Background
Daniel Wigdor joined Facebook Canada in 2020 after Meta acquired a business he had founded. His employment agreement granted him restricted stock units under Meta’s equity plan and purported to limit his termination entitlements. Facebook Canada terminated his employment without cause in December 2023.
Wigdor sought common-law reasonable-notice damages, including the value of RSUs that would have vested during the notice period, and punitive damages based on the respondents’ 10-month delay in paying his statutory entitlements. The application judge held that the employment agreement’s termination provisions violated Ontario’s Employment Standards Act, 2000 and awarded damages based on 10 months’ reasonable notice, but excluded the RSUs and denied punitive damages. Wigdor appealed those rulings, while Facebook Canada and Meta cross-appealed the finding that the termination provisions were unenforceable.
The Court’s Holding
The Court of Appeal allowed Wigdor’s appeal concerning the RSUs, upheld the denial of punitive damages, and dismissed the respondents’ cross-appeal. It agreed that the employment agreement’s termination provisions were unenforceable because they purported to permit termination on only two weeks’ notice during Wigdor’s first three months with Facebook Canada, despite the ESA requiring recognition of his prior service with the acquired business. He therefore remained entitled to 10 months’ common-law reasonable notice.
The court held that ESA ss. 60 and 61 must be read together. Pay in lieu of statutory notice must place an employee in the same financial position as working notice, calculated without altering any term or condition of employment during that period. Because the RSUs were employment compensation and their agreements purported to stop vesting immediately upon termination, the forfeiture provisions contravened the ESA and were void. The court increased Wigdor’s damages by US$4,711,647.29, representing 9,405 RSUs that would have vested during the 10-month notice period.
The court declined to disturb the refusal of punitive damages. Although the delayed statutory payment was inadequately explained and more than an innocent administrative error, the application judge was entitled to find that the conduct did not meet the demanding standard of malicious, outrageous, or reprehensible misconduct.
Key Takeaways
- Ontario pay in lieu of statutory notice must reflect what the employee would have received during working notice without any alteration to employment terms or conditions.
- An equity plan that ends RSU vesting during the statutory notice period may violate the ESA; a clause requiring continuation only when legislation does so “explicitly” did not save these agreements.
- If an unlawful forfeiture provision cannot displace common-law rights, damages may include equity compensation that would have vested throughout the full reasonable-notice period.
Why It Matters
The decision confirms that Ontario employers cannot avoid notice-period compensation protections merely by placing equity terms in separate plan documents or characterizing the termination as one involving pay in lieu rather than working notice. Courts will assess the contractual language for ESA compliance when the agreement is made, not simply examine what the employer ultimately paid.
The ruling is particularly significant for employees whose compensation includes RSUs or other equity awards: where those awards are a term or condition of employment, an unlawful statutory-notice forfeiture clause can expose an employer to damages for awards vesting throughout the longer common-law reasonable-notice period.