In Adrain v Agricom International Inc. [Adrain], the Supreme Court of British Columbia (“BCSC”) considered whether an employee’s commencement of a wrongful dismissal lawsuit while still employed justified immediate termination for cause. The BCSC held that the employer did not have just cause to dismiss the employee; however, because the employee sued during a valid working notice period, she repudiated the employment contract, reducing the damages ultimately awarded.

Background

The employee worked for the employer for approximately 30 years. By 2019, after significant downsizing, the company continued operating with only the employee and the employer’s president.

In 2025, the president advised the employee that he was considering retirement. He offered to transfer the business to her for one dollar or, if she declined, to wind down the company. The employee declined the purchase option and, through counsel, demanded payment of $200,000, representing 24 months of notice.

The employer later provided the employee with approximately 13 months of working notice. The employee took the position that this was inadequate given her lengthy service, age, and role. Her lawyer sent a letter warning of legal action if her entitlements were not addressed.

When no response was received, the employee filed a wrongful dismissal claim during the working notice period. The employer then ended her employment immediately, alleging that her letters and lawsuit amounted to repudiation of the employment contract and just cause for dismissal.

The Decision

No Just Cause for Dismissal

The BCSC rejected the employer’s just cause argument and found that the letters and lawsuit were not, in the circumstances, fundamentally incompatible with continued employment.

The BCSC emphasized the employee’s 30 years of service, clean disciplinary record, non-managerial role, and limited in-person interaction with the president, as she worked primarily from home. The BCSC also noted the power imbalance between the parties and found that the letters, while direct, were not inflammatory.

Suing During Working Notice Constitutes Repudiation

However, the BCSC reached a different conclusion on repudiation. Relying on binding British Columbia appellate authority, the BCSC held that an employee who commences a wrongful dismissal action during a working notice period repudiates the employment contract, unless the employer has first constructively dismissed the employee or otherwise repudiated the contract. That exception did not apply.

Reasonable Notice and Damages

Interestingly, the employee’s repudiation did not eliminate her accrued right to damages arising from the employer’s inadequate notice. The BCSC found that 24 months was the appropriate reasonable notice, and that because the employer had provided only 13 months, the employee was wrongfully dismissed. The BCSC reduced her recovery to account for the amount of working notice she did not work after repudiating the contract. After deductions, set-offs, and a one-month contingency reduction, the employee was awarded $47,254.70, plus interest.

The BCSC declined to award bonus damages, finding the bonus was truly discretionary, but allowed the employee’s claim for cell phone reimbursement.

Key Takeaways

Adrain offers several important reminders for employers considering working notice, just cause, and litigation risk:

• Just Cause Remains Contextual: There is no automatic rule that an employee’s demand letter or lawsuit against an employer will amount to just cause for dismissal. Courts will assess the full context, including the employee’s role, history, the tone of the communications, the nature of the allegations, and whether continued employment was realistically incompatible.
• Working Notice May Limit Damages Where an Employee Repudiates the Employment Relationship: Where an employee commences a wrongful dismissal action during a valid working notice period, employers may have grounds to argue that the employee has repudiated the employment contract. Such repudiation may reduce the damages ultimately payable.
• Repudiation Does Not Necessarily Eliminate Existing Entitlements: Even where an employee repudiates the employment contract, that repudiation may not extinguish rights that have already accrued. In Adrain, the employee’s repudiation reduced her damages but did not entirely eliminate her entitlement to compensation arising from the employer’s failure to provide reasonable notice.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.