In Wigdor v. Facebook Canada Ltd., 2026 ONCA 572 , Justice Copeland made a number of important decisions about the relationship between RSU’s ( Restricted Stock Units ) and the law of reasonable notice :
A) Sections 60 and 61 of the ESA require the same calculation of what is to be paid to the dismissed employee
I agree with Dr. Wigdor that, properly interpreted, s. 61(1)(a) of the ESA requires that the lump sum payment to which an employee is entitled where pay is provided in lieu of working notice must be calculated on the basis that there are no alterations to the terms or conditions of employment during the statutory notice period.
Section 61(1)(a) defines the lump sum payment to which an employee is entitled if termination is without notice or is with less notice than required under ss. 57 or 58 of the ESA.3 Section 61(1)(a) clearly defines the amount of the payment in lieu of notice as: “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” (emphasis added). The text of s. 61(1)(a) is clear that the lump sum must be “equal to” the amount the employee would have been entitled to had they been given working notice under s. 60.
The trial Judge had made a distinction between the compensation that would flow from a working notice termination and a pay in lieu of notice termination, The OCA says that was an error and the monetary result must be the same .
B) In determining the validity of the contract, we look at it time of formation of the contract not what the employer did at the time of termination :
The application judge only considered whether the RSU termination provisions complied with the ESA through the lens of a termination where pay in lieu of notice is given because, apart from four days of working notice, Dr. Wigdor was given pay in lieu. By focusing only on circumstances where pay in lieu is given, the application judge failed to consider the effect of the terms of the contract at the time the contract was entered into. In other words, in this case, if the terms of the RSU Agreements purporting to deprive terminated employees of vesting of RSUs during the notice period for a termination contravene the ESA because they alter a term or condition of employment, they do so at the time the employment contract is entered into whether for a particular employee a later termination is with working notice or pay in lieu.
C) The Court did not decide whether equity based compensation was ” wages ” within the definition in section 1 (1) of the ESA:
It is not necessary to address this issue to decide this appeal, and I decline to do so. Dr. Wigdor’s argument is that the entitlement to RSUs constitutes a “term or condition of employment” within the meaning of s. 60(1)(a) of the ESA.5 5 Dr. Wigdor made submissions, in the alternative and in response to the intervener’s submissions, on the “wages” issue. However, his primary position was that it is not necessary to decide if equity-based compensation is “wages” to decide this appeal. As outlined above, I would decide the appeal on this basis. Whether the RSU entitlement also constitutes “wages” need not be decided. The question of whether equity-based compensation falls within the definition of “wages” in the ESA is better left to an appeal where its resolution is determinative. I would add that, depending on the evidentiary record, it may be the case that the answer is more nuanced than a blanket determination that all forms of equity-based compensation are or are not “wages” under the ESA.
D) Savings Language in the Clause Does Not Work:
The 2021-2023 RSU Agreements also purport to end vesting immediately upon termination. Although the 2021-2023 RSU Agreements appear to attempt to include a saving provision with the language “unless explicitly required by applicable legislation”, there is nothing “explicit” in the ESA about continued vesting of RSUs during the statutory notice period. The saving language is not engaged.
E) Just Because the plaintiff received some of these RSU’s in part because of a commercial transaction that does not mean that the ESA does not apply:
The only reasonable conclusion on the record in this appeal is that Dr. Wigdor’s RSU entitlements were part of his employment compensation. As I have outlined above at paras. 107, 118-19, the employment agreement and the RSU Agreements structure Dr. Wigdor’s RSU entitlements as employment compensation. Further, the RSUs that vested during the time Dr. Wigdor was employed by the Respondents were treated as employment income. Thus, the ESA applies to the RSU entitlements.
To the extent that UTS is advancing an argument that in the context of a commercial contract, the ESA provisions do not apply, we disagree. There is nothing in the ESA that indicates that it is inapplicable in employment relationships connected to commercial transactions.
F) The ruling innMikelsteins v. Morrison Hershfield Limited, 2021 ONCA 155, is not applicable in this case :
Mikelsteins is distinguishable from the circumstances of this appeal. Mikelsteins concerned an “employee-owned engineering firm” that allowed certain employees to purchase shares in the parent corporation using their own funds. When an employee decided to purchase shares, their rights regarding the shares were determined by the terms of the shareholders agreement. This court held that receipt of shares was not employment compensation subject to the ESA for two reasons: (1) because the employee had to purchase the shares using their own funds; and (2) because the employee’s rights as a shareholder in relation to the shares, once the employee made the choice to purchase the shares, were determined under the shareholders agreement, not the employment contract: Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515, at paras. 2-6, 12-19; Mikelsteins v. Morrison Hershfield Limited, 2021 ONCA 155, at paras. 11-13, leave to appeal refused, [2019] S.C.C.A. No. 363.
[132] By contrast, as I have outlined above, in this case the RSU entitlements were a form of employment compensation that automatically vested in consideration of ongoing employment.
My Comments;
This is a very important case that should be read in its entirety.
By the way, the RSU issue was worth $4,711,647 USD or over $6.5 million of our dollars
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