The respondent, an experienced in-house corporate counsel, was terminated without cause after 18 months of employment.
Upon termination, he was offered a severance package of three months' salary in exchange for signing a release.
He signed the release immediately and received the funds.
He later sued for wrongful dismissal, arguing the release was unconscionable.
The trial judge set aside the release based on a breach of good faith.
The Court of Appeal allowed the employer's appeal, finding the trial judge erred in applying the law of bad faith discharge instead of unconscionability.
Applying the four-part test for unconscionability, the Court held the transaction was not grossly unfair, the respondent did not lack legal advice, there was no overwhelming imbalance in bargaining power, and the employer did not take advantage of his vulnerability.
The action was dismissed.