Wigdor v. Facebook Canada Ltd.: Ontario Court of Appeal Addresses RSUs and Termination Compensation
The Ontario Court of Appeal’s decision in Wigdor v. Facebook Canada Ltd., 2026 ONCA 572 is an important Ontario employment law ruling concerning restricted stock units (“RSUs”), termination clauses and compensation during the notice period.
The Court allowed Dr. Daniel Wigdor’s appeal on the RSU issue. It held that the termination provisions in Meta’s RSU agreements were unenforceable because they attempted to stop RSU vesting immediately upon termination, contrary to minimum employment standards under sections 60 and 61 of Ontario’s Employment Standards Act, 2000 (“ESA”).
As a result, the Court increased Dr. Wigdor’s damages by US$4,711,647.29, representing the value of 9,405 RSUs that would have vested during his 10-month common-law reasonable-notice period.
The decision is particularly significant for executives and other employees whose compensation includes shares, stock options, RSUs, bonuses or long-term incentive plans. In these cases, the value of compensation lost after dismissal can substantially exceed an employee’s salary.
What Happened in Wigdor v. Facebook Canada Ltd.?
Dr. Wigdor founded Chatham Inc. in 2011 and began providing services to a Meta subsidiary in 2016. In 2020, Meta acquired Chatham in a transaction designed, in part, to bring Dr. Wigdor and members of his team into Meta’s workforce.
Dr. Wigdor became Director, Research Science at Facebook Canada.
His compensation package included an initial grant of 43,380 Meta RSUs under Meta’s 2012 Equity Incentive Plan. He received additional RSU grants between 2020 and 2023. The RSUs generally vested quarterly over four years.
Facebook Canada terminated Dr. Wigdor’s employment effective December 8, 2023. It offered him a termination package conditional on signing a release. Dr. Wigdor did not accept the offer because the release would have prevented him from disputing the loss of his unvested RSUs.
At trial, the Ontario Superior Court found that the termination provisions in Dr. Wigdor’s employment agreement were unenforceable and awarded him 10 months of common-law reasonable notice. However, the trial judge upheld the RSU forfeiture provisions and declined to award damages for RSUs that would have vested during the notice period. The trial judge also refused to award punitive damages.
Both parties appealed aspects of that decision.
What Did the Ontario Court of Appeal Decide?
1. The Employment Agreement’s Termination Provisions Were Unenforceable
Facebook Canada argued that the termination provisions in Dr. Wigdor’s employment agreement complied with the ESA and should have limited his entitlements.
The Court of Appeal rejected that argument and dismissed Facebook Canada’s cross-appeal.
A central problem was that the employment agreement did not properly recognize Dr. Wigdor’s prior service. Section 9 of the ESA can require an employee’s previous service to be included when determining statutory termination entitlements following a sale of a business.
Despite Dr. Wigdor’s deemed prior service, the agreement contemplated that his employment could be terminated without notice during what it described as his first three months of employment. That language could have provided less than his minimum ESA entitlements.
The fact that Dr. Wigdor was a sophisticated employee who had received legal advice did not make an otherwise unlawful termination provision enforceable. Employment agreements must comply with the ESA regardless of an employee’s bargaining power or access to legal advice.
The 10-month common-law notice period therefore remained in place.
2. Sections 60 and 61 of the ESA Must Be Read Together
The Court of Appeal explained that sections 60 and 61 of the ESA work together when an employer provides termination pay instead of working notice.
Section 60 prohibits an employer from reducing an employee’s wage rate or altering any other term or condition of employment during the statutory notice period.
Section 61 permits an employer to provide termination pay instead of working notice. However, the employee must generally receive the financial equivalent of what the employee would have received during the statutory notice period.
In practical terms, an employer cannot avoid its statutory obligations simply by terminating employment immediately and providing pay in lieu of notice. The employee must be placed in the financial position required by the ESA during the applicable statutory notice period.
3. The RSU Termination Provisions Violated the ESA
Meta’s RSU agreements stated, in different ways, that RSU vesting would stop when Dr. Wigdor’s employment ended.
The Court of Appeal held that these provisions were unenforceable because they attempted to eliminate a form of employment compensation during the statutory notice period.
The RSUs were not merely an investment held independently of Dr. Wigdor’s employment. They had been incorporated into his employment compensation package, were granted because of his employment and vested over time while he remained employed.
The 2020 RSU agreement expressly stopped vesting upon termination. Later agreements contained language referring to minimum employment standards, but that language did not save provisions that otherwise failed to preserve Dr. Wigdor’s statutory rights.
Because the termination provisions could operate in violation of the ESA, they were void and could not be used to restrict Dr. Wigdor’s common-law entitlement to compensation.
Why Did Dr. Wigdor Receive RSU Damages for the Full 10-Month Notice Period?
The Supreme Court of Canada established the relevant approach to incentive compensation in Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26.
Courts generally ask two questions:
Would the employee have received the compensation had the employee continued working during the reasonable-notice period?
If so, does the employment contract or compensation plan contain clear and enforceable language removing or limiting that common-law entitlement?
There was no dispute that 9,405 RSUs would have vested during Dr. Wigdor’s 10-month reasonable-notice period if his employment had continued.
The RSU termination provisions could not exclude that entitlement because they were unenforceable under the ESA. Once those provisions were removed, there was no valid contractual language limiting Dr. Wigdor’s common-law damages.
The Court therefore awarded US$4,711,647.29 for the RSUs that would have vested during the notice period.
Did the Court Decide That RSUs Are “Wages” Under the ESA?
No.
This is an important limitation of the decision. The Court of Appeal expressly declined to decide whether RSUs or other forms of equity compensation constitute “wages” under the ESA.
The decision instead turned on the fact that the RSUs formed part of Dr. Wigdor’s employment compensation and that the RSU termination provisions attempted to alter his compensation rights during the statutory notice period.
Accordingly, Wigdor should not be interpreted as establishing that every RSU, stock option or share award must continue vesting following termination.
The outcome will depend on factors such as:
The wording of the employment agreement and equity plan;
Whether the equity award was incorporated into the employee’s compensation package;
The applicable vesting schedule;
The plan’s definition of termination or active employment;
Whether the plan language complies with the ESA; and
Whether the language clearly and validly limits common-law entitlements.
Employee-purchased shares or investments held independently of employment may raise different legal issues.
Why Were Punitive Damages Refused?
Dr. Wigdor also sought punitive damages based partly on Facebook Canada’s delay in paying his minimum statutory entitlements.
The Court of Appeal upheld the decision refusing punitive damages, despite an approximately 10-month delay in payment.
Punitive damages are exceptional. They are intended to address conduct that is malicious, oppressive or high-handed and represents a marked departure from ordinary standards of decent behaviour.
A breach of the ESA or delay in payment does not automatically justify punitive damages. Courts examine the employer’s overall conduct, including whether the conduct was deliberate, dishonest or sufficiently reprehensible to warrant punishment beyond ordinary compensation.
What Does Wigdor Mean for Ontario Employees?
Employees should not assume that equity compensation automatically disappears when their employment is terminated.
If your compensation includes RSUs, stock options, shares, bonuses or long-term incentive awards, the value that would have vested or become payable during the reasonable-notice period may form part of your wrongful dismissal damages.
Before accepting a termination package or signing a release, employees should:
Collect all employment agreements, offer letters and amendments;
Obtain every applicable equity plan and award agreement;
Identify outstanding awards and their vesting dates;
Review how the documents define termination and active employment;
Determine whether the equity awards were incorporated into the employment agreement;
Calculate what would have vested during both the statutory and common-law notice periods; and
Obtain legal advice about whether any forfeiture or termination provisions are enforceable.
A termination letter may state that unvested equity is forfeited, but that does not necessarily determine the employee’s legal entitlement.
Learn more about wrongful dismissal in Ontario and what may be included in a severance package.
What Does the Decision Mean for Employers?
Employers that use RSUs, stock options, bonus plans or other incentive compensation should review their employment and equity-plan documents carefully.
Particular attention should be paid to:
Whether equity documents are incorporated into the employment agreement;
How termination, vesting and active employment are defined;
Whether the documents preserve all minimum ESA entitlements;
Whether different agreements contain inconsistent termination language;
Whether general ESA-saving language is sufficiently clear; and
Whether the documents validly address compensation during the common-law notice period.
Language stating that vesting stops on the termination date or the employee’s last day of active employment may not be enforceable if it can remove compensation during the statutory notice period.
The Wigdor decision also confirms that sophisticated employees and employees who receive independent legal advice remain protected by the ESA. Sophistication does not cure an unlawful termination clause.
Employers can learn more about reviewing employment contracts and obtaining advice from wrongful dismissal defence lawyers.
Frequently Asked Questions About RSUs and Termination
Do RSUs Always Continue Vesting After Termination?
No. Whether an employee is entitled to compensation for unvested RSUs depends on the employment agreement, the equity plan, the award agreement, the ESA and the common law.
However, a forfeiture provision will not necessarily be enforced simply because it appears in an RSU agreement.
Can an Employer Stop RSU Vesting on the Termination Date?
An employer may attempt to limit vesting through clear contractual language, but that language must comply with the ESA. A provision that removes compensation during the statutory notice period may be void.
If the limitation is void, the employee may be entitled to damages for RSUs that would have vested throughout the common-law reasonable-notice period.
Are RSUs Considered Wages in Ontario?
The Court of Appeal did not decide that issue in Wigdor. The case should not be cited as authority that all RSUs are wages under the ESA.
Can an Employment Agreement Limit RSU Compensation During Reasonable Notice?
Potentially, but the limiting language must be clear, unambiguous and legally enforceable. It must also preserve the employee’s minimum ESA entitlements.
If the language violates the ESA, it cannot be used to limit the employee’s common-law damages.
Speak With an Ontario Employment Lawyer
The financial consequences of RSU forfeiture can be substantial. Employees should obtain legal advice before accepting a severance package or signing a release, particularly where equity compensation forms a significant part of their total remuneration.
Employers should also have employment agreements and equity compensation plans reviewed to ensure that their termination provisions comply with Ontario law.
Contact Vanguard Employment Lawyers for advice about RSUs, stock options, severance packages, termination clauses and wrongful dismissal claims.
This article provides general legal information only and does not constitute legal advice. Employment law outcomes depend on the specific facts and contractual documents in each case.