In Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, the Ontario Court of Appeal confirmed that employees are entitled to the continued vesting of RSUs or other equity-based compensation during the statutory notice period under the Employment Standards Act, 2000 (ESA).
The ESA requires that an employer not alter any “term or condition of employment” during the statutory notice period.
The Court of Appeal determined the forfeiture provisions in Meta's RSU agreements (discussed in our previous blog post) which provided for forfeiture of RSUs on termination and did not permit continued vesting through the statutory notice period were unenforceable. As a result of the forfeiture provisions being void, Dr. Wigdor was awarded about US$4.7 million, representing the value of RSUs that would have vested during his common law reasonable notice period
On a more positive note for employers, the Court of Appeal affirmed that the threshold for punitive damages remains high. Facebook’s roughly 10-month delay in paying Dr. Wigdor’s minimum ESA entitlements did not amount to “harsh” or “malicious” conduct required for punitive damages, and the Court of Appeal found no reviewable error.
Background and Decision of the Ontario Superior Court of Justice
Dr. Wigdor commenced employment with Facebook Canada in September 2020 following Meta’s acquisition of a company he had founded. As part of the transaction, he received 43,380 Meta RSUs, which vested quarterly over four years. His annual RSU agreements provided that any unvested RSUs would be forfeited upon termination. Facebook terminated Dr. Wigdor’s employment without cause in December 2023 and offered him a severance package conditional on signing a release that included a waiver of any claim to his unvested RSUs. He declined and commenced an application seeking a declaration that the termination provision in his employment agreement was unenforceable and that he remained entitled to the unvested RSUs.
At first instance, the application judge found that the termination provisions in Dr. Wigdor’s employment agreement contravened the ESA and were unenforceable. The judge therefore determined that he was entitled to damages based on 10 months’ reasonable notice at common law. The application judge nevertheless upheld the forfeiture provisions in his RSU award agreements and found that Dr. Wigdor was not entitled to the value of RSUs that would have vested during the notice period.
That conclusion turned on the application judge's interpretation of sections 60 and 61 of the ESA, which address an employee’s entitlements during the statutory notice period. The application judge treated sections 60 and 61 of the ESA separately, finding that section 60’s prohibition against altering a term or condition of employment applied only during working notice. Because Dr. Wigdor received pay in lieu of notice under section 61, the Court considered only whether the RSUs were “wages” or “benefits” and, finding that they were neither, concluded that continued vesting was not required.
The judge also declined to award punitive damages arising from Facebook’s approximately 10-month delay in paying Dr. Wigdor’s minimum ESA entitlements.
Dr. Wigdor appealed, and Facebook/Meta cross-appealed.
The Court of Appeal Steps In
The Court of Appeal upheld the finding that the termination provisions in Dr. Wigdor’s employment agreement were unenforceable and that he was therefore entitled to reasonable notice at common law, but reversed the application judge’s decision concerning the enforceability of the RSU forfeiture provisions.
In doing so, the Court of Appeal clarified the interaction between sections 60 and 61 of the ESA:
- Section 60: prohibits an employer from reducing an employee’s wage rate or altering any other term or condition of employment during the working notice period; and
- Section 61: permits an employer to terminate employment immediately, provided the employee receives termination pay in a lump sum equal to the amount that they would have been entitled to receive under section 60 had they been given working notice, and the employer continues to make benefit plan contributions during the statutory notice period.
The Court of Appeal held that sections 60 and 61 must be read together. As a result, section 60(1)(a)’s prohibition against altering any “term or condition of employment” during the working notice period also applies when an employer provides an employee with pay in lieu of notice under Section 61.
Importantly, the Court found it unnecessary to decide whether equity-based compensation constitutes “wages” under the ESA. Instead, it held that Dr. Wigdor’s RSU entitlements were a “term or condition of employment.” Among other things, the RSU grant was incorporated into his employment agreement, RSU entitlements were treated as employment compensation, and Meta described the applicable equity plan as a “share-based employee compensation plan.”
RSU Forfeiture Provisions Contravene the ESA
The 2020 RSU Agreement provided that no vesting would continue during any notice period, whether contractual, statutory, regulatory, or common law. The 2021–2023 RSU Agreements stated that unvested RSUs would be forfeited on termination and that any notice, pay in lieu, or damages period would not extend vesting “unless explicitly required by applicable legislation.”
The Court of Appeal held that these provisions purported to end unvested RSU vesting immediately upon termination, thereby altering a term or condition of employment during the statutory notice period, contrary to section 60(1)(a) of the ESA. Because the provisions contravened the ESA, they were void. The Court further found that the saving language in the 2021–2023 agreements (“unless explicitly required by applicable legislation”) was insufficient to save the clauses, as it was vague and did not effectively preserve the employee’s statutory entitlements.
Notably, unlike in the recent decision of Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, where the Ontario Court of Appeal found that language preserving “any minimum compensation or entitlements prescribed by the Employment Standards Act” brought an otherwise problematic “with cause” provision into compliance with the ESA, the saving language in Wigdor applied only where continued vesting was “explicitly required” by legislation. Because the ESA does not expressly address continued RSU vesting, the Court found that the saving language did not apply.
The forfeiture provisions therefore could not limit Dr. Wigdor’s common law entitlement to damages. As a result, he was awarded an additional US$4,711,647.29, representing the value of the RSUs that would have vested during his 10-month reasonable notice period.
Punitive Damages are not Warranted
The Court of Appeal affirmed the application judge's denial to award punitive damages. While the application judge had found that Facebook’s 10-month delay in paying ESA minimum entitlements was more than an unintentional administrative error, it did not rise to the level of “harsh” or “malicious” conduct required for a punitive damages award. The Court of Appeal saw no reviewable error in this conclusion, noting the high threshold that continues to apply.
Key Takeaways
- Employers must preserve all terms and conditions of employment during the statutory notice period: The Court confirmed that this obligation applies whether an employer provides working notice or pay in lieu of notice.
- Equity forfeiture provisions must be carefully drafted and ESA-compliant: Employers should review their RSU plans, together with their employment agreements, to ensure that they do not purport to end RSU vesting immediately upon termination without preserving the employee’s entitlements during the statutory notice period.
- Separate equity agreements are not necessarily insulated from employment standards legislation: Employers should not assume that an equity plan falls outside the ESA simply because it is contained in a standalone agreement. Where equity entitlements are incorporated into an employment agreement and form part of an employee’s compensation, ESA requirements may apply.
- Saving language must be specific: Vague saving language such as “unless explicitly required by applicable legislation” may not be sufficient to preserve otherwise non-compliant forfeiture provisions. Employers should ensure that any saving language specifically and clearly preserves applicable statutory minimum entitlements.
- The threshold for punitive damages remains high: The Court nevertheless confirmed the lower court’s refusal to award punitive damages despite a lengthy delay in providing statutory minimum entitlements.
The decision is an important reminder for employers to review not only their employment agreements, but also RSU and other equity incentive compensation plans, to ensure that termination-related provisions are enforceable and preserve all minimum statutory entitlements.
If you have any questions about this decision, or if we can help advise your business on similar or other employment-related issues, please contact one of the authors, or another member of the Bennett Jones Employment Services group, for more information.
