Fired With Unvested Stock? Wigdor v. Facebook Canada and Your Equity on Termination

Ontario's Court of Appeal has awarded an employee US$4,711,647.29 for stock units that would have vested had he worked through his notice period. In Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, released August 7, 2026, the Court held that clauses cancelling unvested equity the moment employment ends breach the Employment Standards Act, 2000, and that the employer could not rely on them.

The decision matters well beyond one large award, because equity now forms a substantial part of pay for many Ontario employees while severance offers routinely ignore it. Employees assessing what an offer leaves out can estimate the common law notice period their equity would have vested through. This article explains what the Court decided, which employees the reasoning reaches, and the arguments the employer lost along the way.

What did the Court of Appeal decide in Wigdor v. Facebook Canada?

The Court held that the forfeiture terms in the employee's stock unit agreements contravened the ESA and were therefore void. Section 60(1)(a) prohibits an employer from altering any term or condition of employment during the statutory notice period, and cancelling vesting at termination does precisely that. The employee recovered the value of the units that would have vested during his 10-month common law notice period.

The employee was a tenured University of Toronto computer science professor whose consulting company Meta acquired in 2020. The purchase was structured so that he became an employee of Facebook Canada, and part of the deal granted him 43,380 stock units valued at US$7.5 million, vesting quarterly over four years. Facebook Canada terminated him in December 2023.

Two separate rulings produced the result. The employer cross-appealed, arguing its termination clause validly limited the employee to statutory minimums, and the Court dismissed that cross-appeal. With the clause void, the common law notice period applied, and the equity question then determined what that period was worth.

Why did the RSU forfeiture clause fail?

The clause failed because it altered a term of employment during a period when the ESA freezes those terms. The agreements said all unvested units were forfeited immediately on termination and that vesting would not continue during any notice period, whether contractual, statutory, or at common law. The Court held that this conflicts directly with section 60(1)(a), so section 5 of the ESA renders it void.

The Court applied the two-part framework from Matthews v. Ocean Nutrition, 2020 SCC 26. A court asks first whether, but for the termination, the employee would have been entitled to the compensation during the reasonable notice period. It then asks whether the wording of the plan unambiguously and lawfully removes the common law right. The first question was undisputed here, so everything turned on the second.

Timing also mattered. The Court confirmed that a clause is assessed for ESA compliance as of the date the contract was made, not by what the employer did at termination. A provision that would breach the statute in some scenario is void from the outset, even if the actual dismissal unfolded differently.

How do sections 60 and 61 of the ESA work together?

The application judge had read the two sections separately, and the Court of Appeal held that was an error. Section 60 governs working notice and forbids altering terms of employment during it. Section 61 governs pay in lieu, and requires a lump sum equal to what the employee would have received under section 60.

That cross-reference pulls the no-alteration rule into the pay-in-lieu calculation.

The consequence is significant for anyone paid out rather than given working notice. Pay in lieu must be calculated as though no term of employment changed during the statutory notice period, so an employer cannot improve its position by paying someone out instead of letting them work. The Court described the two sections as a harmonious scheme designed to leave employees no worse off under either route.

The Court also drew meaning from the word "amount" in section 61. Because the statute refers generally to the amount the employee would have received, the entitlement is not confined to regular wages, and reaches other compensation the employee would have earned during the period.

Does this reasoning reach stock options and other equity?

The decision turned on function rather than labels, so the reasoning is not confined to restricted share units. The Court asked whether the equity formed a term or condition of the employee's employment, and answered yes on the basis of how the compensation actually worked rather than what the plan documents called it.

The evidence it relied on will look familiar to many employees. The employment agreement promised the grant, the employer's own affiant agreed the units were part of compensation, the plan documents called it share-based employee compensation, the units vested with continued service, and vested units appeared on pay statements as a taxable benefit.

One question stayed open deliberately. An employer-side intervener asked the Court to hold that equity compensation can never be "wages" under the ESA, and the Court declined, saying that question is better decided in a case where it determines the outcome. It added that the answer may prove more nuanced than a blanket rule either way.

Equity an employee buys sits differently. The Court distinguished an earlier case where employees of an employee-owned firm purchased shares with their own funds and their rights then flowed from a shareholders agreement rather than the employment contract. The line runs between equity granted as pay for working and equity bought and held as an investment.

Did the employer's saving language help?

No, and this is the most transferable lesson in the decision. The later agreements ended vesting on termination "unless explicitly required by applicable legislation." The Court held that nothing in the ESA explicitly addresses continued vesting of stock units, so the saving language was never triggered and did no work.

The Court went further. Even assuming the provision were ambiguous about how explicit the legislation must be, it said that ambiguity would be resolved in favour of the employee. Generic compliance language appended to a clause that otherwise breaches the statute does not rescue it.

That holding sits alongside the clause-validity reasoning in the Baker and Li appeals, where contracts promising ESA compliance throughout were read as meaning what they said. The difference lies in whether the compliance promise actually resolves the conflict or merely gestures at it.

Why did the termination clause itself fail?

The termination clause failed for a reason many employees never consider: it ignored service with a business the employer had bought. Section 9 of the ESA provides that when a business is sold and the employee continues with the purchaser, employment with the seller counts toward length of employment. The employee's nine years with his own company therefore carried over from his first day.

The clause allowed termination on two weeks' notice during the first three months of employment. Because his prior service counted, he was entitled from day one to eight weeks of notice plus nine weeks of severance pay. Promising two weeks in that window breached the statute, and a general promise elsewhere in the agreement to respect the ESA could not cure a specific provision that contradicted it.

Employees who joined an employer through an acquisition, a merger, or an outsourcing arrangement should note how much this changed. Prior service moved the entitlement, and a clause drafted as though employment started fresh could not stand.

Does having a lawyer when you signed change anything?

No, and the Court rejected the argument squarely. The employer pointed out that the employee had negotiated both the sale of his company and his employment agreement with counsel, and argued the contract should be read accordingly. The Court held that this court has cautioned against letting an employee's sophistication or access to independent advice override the plain language of termination provisions.

It also gave a technical reason. The surrounding circumstances a court may use to interpret a contract consist of objective background facts known to both parties at the time of contracting, and whether one party had a lawyer does not fall within that category. The Court rejected the proposition that a represented employee deserves less clarity than anyone else.

The same reasoning defeated an argument that the ESA should not apply because the employment was tied to a commercial share purchase. Nothing in the statute makes it inapplicable to employment relationships connected to commercial transactions. The parties structured the equity as employment compensation, and as the Court put it, the employer had to live with that choice.

Why did the court refuse punitive damages?

The employer did not pay the employee's statutory entitlements for 10 months after termination, and paid only once he commenced his application. The application judge found this suggested more than an unintentional administrative error, called the employer's explanation inadequate and vague, and inferred it had been prepared to let the entitlements languish while pursuing a release.

Even so, both courts declined to award punitive damages. That remedy demands conduct malicious and outrageous enough to warrant punishment on its own, and the application judge found the conduct dilatory rather than harsh or malicious. The Court of Appeal treated the assessment as discretionary and found no reviewable error.

The outcome is worth stating plainly. An employer withheld statutory entitlements for 10 months, and the courts responded by ordering payment rather than punishment. Employees whose statutory pay is delayed should not expect the delay itself to generate a separate award.

What does this change for employees with equity compensation?

Equity belongs in the severance calculation, and the size of this award shows how much can turn on it. The common law notice period determines how much unvested equity would have vested, so the factors that set the notice period also set the value of the claim. An offer built on base salary alone can understate the entitlement badly.

The reasoning also gives employees a specific place to look. Forfeiture terms sit in plan documents and award agreements rather than the employment contract itself, which is why they escape attention, and this decision confirms those documents form part of the employment terms when the contract incorporates them. Employees weighing an offer that says nothing about unvested equity can book a consultation with a licensed Ontario employment lawyer before signing a release.

Frequently Asked Questions

Q1: What did the Court of Appeal decide in Wigdor v. Facebook Canada?

The Court held that clauses forfeiting unvested stock units on termination contravene the Employment Standards Act, 2000 and increased the employee's damages by US$4,711,647.29. Section 60(1)(a) of the ESA bars an employer from altering any term or condition of employment during the statutory notice period, and the Court found that ending vesting the moment employment ends does exactly that. Because the forfeiture provisions were void, they could not displace the employee's common law rights, so he recovered the value of the units that would have vested during his 10-month common law notice period.

Q2: Do these rules apply to stock options as well as restricted share units?

The decision turned on whether the equity was a term or condition of employment rather than on what the award was called, so the reasoning is not confined to restricted share units. The Court looked at how the compensation actually functioned: the employment agreement promised the grant, the employer's own affiant agreed the units formed part of employee compensation, the company described the plan as share-based employee compensation, the units vested automatically with continued service, and the vested units were taxed as employment income. The Court expressly declined to decide whether equity compensation counts as wages under the ESA.

Q3: What about shares an employee bought with their own money?

The Court distinguished that situation. In an earlier case involving an employee-owned firm, employees purchased shares with their own funds and their rights afterward flowed from a shareholders agreement rather than the employment contract, so those shares were not employment compensation subject to the ESA. The units in this case were granted as compensation and vested automatically in consideration of continued employment. The dividing line is whether the employee paid for the equity and holds it as a shareholder, or received it as pay for working.

Q4: Does generic language saying a clause complies with legislation save a forfeiture provision?

It did not save these agreements. The later award agreements ended vesting on termination unless continued vesting was explicitly required by applicable legislation. The Court held nothing in the Employment Standards Act, 2000 explicitly addresses continued vesting of stock units, so the saving language was never engaged. The Court added that even if the provision were ambiguous about how explicit the legislation must be, that ambiguity would be resolved in favour of the employee. Saving language did not rescue a clause that altered a term of employment during the notice period.

Q5: Does it matter that the employee had a lawyer when he signed the contract?

No. The employer argued that the employee had negotiated the sale of his company and his employment agreement with counsel, which should affect how the contract was read. The Court rejected that argument, noting it had cautioned before against letting an employee's sophistication or access to independent advice override the plain language of termination provisions. It also held that the fact a party was represented does not fall within the surrounding circumstances a court may consider when interpreting a contract. Represented employees are entitled to the same clarity as anyone else.

Q6: Why did the court refuse punitive damages?

The employer did not pay the employee's statutory entitlements until 10 months after termination, and only after he started his court application. The application judge found this suggested more than an unintentional administrative error but fell short of reprehensible conduct, and that the employer had been prepared to let the entitlements languish while pursuing a release. Punitive damages require conduct that is malicious and outrageous enough to deserve punishment on its own. The Court of Appeal found no reviewable error in the refusal and declined to interfere.

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