In a recent BC Supreme Court decision, a long-term employee’s reasonable notice period was significantly reduced because she filed a wrongful dismissal action during the working notice period. Her lawsuit effectively repudiated the employment relationship, ending the employer’s obligations toward her under the employment contract.

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Background

Ms. Adrain worked for Agricom - a trader and exporter of agricultural commodities – in an office administrator role alongside its founder, Mr. Thorpe, for 30 years. On April 8, 2025, Mr. Thorpe advised Ms. Adrain that he was planning to wind down the company and offered that Ms. Adrain could either take over the business or eventually cease employment.

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On April 14, 2025, Ms. Adrain had a lawyer send a letter on her behalf to Agricom stating that she would continue to work until the company wound down but demanded $200,000.00 in severance payment to reflect 24 months reasonable notice. In response, on April 29, 2025, Agricom provided Ms. Adrain with 13 months working notice of termination. Ms. Adrain responded through her lawyer that 13 months notice was insufficient. After Agricom did not respond to this letter, Ms. Adrain filed a wrongful dismissal action on May 14, 2025. Agricom filed its response to the action on June 17, 2025.

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Parties Positions

Ms. Adrain argued that she was wrongfully dismissed by Agricom, as 13 months working notice was insufficient, and there was no just cause to terminate her. She argued that 24 months was reasonable notice based on her age, length of service, position and skill set and as such, she was entitled to her salary, bonuses, and cell phone expenses for the 24-month period.

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Agricom argued that Ms. Adrain’s demand letters and subsequent lawsuit constituted just cause for her termination. In the alternative, Agricom argued that Ms. Adrain repudiated her employment contract by filing the lawsuit, and that they accepted this repudiation on June 17, 2025, by filing their response. As such, Ms. Adrain would be entitled to damages reflecting reasonable notice of termination, minus pay for the months she would have worked if she hadn’t repudiated her employment contract.

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Issues

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1. Did the demand letters and lawsuit commenced by Ms. Adrain constitute just cause for her dismissal?
2. Did Ms. Adrain repudiate her employment contract by commencing the lawsuit?
3. How should Ms. Adrain’s reasonable notice period be calculated?

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The demand letters and lawsuit did not constitute just cause for dismissal

The court acknowledged that there are times when an employee’s legal action against their employer will render the employment relationship incompatible, thus constituting just cause for dismissal. However, the determination depends on the circumstances of each case: para. 48. In Ms. Adrain’s case, the demand letters and lawsuit did not amount to just cause for dismissal. The court considered that it was neither shocking nor unreasonable for Ms. Adrain to communicate with Agricom through her lawyer. Mr. Thorpe had just given her some important decisions to make regarding her future with the company. The letters, while direct, were not overly aggressive, but rather an invitation to negotiate: para. 54. The court also considered Ms. Adrain’s many years of positive contribution to the company, the power imbalance between her and Mr. Thorpe as her boss, and the ambiguous nature of Mr. Thorpe’s original explanation of how the company was going to be wound down. Further, Ms. Adrain worked from home, and she didn’t often have the opportunity to communicate with Mr. Thorpe in person.

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Similarly, the lawsuit itself was not scandalous or inflammatory, and was only commenced after Agricom failed to respond to Ms. Adrain’s final letter. The lawsuit did not render the employment relationship incompatible, as it was in very early stages. Ms. Adrain remained willing to work at Agricom while the company wound down and would not have been in close quarters with Mr. Thorpe as she worked from home: paras. 55-56.

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Ms. Adrain repudiated her employment contract when she filed the lawsuit

Notwithstanding the above, the court still found that Ms. Adrain repudiated her employment contract by commencing the wrongful dismissal action during her working notice. The repudiation was accepted by Agricom on June 17, 2025, when it filed the response to the action: para. 64.

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Ms. Adrain’s reasonable notice period was significantly reduced to reflect her repudiation of the employment contract

Both parties and the court agreed that 24 months was a reasonable notice period and that the 13 months notice provided by Agricom was insufficient. However, the court held that Ms. Adrain’s award should be adjusted to reflect her repudiation of the employment contract, as Agricom was not obligated to compensate her once she had ended the employment relationship. Ms. Adrain repudiated the employment contract 1.5 months into the 13 months of working notice Agricom had given her. As such, the court deducted the remaining 11.5 months of working notice that Ms. Adrain would have worked through, had she not repudiated her employment, leaving her entitlements at only 12.5 months reasonable notice (24 months minus 11.5 months).

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The trial of this matter occurred only 4 months after Ms. Adrain was given formal working notice of the termination of her employment. At the time of trial, Ms. Adrain had not yet secured alternate employment. However, the court determined that Ms. Adrain’s reasonable notice period should be deducted by an additional month, on the basis that it was likely Ms. Adrain might find alternative employment within the notice period.

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Ms. Adrain’s notice period was further reduced, as Agricom had continued to pay her for a period of 4.5 months after termination. It is also noteworthy that Ms. Adrain was not entitled to damages in respect of bonuses owed by Agricom throughout the notice period. This was because whether she received a bonus each year was entirely up to the discretion of Agricom. The bonuses did not make up an integral part of her compensation, as they were not issued every year: para. 88.

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After all the deductions, Ms. Adrain’s reasonable notice period was 7 months with an award of $47,254.70 reflecting her pay during that period.

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Takeaways

If an employee commences formal legal negotiations or a lawsuit against their employer, these actions will not always constitute just cause for dismissal. It will depend on whether the legal actions render the employment relationship incompatible in the circumstances.

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However, if an employee commences a wrongful dismissal action against their employer during their working notice, the employee will generally be considered to have repudiated the employment contract, effectively ending the employment relationship and ending any obligation on the employer to pay them further. This case serves as a caution to employees who have been given working notice, and are considering legal action, as commencing proceedings may significantly reduce any potential award granted by the court.

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However, employers should also be aware that employees who repudiate the employment relationship during working notice may still be entitled to damages if the working notice period provided was insufficient.

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