Can Your Employer Cut Off RSU Vesting The Day You're Fired? The Ontario Court of Appeal Says No

For years, employers offering restricted stock units and other equity compensation have relied on a simple assumption: if the plan document says unvested units are forfeited on termination, that’s the end of the conversation. The Ontario Court of Appeal’s decision in Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, just dismantled that assumption — and left Meta on the hook for close to US$4.7 million.

Dr. Daniel Wigdor is a tenured University of Toronto computer science professor who built a consulting company, Chatham Inc., into a 150-person operation serving Meta’s Reality Labs team. In 2020, Meta bought Chatham and folded Dr. Wigdor into Facebook Canada as Director, Research Science.

Part of the deal: a grant of 43,380 Meta RSUs valued at roughly US$7.5 million, vesting quarterly over four years, with further grants added in 2021, 2022 and 2023.

Facebook Canada terminated Dr. Wigdor without cause in December 2023. The termination letter offered him ESA minimums plus an enhanced severance package — but only if he signed a release barring him from disputing the forfeiture of his unvested RSUs.

He refused to sign.

Facebook Canada then refused to pay his basic statutory entitlements for ten months, paying up only after litigation was already underway.

Facebook Canada cross-appealed the application judge’s finding that its termination clause was unenforceable.

The clause purported to let the company terminate Dr. Wigdor on two weeks’ notice during his “first three months” of employment — but under section 9 of the Employment Standards Act, 2000, his nine years of prior service at Chatham had to count toward his entitlements under the ESA.

The Court of Appeal agreed the clause contravened the ESA and rejected the argument that Dr. Wigdor’s access to legal counsel during the sale negotiation should soften how strictly the clause is read.

Because the termination clause was void, Dr. Wigdor was entitled to common law reasonable notice — set at 10 months, a finding the Respondents didn’t challenge.

This is where the case gets interesting for anyone holding equity compensation.

Under the Supreme Court’s framework in Matthews v. Ocean Nutrition, a terminated employee is entitled to damages for a bonus or similar entitlement that would have vested during the notice period unless the plan’s wording unambiguously removes that right — and does so lawfully.

The application judge had read sections 60 and 61 of the ESA as two separate tracks: section 60 governs working notice and bars an employer from altering any “term or condition of employment” during that period, while section 61 governs pay in lieu of notice and, in her view, imposed no equivalent restriction. On that reading, RSU forfeiture on termination survived scrutiny.

The Court of Appeal disagreed.

Writing for a unanimous panel, Copeland J.A. held that section 61(1)(a) — which entitles an employee to “a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given” — expressly incorporates section 60’s protections, including the bar on altering terms or conditions of employment.

Reading the two sections together, and in light of the ESA’s remedial purpose, an employee terminated with pay in lieu of notice cannot end up worse off than an employee given working notice.

Sections 60 and 61 must produce the same result.

Having established that principle, the Court had little difficulty finding that Dr. Wigdor’s RSUs qualified.

They were baked into his employment agreement, vested on a quarterly schedule tied to continued employment, were treated as taxable employment income on his pay stubs, and were described in Meta’s own annual report as a “share-based employee compensation plan.”

Both the 2020 RSU Agreement and the 2021–2023 RSU Agreements purported to cut off all vesting immediately on termination, “whether specified under contract or statutorily, regulatory or common law.”

The Court held that language directly contravenes section 60(1)(a) of the ESA.

A savings clause in the later agreements — vesting would continue only if “explicitly required by applicable legislation” — didn’t help, either: nothing in the ESA “explicitly” addresses RSU vesting, and any resulting ambiguity has to be resolved in the employee’s favour.

Because the RSU forfeiture provisions violated the ESA, they were void under section 5(1) and could not validly override Dr. Wigdor’s common law right to reasonable notice.

The result: US$4,711,647.29 added to his damages award, representing the value of the RSUs that would have vested during his 10-month notice period.

Dr. Wigdor also sought punitive damages over the ten-month delay in paying his statutory minimums, arguing it was designed to pressure him into signing the release. The application judge found the conduct “dilatory” but not “harsh” or “malicious,” and the Court of Appeal saw no reviewable error in that discretionary call — though it noted the finding “approaches” one of intentional misconduct.

Employers shouldn’t read the result as a green light: the bar for punitive damages remains high, but a ten-month failure to pay statutory minimums came close to crossing it.

Wigdor is a significant course correction. The application judge’s decision had been welcomed by employer-side commentators as a green light for forfeiture-on-termination language in equity plans.

The Court of Appeal has now made clear that such language is only as good as its compliance with the ESA’s minimum standards — and that compliance has to be assessed at the time the contract is signed, not by looking at how the employer happened to behave at termination.

If you have questions about a termination clause, an equity compensation plan, or entitlements owed to you after a dismissal, contact Pinto Shekib LLP at info@pintoshekib.ca or 416-901-9984 for a confidential consultation.