When an employee's employment is terminated without cause, the Employment Standards Act ("ESA") requires employers to provide either working notice or pay in lieu of notice. During the statutory notice period, section 60 of the ESA prohibits an employer from reducing an employee's wage rate or altering any other "term or condition of employment." Yet the ESA does not define what constitutes a "term or condition of employment", leaving courts to determine the scope of that protection on a case-by-case basis.

Historically, employers and employees have often focused on wages, benefits, and vacation entitlements when considering ESA notice obligations. As compensation structures for executives and senior management have become more complex, disputes have increasingly arisen over stock options, restricted stock units ("RSUs"), bonuses, and other incentive-based compensation. The question becomes whether these forms of compensation are merely contractual perks that can end immediately upon termination, or whether they are protected terms and conditions of employment that must continue through the statutory notice period. The Ontario Court of Appeal recently considered that issue in Wigdor v Facebook Canada Ltd., (2026 ONCA 572).

Wigdor v Facebook Canada Ltd., 2026 ONCA 572

In Wigdor v Facebook Canada Ltd. (2026 ONCA 572), Daniel Wigdor, was a tenured professor at the University of Toronto who founded a technology consulting company that was later acquired by Meta Platforms, Inc. (formerly known as Facebook). As part of the transaction, he became employed by Facebook Canada Ltd. (Meta's Canadian subsidiary) with the title Director, Research Science. In addition to a substantial salary and benefits package, his compensation included significant grants of RSUs under Meta's equity compensation program.

Dr. Wigdor's employment was terminated without cause in December 2023. Following his dismissal, Dr. Wigdor declined to sign the termination letter and accompanying release because he took the position that he remained entitled to RSUs that would have vested during the notice period. The relevant RSU agreements provided that unvested RSUs would be forfeited upon termination and that vesting would not continue during any notice period, including statutory notice periods. The employer therefore argued that the RSU agreements clearly ended vesting upon termination. Dr. Wigdor, however, maintained that these provisions violated the ESA because they purported to remove compensation-related rights during the statutory notice period.

The Ontario Court of Appeal agreed with Dr. Wigdor. The Court held that sections 60 and 61 of the ESA must be read together. In the Court's view, where an employee receives pay in lieu of notice, the employee must receive compensation equivalent to what they would have received had working notice been provided. That analysis includes the protection found in section 60(1)(a), which prohibits an employer from altering a term or condition of employment during the statutory notice period.

The Court concluded that Dr. Wigdor's entitlement to RSUs formed part of the terms or conditions of his employment. The RSUs were described in the employment documentation, were intended to compensate and retain employees, vested over time as part of the employment relationship, and were treated as employment income when they vested. For those reasons, the Court rejected the argument that the RSUs existed independently of the employment relationship.

Having reached that conclusion, the Court found that the provisions terminating RSU vesting during the statutory notice period contravened the ESA. Because employers cannot contract out of ESA minimum standards, those provisions were unenforceable. As a result, Dr. Wigdor was entitled to recover the value of the RSUs that would have vested during his common law reasonable notice period. In doing so, the Court of Appeal overturned the motion judge's conclusion that Dr. Wigdor's RSU entitlements were not subject to the ESA. As a result, the provisions purporting to extinguish those entitlements during the statutory notice period could not be enforced.

What Does This Mean for Employers and Employees?

The decision serves as a reminder that compensation arrangements cannot be analyzed in isolation from the Employment Standards Act. Even carefully drafted incentive compensation plans may be vulnerable if they remove rights that the ESA protects during the statutory notice period. A clause may be clear, but clarity alone will not save a provision that violates minimum statutory standards. However, it is also interesting that this came a day after the Baker v Van Dolder's Home Team Inc., (2026 ONCA 568) decision (which I have a separate blog on) where the Court of Appeal took a different approach to analyzing termination clauses.

For employees, the case is a reminder that compensation lost following termination may not necessarily be lost forever. Where incentive compensation forms part of an employee's overall compensation package, it may be worth examining whether plan language complies with the ESA before assuming those entitlements have been lost.

For employers, the decision highlights the importance of reviewing not only employment agreements, but also stock option plans, RSU agreements, bonus plans, and other incentive compensation documents. Provisions that automatically terminate participation or vesting upon dismissal may require careful scrutiny to ensure that they comply with the ESA.

How Suzanne Desrosiers Professional Can Help

At Suzanne Desrosiers Professional Corporation, we have a team of employment lawyers who are well versed in employment law and keep up to date on major employment law cases. If you or your organization have an employment law case, regardless of whether it involves RSUs, call our office today for a consultation. To speak to one of our lawyers, please call us at 705-268-6492 or email us at info@sdlawtimmins.com.