Company changed pay scale and moved sales rep to less lucrative sales territory
An advertising sales company was entitled to change an employee’s compensation but not her sales territory under her employment contract, the British Columbia Supreme Court has ruled.
The employee in question was hired as an advertising sales representative by Vancouver-based Stockgroup Media, an Internet advertising firm. Upon starting her employment, the employee signed an employment agreement that allowed Stockgroup to change her compensation structure and incentive plans at any time in response to changes in the business. In her first year, the employee fell short of her sales targets and she was transferred to an administrative assistant position. She still did sales part-time along with assisting other sales representatives. When her supervisor went on maternity leave in 2004, she took over the sales accounts and her sales and commissions, which included the lucrative territory of Toronto and other parts of Ontario, increased.
In May 2005, Stockgroup proposed a new compensation plan for the employee, which she didn’t like. The company made some changes and she signed it, despite still having some reservations. The employee continued to raise her concerns about her compensation over the next eight months.
In February 2006, Stockgroup changed around its sales territories which resulted in the employee losing Ontario as her sales territory. She felt this would significantly hurt her commissions, despite alterations to her compensation which took these changes into account.
On April 24, 2006, Stockgroup, concerned with the employee’s attitude and performance, discussed a performance improvement plan with her. She received written notice that she was being put on probation and she had 48 hours to either accept her probation or resign. The employee saw her doctor for stress two days later and he gave her a note saying she needed one month of medical leave.
However, she didn’t return to work when her leave ended. Instead, she filed a suit claiming the change in commission structure in May 2005 was constructive dismissal and the change in her territory in February 2006 aggravated the situation, necessitating bad-faith damages.
The court found Stockgroup acted fairly when it changed the compensation structure and incentive plan in 2005. The employment contract stipulated this entitlement and the company further changed it to accommodate some of the employee's concerns.
However, the employment contract didn’t include a right to unilaterally change her sales territory, which Stockgroup did in February 2006. The court considered this the introduction of a new term to the employment contract, which the employee did not agree to. Since the probation was a response to the employee’s attitude that was a result of the territory change, it also constituted constructive dismissal.
Though the employee didn’t initially treat the territory realignment and probation as a repudiation of her employment contract, she could have and eventually did, the court said.
“Although (the employee) did not elect to treat the realignment as a repudiation of her contract of employment, she was justified in continuing to advance her concerns,” the court said. “The imposition of probation was not warranted. She accepted (Stockgroup’s) repudiation of her contract of employment when she failed to return to work at the expiry of her leave.”
The court ordered Stockgroup to pay the employee four weeks’ wages, or $11,000, for her service of three and one-half years. See Churchill v. Stockgroup Media Inc., 2008 CarswellBC 930 (B.C. S.C.).
The employee in question was hired as an advertising sales representative by Vancouver-based Stockgroup Media, an Internet advertising firm. Upon starting her employment, the employee signed an employment agreement that allowed Stockgroup to change her compensation structure and incentive plans at any time in response to changes in the business. In her first year, the employee fell short of her sales targets and she was transferred to an administrative assistant position. She still did sales part-time along with assisting other sales representatives. When her supervisor went on maternity leave in 2004, she took over the sales accounts and her sales and commissions, which included the lucrative territory of Toronto and other parts of Ontario, increased.
In May 2005, Stockgroup proposed a new compensation plan for the employee, which she didn’t like. The company made some changes and she signed it, despite still having some reservations. The employee continued to raise her concerns about her compensation over the next eight months.
In February 2006, Stockgroup changed around its sales territories which resulted in the employee losing Ontario as her sales territory. She felt this would significantly hurt her commissions, despite alterations to her compensation which took these changes into account.
On April 24, 2006, Stockgroup, concerned with the employee’s attitude and performance, discussed a performance improvement plan with her. She received written notice that she was being put on probation and she had 48 hours to either accept her probation or resign. The employee saw her doctor for stress two days later and he gave her a note saying she needed one month of medical leave.
However, she didn’t return to work when her leave ended. Instead, she filed a suit claiming the change in commission structure in May 2005 was constructive dismissal and the change in her territory in February 2006 aggravated the situation, necessitating bad-faith damages.
The court found Stockgroup acted fairly when it changed the compensation structure and incentive plan in 2005. The employment contract stipulated this entitlement and the company further changed it to accommodate some of the employee's concerns.
However, the employment contract didn’t include a right to unilaterally change her sales territory, which Stockgroup did in February 2006. The court considered this the introduction of a new term to the employment contract, which the employee did not agree to. Since the probation was a response to the employee’s attitude that was a result of the territory change, it also constituted constructive dismissal.
Though the employee didn’t initially treat the territory realignment and probation as a repudiation of her employment contract, she could have and eventually did, the court said.
“Although (the employee) did not elect to treat the realignment as a repudiation of her contract of employment, she was justified in continuing to advance her concerns,” the court said. “The imposition of probation was not warranted. She accepted (Stockgroup’s) repudiation of her contract of employment when she failed to return to work at the expiry of her leave.”
The court ordered Stockgroup to pay the employee four weeks’ wages, or $11,000, for her service of three and one-half years. See Churchill v. Stockgroup Media Inc., 2008 CarswellBC 930 (B.C. S.C.).
