In Wigdor v. Facebook Canada Ltd., 2025 ONSC 4051, the applicant, a former Facebook employee, sought an order that the termination provision in his employment was unenforceable and that he was entitled to continued RSU vesting for the duration of his notice period pursuant to the Employment Standards Act, 2000 (the ESA).
Factual background
In 2020, as part of a transaction, the applicant began employment with Facebook Canada Ltd. (Facebook), continuing in a project management role he had begun while providing consulting services to Meta (Facebook's parent company). The applicant's employment arrangement provided restricted share unit (RSU) grants over the period of 2020 — 2024.
Employment Agreement
The applicant's agreement with Facebook provided that ,"in no event" would an employee receive less than her or his entitlements under the ESA, and, within the first three months of employment, Facebook could terminate employment "at any time by providing only two weeks" of advance notice or pay in lieu thereof.
RSU entitlements
The applicant received RSU grants from Facebook beginning in 2020, pursuant to Meta's 2012 Equity Incentive Plan and RSU Award Agreements. Both the 2020 RSU Agreement and the 2021-2023 RSU Agreements provided that RSU vesting would terminate as of the date the employee ceased providing services to the company, or the termination date (whichever was later). The applicant argued that such terms violated s. 61 of the ESA, which requires employers to maintain all "terms and conditions of employment" during the statutory notice period.
Facts leading up to termination
Facebook terminated the applicant on December 4, 2023, effective December 8, 2023. The termination letter purported to terminate the applicant's employment without advance notice by paying the minimum statutory payments under the ESA, which Facebook calculated as eight weeks of termination notice pay and 12.5 weeks of severance pay. Facebook presented the applicant with a full and final release in exchange for enhanced severance, which the applicant declined to sign because it precluded him from disputing the forfeiture of his unvested RSUs (valued in millions of dollars).
Issues
The Court had to decide the following issues (among others):
- Is the applicant's employment agreement void because its termination clause contravenes the ESA?
- Is the applicant entitled to the value of the forfeited RSUs and other benefits which would have vested during the notice period?
Decision on termination clause
The Court found that section 12(a) of the termination clause in the applicant's employment agreement ran afoul of the ESA because the provision provided that, if employment was terminated within the first three months, Facebook would only provide two weeks' notice or pay in lieu. This was contrary to the language at the beginning of section 12, which provided that the applicant would not receive less than his ESA entitlements (which would have been at least eight weeks of termination notice, and severance pay at the time of signing the agreement).
Decision on RSUs treatment
The Court ultimately disagreed with the applicant's assertion that Facebook's termination of the RSUs ran afoul of the ESA.
The Court cited North v. Metaswitch Networks Corporations, 2017 ONCA 790, concluding that RSUs, like stock options, do not constitute "wages" under the ESA, nor are RSUs a benefit akin to a health or dental benefit, which an employer is required to continue for the statutory notice period. Accordingly, the Court found that neither section 61 nor section 60 of the ESA operates to guarantee the continued vesting of RSUs during the statutory notice period. Notably, the Court stated that, had the legislature intended for "wages" in the ESA to encompass other forms of remuneration, including stock options and RSUs, it would have adopted a more expansive definition.
The Court also confirmed that the forfeiture language in the 2020 RSU Agreement was enforceable. The agreement stated that, if the participant's employment was terminated for any reason, the employee would be forced to sell back her or his shares to the issuer. The provision also clarified that the relevant termination date for the purpose of terminated vesting occurs when the participant ceases to perform services. Similarly, the 2021-2023 RSU Agreements provided for the forfeiture of unvested RSUs upon termination, where the termination date was the date on which termination occurs, and not extended unless "applicable employment standards legislation explicitly requires continued entitlement to vesting during a statutory notice period." The Court found this language to be clear and unambiguous.
The applicant argued that the language of the RSU agreements was overbroad because it failed to recognize situations where employees cannot be lawfully terminated (including job protected leave, or in the event of reprisal). The applicant drew analogies to instances where similarly worded employment agreements have been held unenforceable, which the Court also rejected, affirming that the RSU agreements governed the applicant's rights in respect thereto, and were not to be treated the same way as rights under his employment agreement.
Takeaways and conclusions
- While we anticipate this case will be appealed to the Ontario Court of Appeal, in the interim, it provides some comfort to employers who regularly offer equity-based benefits to their employees. Stock options and RSUs are not "wages" pursuant to the ESA.
- Employers should consider reviewing equity and other incentive plan documents to ensure forfeiture provisions and termination language are clear and unambiguous, in particular, for employers who wish to terminate continued vesting at the end of employment.
- Notwithstanding the decision in Wigdor, existing plan documents that promise continued vesting over the statutory notice period (or some other period) should continue to operate as drafted. The Court's decision does not trump existing contractual obligations separate from the ESA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
