In Short:
- Damages Awarded: The OCA awarded US$4. million for RSUs that should have vested during the executive’s 10-month common law reasonable notice period.
- RSUs Protected: Under Sections 60 and 61 of the Employment Standards Act, 2000 (ESA), employers cannot alter the terms of employment, including equity vesting, during statutory notice.
- Forfeiture Clauses Void: Any forfeiture clauses that remove unvested RSUs on Dismissal may be void if they do not comply with ESA Minimums
- Potential Liability for Employers: In such cases, employers may face damages for equity that would have vested during the reasonable notice period.
In a landmark ruling in Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, the Ontario Court of Appeal (OCA) ordered Meta to pay a terminated executive US$4.7 million for Restricted Stock Units (RSUs) that should have vested during his notice period. Reversing a lower court decision, the court clarified that employers cannot alter the terms of employment or cut off equity vesting during the statutory notice period.
Background of the Dispute and Trial Court Ruling
Dr. Daniel Wigdor joined Facebook Canada as Research Director in 2020 following Meta’s acquisition of his company, earning a $232,000 base salary plus RSUs vesting quarterly over four years. In late 2023, Meta terminated Wigdor without cause, paying him statutory severance and 8 weeks’ lump-sum pay in lieu of notice. Meta offered enhanced severance if Wigdor signed a release, but he refused because it barred him from challenging the forfeiture of his unvested RSUs. He subsequently sued for wrongful dismissal.
The Lower Court Ruling (July 2025)
In July 2025, the Ontario Superior Court awarded Wigdor 10 months of common law reasonable notice. However, the court denied his RSU claim, holding that RSUs were contractual benefits rather than “wages” under the ESA and that lump-sum pay under Section 61 allowed Meta to halt vesting.
The Court of Appeal Decision: Harmonizing ESA Provisions
The Court of Appeal reversed the lower court ruling on the RSU issue, awarding Wigdor US$4.7 million. The OCA ruled that Sections 60 and 61 of the ESA must be read together rather than separately.
Core Legal Ruling:
Section 61 (pay in lieu of notice) incorporates Section 60’s mandate: employers are strictly barred from altering any term or condition of employment during the statutory notice period.
Because Meta’s policy halted equity vesting upon termination notice, it unlawfully altered employment terms during the statutory notice window. This rendered the forfeiture clause void and incapable of limiting common law notice rights.
Common Misconception: “Contractual Equity vs. Statutory Protections”
Employers often mistakenly believe that because RSUs are governed by separate, equity agreements, they can enforce forfeiture clauses upon dismissal. Similarly, employees assume signing agreements with forfeiture clauses forfeits their legal right to lost vesting.
The Reality Under Ontario Law
In Ontario, statutory standards set an absolute floor. If an equity clause breaches ESA minimums during statutory notice, it is void in its entirety. The employer then loses forfeiture protections, entitling the employee to common law damages for all equity vesting throughout the entire reasonable notice period (typically 3 to 24 months).
Statutory scheme: Section 60 (of the Employment Standards Act) governs entitlements during working notice; Section 61 of the Act governs entitlements when the employer gives pay in lieu of that notice. Section 61(1)(a) expressly ties the lump-sum amount to what the employee “would have been entitled to receive under section 60 had notice been given,” which incorporates s. 60(1)(a)’s prohibition on altering any term or condition of employment during the statutory notice period. The sections must be read together to put employees in the same financial position whether they receive working notice or pay in lieu of notice.
Application in the case: Because Restricted Stock Units (RSUs) were a term or condition of employment, employment agreement clauses that cut off vesting at termination impermissibly altered the terms and conditions of employment during the statutory notice period, contravening s. 60(1)(a). As s. 61(1)(a) requires a lump sum equal to what s. 60 would have provided (with no alteration of terms or conditions), those clauses were void, and damages had to include the value of RSUs that would have vested in the common law notice period (which was 10 months). This amounted to US$4.7 million.
Key Observations and Strategic Framework
- No Alteration of Terms: Employers cannot alter active participation in equity or bonus schemes during statutory notice.
- Harmonized ESA Application: Pay in lieu of notice under Section 61 must match the position an employee would hold during notice under Section 60.
- Void Forfeiture Clauses: Non-compliant equity agreement terms may be void and unenforceable.
Conclusion
The Court of Appeal’s ruling confirms that provincial employment standards override restrictive equity agreements. Non-compliant forfeiture clauses are void, exposing employers to significant common law liability for lost equity vesting.
In other words, an employer and employee cannot contract out of Employment Standards Act minimums. If an employer attempts to rely on such an agreement in court, they may find themselves with a hefty bill for failing to pay the ESA minimums during the notice period. In this case, it cost the employer US$4.7 million. Our firm, with specialists in employment law, can assess employment agreements before they are entered into to ensure they comply with ESA requirements so that employers are not left with hefty financial bills at the end of the day.
Essential Takeaways for Employers and Corporate Executives
- For Employers: Audit equity plans to remove forfeiture clauses that breach ESA statutory notice requirements.
- For Executives: Do not assume unvested equity is lost; non-compliant forfeiture terms can be struck down to recover lost stock value.
How an Experienced Employment Lawyer Protects Your Rights
An experienced employment lawyer helps by evaluating equity plan compliance, calculating full reasonable notice entitlements, negotiating executive severance packages, and defending corporate employers against statutory exposure.
Don’t let non-compliant equity clauses compromise your compensation or statutory rights. If you are navigating an executive termination in Ontario, contact our legal team immediately to protect your interests.