Sales executive’s loss of authority was constructive dismissal: court

Vice-president's responsibilities were gradually reduced as company reorganized

A senior employee lost enough clout in a reorganization that he was a victim of constructive dismissal, a New Brunswick court has ruled.

Jean-Louis Drapeau, 46, was employed with Spielo Manufacturing Incorporated of Dieppe, N.B., for six years. Drapeau sold gaming terminals, software, systems and technology to businesses in Canada and Europe.

Drapeau was an important employee for the company, making a significant contribution by growing his sales every year. His sales grew from $16 million in 1996 to $55 million in 2001 and he worked hard to keep up with the company’s corporate values. In 1998 he was appointed to the position of vice-president of sales for Canada.

In May 2000, Spielo began a process of reorganization, which was explained to employees in a document on Oct. 6, 2000. Drapeau continued to work on major sales for the company in both the Canadian and European markets. However, in October and November 2001, Drapeau’s authority to sign documents on Spielo’s behalf was removed. He was informed of this change by a supervisor’s administrative assistant. His authority over other employees was also reduced and his status within the company suffered. In early November, he was specifically told by the supervisor not to attend a planning meeting with a major client.

Drapeau resigned on Nov. 9, 2001, and claimed the reductions in his role with Spielo forced him to resign his position and constituted constructive dismissal. The court found the changes in October and November 2001, which diminished his authority within the company and the duties he’d been performing well, were significant changes to his employment which gave him little choice but to resign.

“Those changes deprived him of the authority and the support necessary to allow him to continue to make a real contribution to Spielo,” the court said. “Although he was still called a vice-president, in effect at that time those changes had the effect of demoting and reassigning him to a junior role within only one division of Spielo.”

The court found the changes were a fundamental breach of Drapeau’s employment contract without his consent and as a result he was constructively dismissed. It awarded Drapeau six months’ pay in lieu of notice including commissions he would have earned in a six-month period.

“The cumulative effect of the conduct of Spielo was such that a reasonable person in the position of Mr. Drapeau should not be expected to persevere in that employment,” the court said. See Drapeau v. Speilo Manufacturing Inc., 2007 CarswellNB 126 (N.B. Q.B.).

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