The truncate parameter only works when the label rectangle is too small for it's containing text. This is easily demonstrated in Win32::GUI::XMLBuilder: -

<GUI>
    <Window name='W1'
        dim='100, 100, 200, 80'
        title='truncate test'
    >
        <Label
            text='c:\some\path\notreal.txt'
            dim='20, $self->{W1}->Height-70, 70, 20'
            truncate="path"
        />
    </Window>
</GUI>
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Using a -truncate of 'path' preserves as much as possible of the text after the last backslash. As an alternative solution you might use the File::Basename module: -

use File::Basename;
use strict;
use warnings;

print dirname('c:\some\path\notreal.txt');
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