In another landmark decision, the Ontario Court of Appeal (ONCA) ruled today in the equity compensation case of Daniel Wigdor v. Meta Platforms, Inc. (Wigdor). While the ONCA left the door open to a possible appeal to the Supreme Court of Canada (SCC), Dr. Wigdor was granted damages of close to US$5 million in lieu of his RSU grants which came to an end upon the notice of termination of his employment.
At issue was the question of whether equity rights must be continued through an employee’s statutory notice period. As the RSU documents governing Dr. Wigdor’s grants cut off his entitlements at the time of notice of termination, the ONCA found that those documents undercut Dr. Wigdor’s statutory minimum entitlements. In turn, and because Dr. Wigdor had already been found to be entitled to a 10-month common law notice by the lower court, the ONCA awarded him the value of his RSU grants through the entirety of that common law notice period.
Background to the Wigdor decision
The law in Canada around post-termination of employment rights arguably goes back to the SCC decision in Matthews v. Ocean in 2020. While Matthews was an incentive bonus case rather than an equity case, a number of courts across the country have relied upon it in equity cases over the following years to provide terminated employees with continued stock option or restricted stock unit (RSU) vesting post-termination. The court in Matthews concluded that two questions need to be answered when determining whether an employee is entitled to damages for breach of the implied term to continue bonuses and other benefits during a common law notice period:
1. Whether, but for the termination, the employee would have been entitled to the bonus or other benefit during the reasonable notice period; and
2. Is there something in the applicable plan which specifically removes the employee’s entitlement?
In 2021, the ONCA reviewed this issue in the context of shareholdings and bonuses based on a percentage of shareholdings, in the case of Mikelsteins v. Morrison Hershfield. The court found that the bonus was similar to a dividend rather than a true incentive bonus and that the shares were a voluntary purchase and were not part of the employee’s compensation. For these reasons, the court stated that the employment-based test under Matthews did not engage and that the employee’s rights as a shareholder were to be governed by the company’s Shareholders’ Agreement, which cut off equity rights on the date of notice of termination instead of at the end of the employee’s notice of termination period.
The ONCA had another opportunity to review this issue again in 2023, at which point it came to a different conclusion in the case of Milwid v. IBM. In Milwid, the court looked at the second part of the Matthews’ test and found that there was nothing in IBM’s RSU Plan which removed the employee’s entitlement to continued RSU vesting post-termination. As a result, he was entitled to damages in lieu of the opportunity to vest his RSUs through a 24 month common law notice of termination period. A new lower court Ontario case involving IBM came to the same conclusion in early 2026, under the same RSU Plan and for the same reasons (Adelman v. IBM).
This then brings us to Wigdor. In 2025, the Ontario Superior Court of Justice considered whether or not Dr. Wigdor was entitled to RSU vesting through his common law notice period. The court looked at the second part of the Matthews’ test and found that the RSU Agreement clearly removed the employee’s right to damages. The heart of the argument in Wigdor was focused on whether the language around RSU forfeiture breached the Ontario Employment Standards Act, 2000 (the ESA). More specifically, section 60(1) of the ESA requires all “terms and conditions” of employment to be continued during the statutory notice period if an employee is working out their notice period, but that language is missing from section 61(1), which applies if an employee is instead provided with pay in lieu of notice. Because Dr. Wigdor received some pay in lieu of notice rather than working notice, the lower court hung its hat on that distinction in order to not continue the RSU vesting post-termination.
Rationale for the Ontario Court of Appeal’s decision
After reviewing some of the above law and in particular, the SCC decision in Matthews, the Court dug into statutory interpretation of the ESA. Sections 60 and 61, which are the key sections guiding the Wigdor decision, are set out here:
60 (1) During a notice period under section 57 or 58, the employer,
(a) shall not reduce the employee’s wage rate or alter any other term or condition of employment;
(b) shall in each week pay the employee the wages the employee is entitled to receive, which in no case shall be less than his or her regular wages for a regular work week; and
(c) shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits under the plan until the end of the notice period.
61 (1) An employer may terminate the employment of an employee without notice or with less notice than is required under section 57 or 58 if the employer,
(a) pays to the employee termination pay in a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section; and
(b) continues to make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to receive. [Emphasis added]
In short, the ONCA made the following findings:
- Section 60 is incorporated by reference into section 61;
- Taken together, sections 60 and 61 are intended to place the employee in the same financial position whether they are provided with working notice or pay in lieu of notice; and
- The word “amount” used in section 61(1)(a) is not restricted to “wages” but instead includes all forms of compensation to which the employee was entitled during the statutory notice period.
The lower court read sections 60 and 61 separately, but the ONCA came to the conclusion that the requirement to continue all “terms and conditions of employment” in section 60 is also a requirement of section 61. Of note however, the ONCA also stated that the question of whether equity-based compensation falls under the definition of “wages” is better left for another court to decide.
The ONCA then explored whether Dr. Wigdor’s RSU grants formed part of his compensation and were a term and condition of his employment. In ruling for Dr. Wigdor, the court indicated that the RSUs were referenced in his employment agreement and taxed as employment income. The income from his RSUs was shown on his paystubs as a taxable benefit. They were described in corporate documents as an element of employee compensation. Notwithstanding these facts, the various plan and agreement documents either expressly cut off RSU entitlements as of the date of notice of termination or contained language which waffled on the point [the words of this author, and not the court].
The court concluded that “Applying the interpretation of ss. 60 and 61 of the ESA set out above, the RSU Agreements contravene the ESA because they purport to alter a “term or condition of employment” during the notice period under the ESA by depriving employees of ongoing vesting during that period. As a result, the provisions of the RSU Agreements relating to termination are void and do not remove Dr. Wigdor’s common law rights. Dr. Wigdor is entitled to damages for the RSUs that would have vested during the common law reasonable notice period.”
The court also explained away its decision in Mikelsteins on the basis that the shares purchased in that case were a voluntary purchase and were not part of the employee’s compensation, such as was the case with Dr. Wigdor’s RSU grants.
Where are we now?
1. Much may depend on whether the Wigdor decision is appealed to the Supreme Court of Canada by the employer. In other words, this week’s decision of the Ontario Court of Appeal may not be the end of this issue.
2. While Wigdor is an RSU case, it should be kept in mind that while other types of equity should be subject to the same analysis, much may depend on whether the equity granted to an employee is part of their compensation or a truly voluntary purchase option by the employee.
3. The drafting of equity plans, equity agreements and grant documents is inherently complicated, and these documents should be reviewed by employment lawyers as well as corporate lawyers. It may still be possible to contract out of equity rights post-termination, but it clearly has to be done extremely carefully, if at all.
4. Finally, there are other employment related issues which can arise in the context of drafting equity documents, including the drafting of overly broad termination for cause provisions which may lead to common law notice entitlements to terminated employees due to the law under Waksdale v. Swegon (Ontario C.A.) and the cases that have followed it.
In the meantime, stay tuned while we wait to see whether Meta appeals the Wigdor decision and if so, what our country’s highest court has to think about all of this if leave to appeal is granted.
For more information on this topic, please reach out to Catherine Coulter.
