Canada: Delayed Promotion Not Constructive Dismissal

In the recent case of Penteliuk v CIBC World Markets Inc, the Ontario Superior Court held that an employee whose promised promotion was taking longer than expected was not constructively dismissed.

The Plaintiff was employed as a Managing Director at a large financial institution. In February of 2004, the Plaintiff turned down a lucrative employment offer from a competing employer on the basis that he would be promoted. In December of 2004, the Plaintiff left his position with the Defendant and accepted a position with a competing employer. The Plaintiff alleged that the Defendant unreasonably delayed in promoting him and that the compensation paid to him was less than the agreed upon compensation. The Defendant did not dispute that it agreed to promote the Plaintiff. Instead, the Defendant disputed that it had agreed upon a fixed date for the Plaintiff's promotion.
According to the Court, it is possible for an employee to be constructively dismissed when a promised promotion or rise in compensation does not occur within a reasonable time frame. In order to determine whether an employee was constructively dismissed on these grounds, the Court looked at the nature of the relationship and communications between the parties in some detail.
Upon reviewing the evidence, the Court held that the Defendant did not agree to a fixed date for the promotion.

The Court found that the negotiations between the Plaintiff and the Defendant did establish that the Plaintiff was entitled to an expectation that he would be promoted within a reasonable period of time. However, at all times the Defendant urged the Plaintiff to have patience and took significant steps to implement his promotion, including giving him the promised significant increase in his compensation, and effectively announcing his promotion to the most senior levels of management, Human Resources, and the incumbent.

The Court found that the Plaintiff had not raised an objection about the timing of the promotion until December of 2004, at the same time he tendered his letter of resignation. The general practice of the Defendant was to promote employees at the end of the calendar year or start of the next calendar year. The court held that it was not prejudicial for the Plaintiff to wait until that period before receiving his promotion.

In the end, the court held that the Plaintiff was determined to leave and take up a unique opportunity with another employer which he was entitled to do. In other words, the true intention of the Plaintiff was to resign for another opportunity, not due to a constructive dismissal. The Plaintiff was not entitled to compensation for constructive dismissal where, as here, there was no contractual breach by the Defendant.

This case demonstrates that expressions of an intention to promote an employee could be considered to create a reasonable expectation of promotion. However, even where such an expectation is legitimately created, the business interests of the employer can still be determinative of when and how the promotion occurs. Perhaps more importantly, when an employee is alleging constructive dismissal, it is relevant to consider the true motivation behind an employee's resignation. If constructive dismissal is being alleged simply to gain a payout when an employee intends to leave anyway for another opportunity, this will undermine the employee's allegation they were constructively dismissed.

Norton Rose Fulbright Canada LLP

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