume lose 39 working days.

Statistics Canada paints an equally concerning picture:

• Over 4.1 million Canadians (21.2 per cent of employed people) experience high or very high levels of work-related stress.
• 7.5 per cent of employed people took time off due to stress or mental health reasons in the year before April 2023. This amounted to an average of 2.4 days lost per employed person.
• Women (22.7 per cent) report higher levels of work-related stress than men (19.7 per cent).

As a result, disability costs due to mental health are increasing. Short-term disability claims due to mental health issues increased by six per cent in 2021, and grew in duration by 12 per cent. On average, mental health issues account for 30 to 40 per cent of short-term disability claims in Canada. According to data from members of the Canadian Life and Health Insurance Association, claims for mental health support increased 24 per cent during 2020.

These statistics represent lost productivity and human suffering – suffering that employers now have a legal and moral obligation to address.

Due diligence: Your legal shield and moral compass

Due diligence has long been established as a critical legal defence in OHS. If an organization can demonstrate due diligence, it will be shielded from prosecution in the case of a workplace incident. In the context of PHS, this concept takes on greater importance as regulatory frameworks evolve and enforcement increases.

At its core, due diligence requires employers to take all reasonable precautions to prevent harm. For psychological safety, this means systematically identifying psychological hazards, implementing appropriate controls, monitoring their effectiveness, and continuously improving preventive measures. Documenting these efforts is essential as evidence of genuine commitment to workers’ protection.

Courts and tribunals evaluate due diligence for psychological hazards with the same rigour as physical ones. The legal test typically asks:

• Did the employer know, or should they have known, about the psychological hazard?
• Were reasonable steps taken to address it?
• Was the approach systematic rather than reactive?
• Were supervisors and managers adequately trained?
• Were incidents properly investigated and remedied?

The consequences of failing to demonstrate due diligence extend beyond regulatory penalties. Without this legal shield, organizations face increased liability in civil claims, increased workers’ compensation costs, and, in severe cases, may face criminal negligence charges.

Labour standards and arbitration cases are setting new precedents on what employers are expected to do to protect workers from harm. A search of “harassment cases” on CanLII netted 58,106 results, while “psychological safety” produced 65,579 results, indicating psychological safety is active in the justice system. As a result of the Bill C-45 amendment to section 217.1 of the Criminal Code, there is more discussion on encouraging police to look beyond OHS and consider cases of gross negligence concerning “reasonable steps to prevent bodily harm.” Many employers do not realize negligence can move past OHS fines to criminal courts, much like what happened in France.

Psychological safety’s inherent complexity makes its due diligence challenging. Unlike many physical hazards with precise engineering controls, psychological hazards often require nuanced approaches involving organizational culture, leadership practices and interpersonal dynamics. Nevertheless, courts have clarified that complexity is not an excuse for inaction.

Due diligence serves as legal protection and an ethical imperative. Those who approach it superficially fail to protect workers and expose their organizations to legal and financial risks when – not if –enforcement actions and claims arise.

The tipping point is here

Protecting workplace psychological health is moving from a nice-to-have to a legal requirement across much of Canada. The trend is clear and accelerating. For now, we await the watershed case that will trigger widespread, aggressive enforcement.

In the meantime, CEOs and boards must ask themselves:

• Do we want to be the organization whose negligence becomes the catalyst for change?
• Do we want to be the brand synonymous with workplace psychological harm?
• Do we want to be the “Westray of PHS in Canada” that sparks regulators to justify sweeping enforcement actions across industries?

The bus has left the station, and Shain called it right: psychological health and safety is an employer’s responsibility to enforce. Those who have not boarded the bus are not merely at risk of being left behind. They are standing in its path and are at financial and legal risk. The momentum of regulatory evolution, compensation claim precedents, and changing workplace expectations create a force that will be challenging for unprepared organizations to withstand.

This evolution allows employers to position themselves as leaders rather than cautionary tales. The legal frameworks exist. But in their efforts to protect and support workers’ psychological health, employers must take care to invest in Plan-Do-Check-Act programming that can be audited rather than random acts of wellness.

The question is no longer whether psychological health and safety benefits employers and employees, but whether employers will implement meaningful protections proactively or reactively. One path leads to competitive advantage while the other leads to becoming the example authorities cite when justifying stricter enforcement for everyone

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