What rights do I have if, as a 100-per-cent commission-paid sales rep, I have my potential earnings vastly reduced due to the loss of a product line the company previously offered?
My company has lost the rights (as of Jan 1) to sell something that has accounted for 30-40 per cent of most reps’ sales – and therefore incomes. No replacement product will be made available.
It is possible that they will let some reps go, to allow those who remain to sell more of the other product lines, but it is possible they will play “chicken” with us and wait it out, hoping some reps will leave on their own accord due to reduced income potential, and not have to be paid severance.
All reps have eight or more years of service, and several have been there for more than 20 years.
In a recent Ontario case where the employee complained about changes to his job, the court stated that an employer’s financial circumstances do not excuse a breach of contract. Therefore, the loss of about 30-40 per cent of your compensation, whether or not indeliberate, can amount to a constructive dismissal. If so, you would have the right to leave and pursue damages for severance. However, in law, just like in life, there is always a “but.”
Some court cases have held that an employer’s financial circumstances are relevant and on that basis, have declined to award damages to employees who claimed their compensation was reduced without their consent. Judges are human and they come to court with their own predispositions. Some of them even worked previously as employment lawyers on behalf of companies. Some are just having a bad day. Their sympathies often cannot be predicted and a clear case to one judge can be seen very differently by another.
More importantly, you need a good exit strategy. It is a mistake to just pack up and leave immediately, whether there is a constructive dismissal here or not, because if you stay, your company may decided to just fire you anyway, in which case they will have to offer you severance, based on your pre-reduction or average compensation prior to the loss of the product line.
As well, unless you stay on and see what happens, your early departure may be viewed as premature by the courts. Your employer will certainly argue that your income potential will somehow be the same, and without being there to witness how the changes affect you, you have no way to dispute their arguments.
You could also consider raising the issue of your departure, in exchange for severance, with your employer. But don’t go to this type of meeting empty handed. Speak to an employment lawyer first.
Daniel Lublin is a nationally recognized workplace law expert and a partner at Whitten & Lublin. Follow him on Twitter: @danlublin
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