In the vast majority of cases constructive dismissals arise when employers unilaterally reduce an employee’s compensation or amend another significant and fundamental term of employment. However, in Penteliuk v. CIBC World Markets Inc. (2014) ONSC 2105, the Ontario Superior Court recently had to determine if the failure to provide an employee with a promised promotion and salary increase constituted a constructive dismissal. While ultimately concluding there was no constructive dismissal in the case, the court held that an employee could ground a claim for constructive dismissal if his/her employer failed to provide him/her with a promised promotion and salary increase.
Mr. Penteliuk held the title of Managing Director at CIBC World Markets. In the winter of 2004, Mr. Penteliuk had been offered a very lucrative job at another private brokerage, GMB. When CIBC World Markets learned of the offer it persuaded Mr. Penteliuk not to take the position at GMB in return for a promotion to Team Leader with a significant salary increase. Mr. Penteliuk alleges that CIBC world Markets constructively dismissed him when it failed to promote him and pay him the agreed salary increase by December. At that time, Mr. Penteliuk resigned to take another position at another investment firm. CIBC World Markets defended itself on the basis that there was no fixed date for the promotion to take place and it was taking all reasonable steps to implement the promotion. Further, CIBC World Markets alleged there was never any guarantee on Mr. Penteliuk’s compensation.
The Court commenced its analysis by observing that most cases of constructive dismissal are caused by unilateral reductions in compensation or other amendments to fundamental terms of employment. However, the court then held a failure to promote an employee could result in a constructive dismissal:
[…] failure to promote an employee and to pay promised compensation within agreed upon or a reasonable time frame, where the employee has relied on the promise of a promotion and increased compensation to his detriment, can amount to the employee’s constructive dismissal”.
The Court then observed that CIBC World Markets had conceded that it had made a promise to promote Mr. Penteliuk. However, the court concluded that CIBC was taking the necessary steps to implement the promotion within a reasonable time and this would be the end of 2004 and start of 2005. Given the significance of the promotion, the court held the time involved to implement it was not unreasonable.
The Court also held that CIBC World Markets had met its obligations to increase Mr. Penteliuk’s compensation.
Consequently, the Court dismissed Mr. Penteliuk’s claim for constructive dismissal and held that he had voluntarily resigned in order to take employment with another company. In doing so, the Court made the following telling comments with respect to why it had dismissed his claim:
While the timing of his promotion was irksome to Mr. Penteliuk who was impatient to assume his new role, it did not amount to a breach of the fundamental term of his contract that he be appointed to the position of FIG Team Leader within a reasonable time. The timing of his promotion was likely longer than either Mr. Penteliuk or World Markets had hoped that it would be; however, it was reasonable in the circumstances of this case and in keeping with World Markets’ agreement with Mr. Penteliuk.
Mr. Penteliuk was ambitious and impatient. He had only been in the position of Managing Director for barely 8 months before he was contemplating resigning if he did not obtain the FIG Team Leader position. Although regularly assured that he would have the FIG Team Leader position, he did not want to wait any longer. Rather, he was determined to leave and take up the unique opportunity with Genuity. He was entitled to do so. He is not entitled, however, to require World Markets to pay for his business decision, which was not prompted by any breach by World Market.
Consequently, if employers make promises of promotions and/or salary increases by specific dates, the should follow through with such promises or they may run the risk of a claim for constructive dismissal.
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