Wigdor v. Facebook Canada Ltd., 2026 ONCA 572

Introduction

Following upon its landmark decision regarding termination provisions in employment agreements last week, the Ontario Court of Appeal released another important decision for employers who provide deferred equity compensation to their employees. In Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, the Court of Appeal held that language in Restricted Stock Unit (“RSU”) agreements that provided vesting would stop immediately upon termination, and not continue during any period of reasonable notice, was unenforceable under Ontario’s Employment Standards Act, 2000 (ESA). The Court therefore found that a terminated executive was entitled to over US$4.7 million in damages for the value of RSUs that would have vested during his notice period.

Although Wigdor is important for RSU forfeiture and termination damages, its broader significance may lie in the uncertainty it could introduce into the practical, contextual approach to interpreting employment contracts that the Court of Appeal endorsed in Baker, released one day earlier. This article considers both the immediate impact of Wigdor and the broader questions it raises for employers.

Background

RSUs are a form of compensation in which an employer promises to give an employee shares (or their cash value) at a future date, typically where the employee remains employed for a prescribed period. RSUs “vest” – meaning the employee earns the right to receive them – on a set schedule. If the employee is terminated before vesting is complete, unvested RSUs may be forfeited.

The appellant, Daniel Wigdor, founded a company, Chatham Inc., that was acquired by Meta Platforms Inc. (“Meta”) in 2020.  As part of the acquisition, Mr. Wigdor began working for Facebook Canada Ltd. (“Facebook”) as Director, Research Science in September 2020.

At the time of the acquisition, Meta granted Mr. Wigdor 43,380 RSUs valued at approximately US$7.5 million, which were to vest quarterly over four years. The RSU agreements provided that vesting would stop immediately upon termination and that the termination date would not be extended by any notice period or pay in lieu of notice required by law.

In December 2023, Facebook Canada terminated Mr. Wigdor’s employment on a without cause basis. Mr. Wigdor was offered his minimum statutory entitlements under the ESA. Facebook Canada also offered Mr. Wigdor additional termination amounts in exchange for his execution of a release. Mr. Wigdor refused to sign the release and brought a wrongful dismissal claim against Facebook Canada and Meta.

The Application Decision

At first instance, the application judge found that Mr. Wigdor’s employment agreement attempted to contract out of the ESA. Specifically, the termination clause failed to properly recognize Mr. Wigdor’s years of service with Chatham when calculating his termination entitlements, contrary to section 9 of the ESA. Because the termination clause violated the ESA, it was void, and Mr. Wigdor was entitled to common law reasonable notice.

The application judge, however, held that the termination provisions within the RSU agreements, which stopped vesting upon termination, were valid. The judge reasoned that RSUs did not qualify as “wages” or “benefits” under the ESA, such that the forfeiture provisions did not violate the statute. This meant Mr. Wigdor could not recover the value of the RSUs that would have vested during the statutory notice period.

Both sides appealed: Wigdor appealed the denial of his RSU damages, and Facebook and Meta cross-appealed the finding that the termination clause was void.

Appeal Decision

The Court of Appeal sided with Mr. Wigdor on the RSU issue and dismissed the cross-appeal.

The Court held that sections 60 and 61 of the ESA must be read together as complementary provisions. Section 60 provides that during the statutory notice period an employer cannot reduce an employee’s wages or change any term or condition of their employment. Section 61 stipulates that if the employer chooses to pay in lieu of working notice, the lump sum must equal the full amount the employee would have received had they worked through the notice period. The Court concluded that these two provisions work together to ensure the employee is placed in the same financial position whether they receive working notice or a lump-sum payment.

The Court determined that the RSUs constituted a term or condition of Mr. Wigdor’s employment: they were incorporated into the employment agreement, they vested on a regular schedule, Meta itself described them as “share-based employee compensation,” and vested amounts were taxed as employment income. Because the RSUs were a term of employment, they could not be altered or taken away during the notice period.

On this basis, the Court concluded that the forfeiture provisions in the RSU agreements violated section 60 of the ESA and declared them unenforceable.

Accordingly, the Court increased Mr. Wigdor’s damages by US$4,711,647.29 to reflect the value of the 9,405 RSUs that would have vested during the 10-month common law notice period.

Tension with Baker Decision

The Wigdor decision follows shortly after the Ontario Court of Appeal’s hotly anticipated decision in Baker v. Van Dolder’s Home Team Inc.; Li v. Wayfair Canada ULC, 2026 ONCA 568. The consolidated appeals concerned “ESA-only” termination clauses using phrases such as “at any time” and “at any time and for any reason.”

In Baker, the Court explicitly sought to clarify the legal principles governing the interpretation of termination provisions, noting that the case law in this area had become difficult to reconcile. The Court set out an interpretive framework favouring a practical and contextual reading of employment contracts, focused on the parties’ objective intention, while recognizing the ESA’s protective purpose. Where an agreement objectively reflects an intention to provide at least the ESA minimums, the Court emphasized that a hypothetical technical reading that could permit an unlawful termination should not automatically invalidate the clause.

The Court held that “at any time” or “at any time and for any reason” language does not, by that language alone, make a without-cause termination clause inconsistent with the ESA. On the issue of with-cause termination provisions, the Court also endorsed a plain-language approach. Despite a reference to the “just cause” standard—a threshold for termination lower than the ESA’s “wilful misconduct” standard—the provision in question incorporated minimum entitlements under the ESA.

From an employer’s perspective, Baker was an endorsement of common sense and plain reading of employment contracts. The Court noted that the search for formalistic or technical interpretations of contractual language serves neither employer nor employee, as such interpretations, without regard for the intent of the parties, lead to indeterminacy and inconsistent results.

Wigdor, decided by a different panel of judges but released a mere day after Baker, is in immediate tension with the interpretive framework the Court endorsed in Baker. In Wigdor, the Court appears to engage in the very formalistic approach to clear contractual language that was overtly criticized in Baker. The outcome in Wigdor was the result of a technical reading of sections 60 and 61 of the ESA, where the Court determined that section 61 effectively incorporated obligations from section 60. This interpretation superseded unequivocal language within the RSU agreements stating that no vesting would continue during the statutory notice period.

The Court also gave no weight to the fact that the most recent RSU agreement contained a provision that qualified the post-termination “no vesting” parameters to indicate that vesting would continue if required by legislation. The inclusion of such language could reasonably be interpreted as indicative of the parties’ intent to comply with the ESA had the Court followed the global interpretative approach endorsed within Baker.

Takeaway

These two decisions, released within a day of each other by the same court, pull in different directions. Baker could be taken as assurance by employers that courts will read termination clauses practically and in context, looking at what the agreement as a whole was trying to achieve rather than seizing on individual words that could theoretically permit a breach of employment standards legislation. Under that framework, employers can take some comfort that reasonably drafted termination provisions will be upheld if they clearly intend to provide at least the statutory minimums.

Wigdor, however, applies a stricter analysis. The Court in Wigdor did not ask whether the parties intended to comply with the ESA; instead, it engaged in a technical reading of statutory language that seems at odds with explicit contractual language.  For employers, this tension creates real uncertainty.

Until the courts reconcile these two frameworks, employers should review their employment agreements and RSU plans carefully with legal counsel to ensure they continue to be enforceable in Ontario.