Long-term worker demanded severance pay after receiving notice of business winding down
“If you're trying to mitigate that risk of facing a claim of wrongful dismissal from a long-term employee, then you need to provide severance pay or notice of termination that's appropriate for the circumstances.”
So says Ryan Macklon, an employment lawyer at Vancouver-based Kent Employment Law, after a British Columbia court found that a long-term worker’s wrongful dismissal lawsuit related to her employer’s winding down of the business wasn’t just cause for dismissal – although filing it during the working notice period was a repudiation of her employment and reduced her lengthy notice entitlement.
Agricom International was a company that traded and exported agricultural commodities such as grains and oilseeds. In 1995, the owner hired the worker to be a merchandisor and logistics co-ordinator.
In 2019, Agricom had about seven employees. The business was facing challenges and the owner was thinking about shutting it down, but he decided to continue with a reduced workforce. All the employees were dismissed and the worker was given formal notice that her employment would end in 10 months on Dec. 31.
The worker said she would help wind down the company but she wanted another 14 months’ severance pay in lieu of notice, so the owner decided to keep her as the only other employee. In October, Agricom made a formal written offer of “new employment” for one year from Jan. 1 to Dec. 31, 2020. The worker accepted.
The employment agreement was renewed each year and was adjusted to match Agricom’s fiscal year of June 1 to May 31. On Aug. 16, 2024, they signed an agreement to May 31, 2025.
Winding down of business
On April 8, 2025, the owner told the worker that he intended to retire and he offered her the opportunity to acquire Agricom for one dollar. If she didn’t accept, he would wind down the business.
Six days later, the worker’s legal counsel sent a letter to Agricom stating that she was willing to continue working while the company wound down operations, but she wanted a $200,000 severance payment because the lack of an end date “provided her with no notice in the eyes of the law.”
The owner reiterated his offer to transfer the business to the worker and, if she refused, he was providing her with 13 months’ notice of termination on May 31, 2026. The worker’s counsel responded that the worker was willing to work until then, but she was considering legal action if her claims weren’t addressed.
Agricom didn’t respond and the worker commenced a wrongful dismissal action on May 14, claiming damages for 24 months’ notice. About one month later, the owner gave the worker a letter stating that she had repudiated her employment by her legal actions against the company, and this constituted just cause.
Agricom continued to pay the worker’s salary and benefits until Sept. 19.
Missed opportunity to negotiate
There was a missed opportunity for Agricom to discuss the terms of termination, given the length of the worker’s service and the good working relationship they had, according to Macklon.
“They may have been able to have a discussion amongst themselves about working notice and some kind of severance payment at the end of the 13-month period,” he says. “It was also open to [Agricom’s owner] to retain his own counsel and respond with a counter-proposal - rather than shut it down, they could have explored a little bit further and maybe that wouldn't have led to a lawsuit at all.”
The court noted that there’s no “bright line rule” in BC that an employee launching litigation against their employer – or having their lawyer send a demand letter for their legal entitlements – always amounts to just cause. The worker’s letters were an invitation to negotiate terms of termination and the litigation was only begun after Agricom declined to engage in such negotiations, said the court.
In addition, Agricom shouldn’t have been “shocked” by the letters, given that the owner wanted to wind down the business and the worker was an employee with lengthy service. Agricom didn’t have just cause to terminate the worker and it was “objectively unreasonable” to consider the worker’s choice to use a lawyer to negotiate her legal entitlements as incompatible with continuing the employment relationship, the court said.
The court also found that it was reasonable for the worker to file the wrongful dismissal lawsuit and she indicated a willingness to continue working at Agricom while it was wound down – which also wasn’t incompatible with continuing the employment relationship.
Wrongful dismissal lawsuit was reasonable: court
The worker’s legal action had consequences in terms of repudiation but it wasn’t unreasonable, says Macklon.
“Agricom showed that it wasn't interested in having a conversation about the notice period or severance pay,” he says. “And I think the other consideration was the tone of the letters and the notice of civil claim, which the court really picked up on - the demand letters were business-like about the worker’s entitlements and the notice of civil claim was brief and to the point with nothing inflammatory that would meet the test for just cause, which at the end of the day is up to the employer to prove.”
However, the court held that the worker’s commencement of legal proceedings during the working notice period was a repudiation of her employment contract, pointing to jurisprudence from the BC Court of Appeal establishing that an employee who sues for wrongful dismissal during a working notice period, absent constructive dismissal or prior repudiation by the employer, repudiates the employment agreement.
Both parties agreed that 24 months constituted reasonable notice in the circumstances – the worker was 55 years old with 30 years of service at the time of her termination. The court noted that the company had provided the worker with 13 months’ notice, so she was entitled to damages for wrongful dismissal.
However, the court also found that, due to her repudiation of employment, the worker wasn’t entitled to compensation for the portion of the notice period she didn’t work through. She repudiated her employment one-and-a-half months after she was given the 13-month notice of termination, so 11.5 months should be deducted from the damages - resulting in a compensable notice period of 12.5 months, the court said, adding a further one-month contingency reduction to account for the possibility that the worker might secure alternative employment before the end of the still-active notice period.
Repudiation during working notice
Repudiation is an entirely different legal concept from just cause in the context of working notice of termination, says Macklon.
“During a working notice period, the employee is entitled to come to work and earn wages and the employer is entitled to the services of the employee and expect that they’re going to keep showing up to work and doing their job,” he says. “Here, the court said that the worker did something incompatible with the ongoing employment relationship - suing your employer while you still work for them and claiming a wrongful dismissal while you haven't yet been dismissed, most of the time that's going to be an erosion of the fundamental trust in the employment relationship.”
“Even though the court found that it wasn’t just cause to fire the worker, it was a repudiation because the worker was rejecting the requirement that she keep showing up to work for the next 13 months during the working notice period,” adds Macklon.
The court found that the worker wasn’t entitled to any compensation for bonuses during the notice period, as the evidence was clear that the bonuses were discretionary – she only received a bonus in three of the previous six years.
“The evidence favoured Agricom’s position that the bonus was discretionary - a bonus in one year doesn’t guarantee a bonus in any subsequent years - that's fairly common language nowadays in employment contracts,” says Macklon. “The bonus wasn’t an integral part of the worker’s compensation - it's not something the worker could count on because it wasn’t a regular, every-year occurrence.”
Reasonable notice entitlements
Agricom was ordered to pay the worker wrongful dismissal damages equalling seven months’ salary, benefits, and cellphone expense reimbursements – the company had already paid four-and-a-half months to September 2025 – totalling $47,254.70.
If there had been an employment contract with explicit termination language, it could have avoided the lawsuit, says Macklon.
“A contract that sets out what the employee is entitled to upon termination of employment is protection for the employer and a way to mitigate the risk of a claim for 24 months of severance, like in this case,” he says. “That's probably one of the biggest risks to an employer dismissing an employee, so a solid termination clause that sets out the employee’s entitlements provides security and clarity to both sides - assuming that it at least complies with the statutory minimums under employment standards, it's unlikely that it's going to leave open a question of whether there are further entitlements on the table.”
