When an industry executive accepted a demotion, he effectively lost the ability to allege wrongful dismissal, a court in British Columbia ruled in throwing out a case against Investors Group Financial Services Inc. (IG).
According to a decision of the Supreme Court of B.C., in May 2018, as part of a firm-wide corporate restructuring, a regional director at IG, Jeffrey Michael Smith, had his position eliminated without notice. At the time, the firm offered to have him return to his previous job as a division director, which he accepted.
“Mr. Smith was taken by surprise and disappointed, but ultimately assumed his previous role as [division director],” the court noted — but four months after that he went on a medical leave, and subsequently went on long-term disability until February 2020, when he took a new job with TD Wealth.
In late 2018 though, he filed a claim against IG alleging breach of contract, and seeking damages for wrongful dismissal, along with aggravated and punitive damages.
The key question for the court was whether Smith was constructively dismissed or accepted returning to his old job, the court said.
“Mr. Smith’s position is that IG unilaterally and materially changed the term of the [regional director] agreement by removing him as [regional director] and by offering him the opportunity to return to his former position of [division director],” the court said.
However, the court found that the job change didn’t amount to constructive dismissal, noting that employers “are entitled to restructure their affairs from time to time and change some of the job responsibilities of an employee within that operation without such a change constituting a repudiation of the employee’s contract.”
In this case, it found that although Smith’s job title and position changed, “the evidence he led on behalf of his case is insufficient to establish that there were material changes to his contract,” the court said.
And, even if there had been a material change to the contract, a claim for constructive dismissal must fail if the employee accepts the change, the court noted.
“[A] constructive dismissal must be a ‘unilateral’ change to the employment contract, and it cannot be said that a change is unilateral if both sides consented to it,” the decision said.
And, by accepting the division director role, Smith consented to the job change, the court found.
“Ultimately, I do not need to look any further than Mr. Smith’s own evidence in direct to conclude that he acquiesced to the change to the parties’ working relationship,” said the judge presiding over the case. “While his evidence also confirms that he has had a change of heart, it is too late for that, and his change of heart is undermined by his conduct in any event.”
The court dismissed the claim.