Can an employer require an employee to forfeit unvested equity and incentive compensation on the date their employment ends? The Court of Appeal for Ontario (“Court of Appeal”) recently answered that question in Wigdor v. Facebook Canada Ltd., 2026 ONCA 572 [Wigdor], which resulted in an increase in damages of approximately US$4.7 million to an Ontario employee.
It is likely that this decision will spur many employers with Ontario employees to review the termination provisions in their equity and incentive plans, especially RSU agreements.
What the RSU agreements in Wigdor said
The applicant employee was employed with Facebook Canada Ltd. (“Facebook”) and signed, in addition to his employment contract, compensation agreements that entitled him to restricted stock units (“RSUs”) in Facebook’s parent company, Meta Platforms, Inc., on an ongoing basis over the course of his employment. The RSU agreements provided that, upon termination of employment, unvested RSUs would be forfeited “forthwith,” and vesting would not continue during any statutory notice period.
The applicant’s termination by Facebook
An employee whose employment is terminated without cause is entitled to notice of termination. This requirement can be satisfied either by allowing the employee to continue working for the notice period (“working notice”) or by terminating the employment relationship immediately and paying the employee the amounts they would have received during that working notice period (“pay in lieu of notice”), or a combination thereof.
The applicant was terminated by Facebook without cause. Facebook offered him his statutory termination pay and statutory severance pay, together with an offer of additional payment on the condition that he sign a full and final release. The applicant declined to sign the release and brought an application seeking, among other things, the value of RSUs that would have vested after the termination of his employment. Facebook maintained that the applicant had forfeited his unvested RSUs immediately upon termination in accordance with the terms of the RSU agreements.
The Ontario Superior Court of Justice’s decision
In Wigdor v. Facebook Canada Ltd., 2025 ONSC 4861, the Ontario Superior Court of Justice (the “Superior Court”) held that the termination provisions of the applicant’s employment contract contravened the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”) and were void. As a result, the applicant was entitled to reasonable notice of termination at common law, which the Superior Court fixed at 10 months.
On the issue of RSU entitlements, the applicant argued that the agreements he had signed, which treated unvested RSUs as forfeited upon termination, violated s. 60 of the ESA. That section of the ESA requires employers to maintain all terms and conditions of employment during the statutory notice of termination period.
The Superior Court rejected this argument, holding that s. 60 of the ESA applies only to periods of working notice, not situations where the employer satisfies their obligations by providing pay in lieu of notice. The Superior Court looked to s. 61 of the ESA, which provides that, when an employer provides payment in lieu of notice, the employer must continue to “make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to receive.” The Court held that, since “benefits” in this context refers only to “benefit plan contributions” (such as health, dental, and life insurance benefits), s. 61 did not require continued vesting of RSUs over the statutory notice period.
Thus, while the applicant was entitled to damages based on 10 months of reasonable notice, those damages did not include the value of the RSUs that would have vested during that period.
The Court of Appeal’s decision
By decision dated August 7, 2026, the Court of Appeal reversed the Superior Court’s decision on the RSU issue. Justice Copeland, writing for the Court of Appeal, found as follows (at paras. 95 and 96):
The application judge erred by reading ss. 60 and 61 disjunctively and holding that the entitlement to a lump sum of pay in lieu of working notice was to be calculated without reference to the obligation on an employer in s. 60(1)(a) not to alter terms and conditions of employment during the statutory notice period.
The application judge failed entirely to consider [the applicant’s] argument that the language in s. 61(1)(a) that requires an employer to pay a lump sum “equal to the amount” the employee would have been entitled to receive “under section 60” had working notice been given incorporates the requirement from s. 60(1)(a) that the employer may not “alter any term or condition of employment”.
In other words, the s. 60 requirement not to alter any terms or conditions of employment during the notice period applies equally to employees who work through the notice period and to employees who are paid in lieu of working notice, given that s. 61 requires the employer to pay a lump sum equal to the amount the employee would have received under s. 60 had working notice been given. Read together, the two provisions are intended to place the employee in the same financial position whether the employee receives working notice or pay in lieu.
The applicant’s RSU agreements, which were incorporated by reference into his employment contract, ultimately contravened the ESA by purporting to alter a term or condition of employment during the statutory notice period, namely, his entitlement to continued vesting of RSUs. The offending provisions were therefore void and could not displace the applicant’s common law right to reasonable notice.
Some of the applicant’s RSU agreements provided that the forfeiture date would not be extended by any notice period “unless explicitly required by applicable legislation”. The Court of Appeal held that this carve-out did not assist the employer. The ESA does not “explicitly” address the vesting of RSUs, so the saving provision was not engaged.
The Court of Appeal accordingly increased the applicant’s damages by US$4,711,647.29, the value of the RSUs that would have vested during the 10-month common law notice period.
The Court of Appeal also dismissed the employer’s cross-appeal and upheld the finding that the termination provisions of the employment contract were void.
Key takeaways for Ontario employers
While employers had been hoping for some clarity on whether RSUs constitute wages under the ESA (the Superior Court held that they are not), the Court of Appeal declined to consider this issue, as it was not necessary to decide the appeal. The Court of Appeal observed that the answer may depend on the evidentiary record in a particular case.
However, what employers can learn from the Court of Appeal’s decision is that:
1. All “terms and conditions of employment” must continue throughout the statutory notice period, regardless of whether the employee works through that period or is paid in lieu.
2. “Terms and conditions of employment” may include compensation entitlements governed by separate equity or incentive compensation plans, not just entitlements contained in an employment agreement.
3. When drafting equity or compensation agreements involving employees in Ontario, employers must take care to preserve vesting and other entitlements through at least the minimum statutory notice of termination period. Because the ESA imposes a general obligation not to alter any term or condition of employment during the notice period, and does not specifically address vesting, it will not suffice to state that vesting will continue if applicable legislation “explicitly” requires it. Language that fails to preserve entitlements through the statutory notice period will be void and, as in Wigdor, may expose the employer to damages over a much longer common law notice period.
Employers may wish to proactively review their equity plans and compensation agreements for Ontario employees in light of the Court of Appeal’s decision. We encourage you to contact one of Miller Thomson’s Labour and Employment lawyers if you or your organization have any questions or require assistance.
