Repudiating contract by suing during working notice period

Exclusive to Canadian HR Reporter from Rudner Law.

Can your company be sued by a current employee, while the employment relationship continues? Is your company expected to continue the employment relationship at the same time as defending the lawsuit?

In the recent decision from British Columbia of Adrain v. Agricom International Inc., the court found that an employee who sued for wrongful dismissal during her working notice period had repudiated the employment contract, resulting in a significant reduction to her damages.

The outcome is somewhat unusual: the court found that Larraine Marie Adrain was entitled to 24 months’ reasonable notice, significantly more than the 13 months of working notice that she was provided. However, the court found that by suing her employer during the working notice, she had repudiated the contract, and effectively forfeited a large chunk of her notice entitlement.

This case is important because it suggests that the employee’s timing in claiming wrongful dismissal may impact their legal entitlements, and that employers cannot be expected to continue the employment relationship once the employee sues.

However, employers should proceed with caution, as it is unclear whether the Adrain decision will be followed more broadly, especially outside of British Columbia.

Facts in Adrain case

Adrain had worked for Agricom International for 30 years before being dismissed on April 29, 2025. Agricom provided her with 13 months’ working notice of termination, and she was expected to continue working for the duration of that period.

Leading up to and following her dismissal, Adrain’s legal counsel sent two demand letters to Agricom - one on April 14, 2025 (while dismissal discussions were ongoing), and one on May 5, 2025. On May 14, 2025, she commenced a wrongful dismissal action against her employer.

In response, Agricom issued a letter on June 17, 2025, titled “Repudiation of Employment,” in which it alleged that by sending demand letters and suing for wrongful dismissal, Adrain had repudiated her employment contract and had given the employer just cause to terminate her employment immediately without notice.

The court rejected the just cause argument outright. It held that sending demand letters and filing a lawsuit did not amount to cause for dismissal.

However, the court went on to find that the act of suing during the working notice period did amount to a repudiation of the employment contract, one that Agricom was entitled to accept.

Court’s reasoning for entitlements

The court agreed that the original 13-month notice period provided by Agricom was insufficient, and found that she was entitled to a 24-month notice period. However, it found that Adrain had effectively cut the employment relationship short by commencing litigation during the working notice period.

Since Agricom accepted that repudiation on June 17, 2025, Adrain had worked only 1.5 months of the 13-month notice period. The court framed the result as follows:

“This means that Ms. Adrain effectively failed to work through 11.5 months of her actual 13-month notice period, and she is not entitled to be compensated in respect thereof. Accordingly, this 11.5-month period will be deducted from her reasonable notice period of 24 months.”

In the end, Adrain’s entitlement was calculated as 12.5 months (i.e. 24 months minus 11.5 months), rather than the full 24 months that would normally be awarded.

Bizarre result, and possibly controversial

The decision in Adrain is striking, because it appears to penalize the employee for seeking to enforce her legal rights.

The decision also appears to conflict with guidance from the Supreme Court of Canada. In Potter v. New Brunswick Legal Aid Services Commission, the court cautioned against assuming that legal action automatically ends the employment relationship:

“It is not evident that by commencing legal action the employee should be held to have resigned by operation of law.”

In other words, suing an employer does not necessarily mean the employee has repudiated the contract or quit, a principle that seems to stand at odds with the conclusion in Adrain. Employers should therefore be careful not to over-rely on Adrain, particularly outside British Columbia, and should assess each situation on its own facts.

Takeaways on Adrain case

The decision in Adrain v. Agricom highlights the need for careful legal strategy during the notice period. The decision offers a potential argument for employers to reduce their liability where an employee sues mid-notice.

However, caution is warranted. While the court accepted Agricom’s repudiation argument in this case, it is not clear whether courts in other provinces would reach the same conclusion.

As always, employers considering termination, especially involving long-service employees, should consult legal counsel before acting.

Alex Minkin is an associate lawyer at Rudner Law in Toronto. He can be reached at (416) 864-8500 or [email protected].