In Babcock v Thuro Inc, 2026 ABKB 615, the Alberta Court of King’s Bench awarded a long-service employee 20 months of reasonable notice (severance) after finding that approximately 13 months of working notice was insufficient.
The employee was 62 when notice was given, had approximately 24 years of service, and worked primarily as a vacuum truck operator in the employer’s sewer and water maintenance business. Although he was not a manager, the Court found that his role involved significant operational experience, including training, supervision of helpers, inventory and maintenance responsibilities. His age, lengthy service, specialized experience, limited comparable employment prospects, and the disruption caused by the COVID-19 labour market all supported an extended notice period.
The case is particularly interesting because the employee became disabled during the working notice period. He stopped working about seven months after notice was given, ultimately qualified for long-term disability benefits, and remained on LTD when his employment formally ended.
When Does the Wrongful Dismissal Occur?
The most significant aspect of the decision concerns the timing of the breach.
The employee argued that the wrongful dismissal occurred when the employer first gave insufficient notice. The Court disagreed.
The Court held that where an employer gives notice of termination effective on a future date, the notice may amount to an anticipatory repudiation if it is ultimately insufficient. The employee then has a choice: accept that repudiation or affirm the employment contract and continue working.
Where the employee continues working and thereby affirms the contract, the employment relationship remains in force. If the working notice ultimately proves insufficient, the actual breach occurs when the employment ends, not when the notice was first delivered. The adequacy of working notice can only finally be assessed once the employment relationship has concluded.
On the facts, the employee continued working rather than accepting the anticipatory repudiation. His employment ended on December 15, 2021. The Court therefore held that the employer breached the employment contract on that date, when the 13 months of working notice proved insufficient.
This is a notable development because it distinguishes between notice of a future breach and the breach itself. In a working notice case, an employee who continues working may remain fully bound by, and entitled to the benefit of, the employment contract until the termination date arrives.
Disability Did Not Frustrate the Employment Contract
The employer also argued that the employee’s disability frustrated the employment contract.
The Court rejected that argument. Frustration requires evidence that the employee’s incapacity made future performance impossible or radically different from what the parties originally contemplated.
Importantly, the employer had considered frustration before giving notice but chose instead to provide working notice. It had no medical evidence establishing permanent incapacity, did not require an independent medical examination or functional assessment, and the employee actually continued working for approximately seven months after notice was given.
Those circumstances were inconsistent with a finding that the employment relationship had already become incapable of performance.
The Takeaway
Babcock is significant for more than its 20 month notice (severance) award. It provides useful guidance on three difficult issues that can arise when disability intersects with a termination.
An employer cannot simply rely on an employee’s later disability to erase liability for inadequate working notice. Disability will not frustrate the employment contract without evidence demonstrating that continued performance has become impossible or fundamentally different. And where an employee continues working after receiving insufficient working notice, the wrongful dismissal may crystallize at the end of the working notice period, rather than when notice was originally given.
Finally, LTD benefits and wrongful dismissal damages must be analyzed separately. The existence of disability benefits does not automatically defeat the wrongful dismissal claim. The terms, funding and purpose of the disability plan matter.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018 and Evolution Legal in 2026.
FAQs
Can an employee become disabled during working notice and still have a wrongful dismissal claim?
Yes. The Court held that the employee’s later disability did not automatically eliminate his wrongful dismissal claim. The employer’s liability for insufficient notice had to be analyzed separately from the question of whether disability benefits might later reduce the damages payable.
What is anticipatory breach in the context of working notice?
An anticipatory breach occurs when an employer communicates an intention not to perform an important contractual obligation in the future. In Babcock, the Court held that providing insufficient working notice can amount to an anticipatory repudiation because the employer is signalling that it intends to end the employment relationship before satisfying its obligation to provide reasonable notice. The employee may then either accept the repudiation and treat the contract as at an end, or affirm the contract and continue working until the stated termination date. If the employee continues working, the actual breach occurs when the employment relationship ends and the notice is ultimately shown to have been insufficient.
When does the breach occur if an employer gives insufficient working notice?
The Court held that where an employee continues working after receiving notice of a future termination, the employment contract remains in force. If the working notice ultimately proves insufficient, the breach (wrongful dismissal) occurs when the employment relationship actually ends, not when the notice was first given.
When does disability frustrate an employment contract?
Frustration requires evidence that the employee’s incapacity makes future performance impossible or radically different from what the parties originally contemplated. In Babcock, the employer had not obtained medical evidence establishing permanent incapacity, and the employee continued working for several months after notice was given. The Court therefore rejected frustration
Are long-term disability benefits deducted from wrongful dismissal damages?
Not automatically. The Court held that deductibility depends on the terms, purpose and funding of the LTD plan, including whether the benefits are wage replacement, whether the employee contributed to them, and whether the insurer has rights of repayment, set-off or subrogation. Because the actual disability policy was not before the Court, that issue was left for trial.