In December 2022 a biotech startup short on cash cut its Chief Business Officer’s pay by a third, promised to restore it once a financing round closed, and agreed to his request to go back to invoicing as a consultant. A few months later it ended the relationship. In court it argued that his employment had ended back in December and that he was a contractor with no right to notice.
Published October 2026
The Supreme Court of British Columbia disagreed, mainly because of the company’s own emails. The decision is short, but it touches several points employers get wrong in practice: what a change in payment method does and does not do, when a pay cut is really a deferral, how much a startup title is worth in notice, and who has to prove that a dismissed employee should have found work sooner.
The company lost the status argument on its own correspondence, lost the mitigation argument because it brought no evidence that comparable jobs existed, and did not try to rely on its one-month termination clause.
What happened
Attila Hajdu joined Triple Hair, a company developing hair loss treatments, in February 2020 as Vice-President of Business Development. A written agreement dated June 3, 2020 made him Chief Business Officer on a full-time basis at $180,000 a year, working an average of 40 hours a week. He was first paid as a contractor and then, from April 2021, through payroll.
In December 2022 the company asked him and others to accept lower pay while it raised money. After a conversation with the CEO, Mr. Hajdu texted to ask whether his status could be switched back to consulting and whether the pay decrease and later top-up could be put in writing. The CEO said he saw no issue with the switch. His email of December 12 then set out the terms: pay would drop from $180,000 to $120,000 a year until the financing round closed, the company would then bring him back to his current compensation, and depending on when the round closed it would pay the $5,000 monthly difference plus a cash and stock option bonus.
Mr. Hajdu invoiced at the reduced rate from January 2023. On May 1, 2023, at age 56, he was let go. The company did not allege just cause.
What the court decided
| Issue | Finding | Amount |
|---|---|---|
| Did the employment agreement end in December 2022? | No. Only the payment method changed and part of his salary was deferred. | $25,000 (the $5,000 monthly shortfall, December 2022 to April 2023) |
| Was he entitled to reasonable notice? | Yes. Employee or dependent contractor; the court did not need to choose. | 8 months at $180,000 a year: $120,000 |
| Should notice damages be reduced? | No reduction for failure to mitigate. Actual earnings in the notice period deducted. | Less $47,113.97, leaving $72,886.03 |
| Accrued vacation | Seven days, not the 21 he claimed. | $4,846.15 |
The emails decided the status question
The company’s case was that the June 2020 agreement ended in December 2022 and that a new contractor arrangement at $10,000 a month replaced it. Loo J. found nothing in the correspondence about ending the agreement (paras 29 to 32). The promise to “bring you back to your current compensation” only made sense if the existing agreement was still running. What changed was that part of his salary was deferred and he was paid by invoice instead of through payroll, and the agreement said nothing about how he had to be paid.
Because the company never took the position that the deferred pay depended on the financing closing, the $5,000 a month it held back stayed owing.
Employee or dependent contractor, and it did not matter which
BC courts treat working relationships as a spectrum. Following TCF Ventures Corp. v. The Cambie Malone’s Corporation, 2017 BCCA 129, a relationship that more closely resembles employment carries an implied duty of reasonable notice, whatever the label. The court found most of the usual factors pointed that way: the company assigned his duties and required 40 hours a week, he was paid a fixed wage with no chance of profit or loss, he depended on the company economically, and he held a central role, used a company email address and represented the company at industry conferences.
The company pointed out that it gave him no benefits and no office. That carried no weight, because no one at the company had benefits or an office. Everyone worked remotely. A factor that applies equally to everyone in the business says little about any one person’s status.
A startup title is not a C-suite notice period
Mr. Hajdu asked for 12 months, relying on cases where senior executives with short service received a year. The company argued for six. It pointed out that when he joined, all four people at the company held “chief” titles, and that by the end one Director of Marketing reported to him.
The court accepted that he should not be treated like an executive running a large organization. It compared Chung v. Quay Pacific Property Management Ltd., 2020 BCSC 714 (a 53-year-old CFO with about two and a quarter years, nine months) and Nicholson v. Masonite International Corporation, 2014 BCSC 1247 (a 45-year-old regional controller with two and a half years, six months), and set eight months. Notice was calculated on the full $180,000 salary, not the reduced rate. How the Bardal factors work in BC explains why age and the real scope of a role move the number more than a title does.
Mitigation: the employer has to prove both halves
This is the part employers most often misjudge. The company had a reasonable point on the facts. Mr. Hajdu had taken a real estate course in 2022, became a licensed realtor in February 2023 and worked as one after his termination. His job applications in the biotech field stopped between February and November 2023, and he did not explain the gap.
None of that reduced his damages. Under Ehman v. Preston Chevrolet Buick GMC Cadillac Ltd., 2021 BCSC 1033, an employer alleging a failure to mitigate must prove both that the employee did not take reasonable steps and that comparable work could likely have been found if he had. The company offered no evidence on the second point, only the argument that he had never been out of work for long in a 20-year career. The court found that was not enough (paras 64 to 67), noting that employers in these cases often call evidence, sometimes from experts, about actual jobs the employee could have pursued.
What he did earn still counted. His realtor commissions of $45,955.12 and $1,158.85 from driving for Uber during the notice period were deducted. See the duty to mitigate for how this works more generally.
What this means for employers
Changing how someone is paid does not change what they are
Moving a worker from payroll to invoices, at their request or yours, does not end an employment agreement. If the work, the hours, the reporting line and the dependence stay the same, the relationship does too. An employer that wants the status to change needs a clear written agreement that ends the old arrangement, real changes in how the work is done, and fresh consideration. Our article on employee or contractor status in BC goes through the factors.
Write pay changes as what they are
The December email was written to reassure a key person during a cash crunch, and it did. It also described a deferral, so the withheld pay became a debt. If a reduction is meant to be permanent, the document has to say so and the employee has to agree to it. If it is a deferral, budget for paying it back, including on termination.
Calibrate notice to the real job
The company won this argument. Pointing to the actual size of the business and the plaintiff’s actual responsibilities brought the award well below what he claimed. Startups and small companies hand out senior titles freely, and the evidence of what the role involved is what protects them.
Bring evidence on mitigation or do not count on it
An unexplained gap in applications and a career change into real estate looked promising for the employer. Without evidence of comparable positions that were open at the time, the argument went nowhere. If mitigation is going to be a live issue, gather that evidence early.
Summary trial is hard to resist
The company argued the case was not suitable for summary trial because it needed more discovery on credibility. The court held that the hope that more discovery might turn something up is not enough to defeat a summary trial (citing Tassone v. Cardinal, 2014 BCCA 149), noted the company had never applied to vary an earlier order limiting further evidence, and found the case modest and not complex. For claims of this size, employers should expect to be decided on affidavits and plan accordingly.
Employers in British Columbia ending a long working relationship with someone they consider a contractor should get advice on terminations and layoffs before the decision is made, while the record can still be read as a whole.
For workers moved to consultant status
If you were switched from payroll to invoicing while doing the same job, you may still be an employee or a dependent contractor with a right to reasonable notice. Keep the emails and messages about the change, especially anything describing a pay cut as temporary. They were decisive here. Keep a record of every job application after you are let go; the employer carries the burden on mitigation, but earnings from new work during the notice period are deducted. You can speak with our Vancouver employment lawyers about your situation, and read pay in lieu of notice in BC for how notice is valued.
Frequently asked questions
What did the court decide in Hajdu v. Triple Hair Group Inc.?
The Supreme Court of British Columbia held on a summary trial that the plaintiff’s written employment agreement was never terminated, that he was an employee or dependent contractor entitled to reasonable notice, and awarded $102,732.18: $25,000 in deferred pay, $72,886.03 for eight months’ notice after deducting what he earned, and $4,846.15 in vacation pay.
Does switching an employee to invoicing make them a contractor in BC?
Not by itself. In this case the change from payroll to invoices was a change in payment method only. The court looks at the substance of the relationship, including control, economic dependence, the chance of profit or loss and how central the work is to the business.
Are dependent contractors entitled to reasonable notice in BC?
Yes. BC courts treat working relationships as a spectrum, and where a relationship more closely resembles employment, a duty to give reasonable notice is implied. In this case the court did not need to decide whether the plaintiff was an employee or a dependent contractor because either entitled him to notice.
Who has to prove a failure to mitigate?
The employer. It must show both that the employee did not take reasonable steps to find work and that comparable work could likely have been found if they had. Triple Hair offered no evidence on the second point, so there was no reduction, although the plaintiff’s actual earnings during the notice period were deducted.
Why was the notice period eight months and not twelve?
The court found that his Chief Business Officer title at a very small startup did not carry the responsibilities of a top executive at a large organization. Comparing similar BC cases, and taking account of his age of 56 and just over three years of service, it set eight months, calculated on his full $180,000 salary.
This article is general information about a decision of the Supreme Court of British Columbia and is not legal advice. Notice periods and status findings depend on the facts of each case. Current as of October 2026. An employment lawyer can advise on your specific situation.
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