Decision highlights nuances of just cause and working notice when employees sue
A recent Supreme Court of British Columbia decision has brought renewed attention to the legal risks surrounding just cause, working notice, and the timing of employment litigation.
The case saw a long-serving employee of a small agricultural trading company landing in legal limbo after launching a wrongful dismissal lawsuit while still on working notice.
The employer, having downsized to just two staff, had offered her 13 months’ notice of termination and even floated the idea of selling her the business for a nominal fee. Instead, the employee’s legal counsel sent demand letters and, before her employment ended, filed a claim for damages.
According to Jenson Leung of KSW Lawyers in Vancouver, the main legal lesson from this case is for employees who jump the gun and sue too early: “In a worst case scenario, it could actually lead to a situation where the employee could be entitled to no damages, if they're seen to have completely repudiated the relationship on their own by starting a lawsuit.”
Working notice, legal claims and repudiation
The court’s decision details a series of communications between the parties: after being offered the business for $1 at an informal sit-down meeting, the employee’s lawyer demanded a $200,000 severance payout.
When the employer responded only with working notice, the employee filed suit.
The court ultimately found that while the employee was entitled to damages, her decision to sue before the end of the notice period constituted a repudiation of the employment contract, reducing her award – as Leung puts it, “She essentially pulled the trigger too early in starting the lawsuit.”
The court’s decision also highlights the employer’s response: after receiving the lawsuit, the company formally accepted the employee’s repudiation and ended her employment immediately, but continued to pay her salary and benefits for several months on an ex-gratia basis.
This strategic move was a key factor in the outcome, Leung says, noting that careful strategy is crucial in preventing “messy” legal interventions.
“The key takeaway from this case is that if an employee who's still employed starts a lawsuit, that is very much the time to get legal advice if or to get legal counsel involved,” Leung advises.
For employers, he explains, this is a critical moment: whether to accept the repudiation and end the relationship, or attempt to repair it. How employer reacts can have significant legal and financial consequences, he warns; “In this case, the company smartly took the position that by suing them, the employee has effectively cut off the relationship between the parties.”
Working notice and contract changes
The court also detailed the parties’ history of annual fixed-term contracts, which had essentially been treated as indefinite employment due to regular renewal. The employer’s attempt to provide working notice, rather than pay in lieu, became a central issue in the litigation.
“This case is a good reminder of the fact that issues like working notice or putting in new or different terms for employment can seem simple at first glance … it's not necessarily, from a legal perspective,” Leung says.
“That's why it's important to make sure that they're getting proper advice along the way in terms of implementing any changes.”
In this case, the court’s finding of contract repudiation by the employee did not eliminate the right to damages entirely, because she had already been given working notice, albeit an insufficient amount.
For Leung, this means that even apparently straightforward terminations or contract changes can quickly become legally complex, and both timing and process are critical.
“Implementing new terms or a new contract isn't as straightforward as business owners can assume sometimes,” Leung says.
“If an employee is starting a lawsuit too early, that can lead to, in this case, a significant reduction of their damages.”
