A recent court decision from British Columbia confirms that an employer does not automatically have just cause to terminate employment if an employee sends a demand letter or commences litigation during their working notice period. However, doing so may still have significant consequences for the employee’s entitlement to damages.
Facts
In Adrain v Agricom International Inc., 2025 BCSC 1842, the employee had almost 30 years’ service and reported directly to the company’s president and founder. By 2025, challenging industry conditions resulted in the employee and the president being the only employees. In April 2025, the president told the employee he intended to retire and offered to sell her the business for $1. Otherwise, the business would be wound down and closed.
Subsequently, the employee’s lawyer sent a letter demanding $200,000, which represented 24 months’ pay in lieu of reasonable notice of termination. The president responded by reiterating the offer to transfer the business and providing 13 months of working notice, with termination effective May 31, 2026. A second demand letter followed. When no response was received, the employee commenced a lawsuit for wrongful dismissal. Approximately one month later, the company terminated her employment for just cause, arguing that she had repudiated her employment contract by suing the company while she was still employed. The employer nevertheless continued paying her salary and benefits for a further 4.5 months on a “without prejudice and ex gratia” basis.
At trial, the Court considered three main issues:
- Whether the employer had just cause to terminate the employee’s employment for just cause;
- Whether the employee repudiated her employment contract; and
- Whether the employee was entitled to damages and, if so, how much.
Decision
The Court held that the employer did not have just cause to terminate the employee’s employment. While prior BC cases have found that suing one’s employer may justify termination for just cause, there is no “bright line” rule. Each case turns on its facts. Here, the Court held it was “wholly understandable” for the employee to consult counsel, send demand letters, and then file a wrongful dismissal action when the company failed to show any willingness to discuss the employee’s demands for compensation.
However, relying on BC Court of Appeal authority, the Court also held that by suing her employer during the working notice period, the employee had repudiated her employment contract. While the employee was entitled to damages because the employer had not provided her with sufficient notice, her damages were reduced to reflect the notice period which she would have worked absent the repudiation.
Both parties agreed that based on her age, long service and position, the employee would have been entitled to 24 months of notice. However, given her repudiation of the contract only 1.5 months into the 13-month working notice period, she was not entitled to damages for the remaining 11.5 months of that period. This reduced her notice period to 12.5 months. The Court further reduced her damages by deducting the 4.5-month period post-termination during which she continued to receive salary and benefits. A further one-month reduction to the notice period was applied to account for the possibility that she would find new employment during the notice period, which had not yet expired before the trial took place. In total, the Court awarded her damages of $47,254.70 for lost salary and benefits based on a 7-month notice period.
Takeaways
Adrain provides an important lesson that demand letters and lawsuits do not automatically give the employer just cause for termination. Employees are generally entitled to assert their legal rights. However, litigation during a working notice period may amount to repudiation of the employment contract and significantly reduce an employee’s damages.