Drawing the Line on Equity Compensation: The Ontario Court of Appeal Takes Up RSUs

Equity‑based compensation has become a core component of remuneration packages for many employees — particularly in technology, life sciences, and other growth industries. Yet Canadian employment law has struggled to draw clear boundaries around how these incentives should be treated on termination, especially where employment ends before equity awards vest.

The Ontario Court of Appeal is now poised to weigh in on these issues in Wigdor v. Facebook Canada Ltd., a wrongful dismissal appeal that raises fundamental questions about whether restricted stock units (“RSUs”) must be continued during a statutory notice period, whether RSUs should be treated as “wages” under the Employment Standards Act, 2000 (the “ESA”) and the enforceability of equity plans which seek to limit post-termination vesting.

On April 23, 2026, McCarthy Tétrault LLP represented the Canadian Association of Counsel to Employers (“CACE”), which was granted leave to intervene in the appeal.

The appeal arises from a wrongful dismissal application. The Applicant employee, following termination of his employment without cause, sought damages that included the value of RSUs that would have vested during the reasonable notice period awarded by the application judge. The application judge determined that the Applicant employee was entitled to common law notice, but was not entitled to RSUs which would have vested during the notice period. Rather, the Application judge determined that the RSU plans at issue did not violate the ESA, were enforceable, and ousted the Applicant’s claim to the vesting of RSUs over that common law notice period. In so doing, the Application Judge determined that RSUs are not “wages” under the ESA and therefore, the ESA does not require employers to provide continued vesting of RSUs when providing statutory pay in lieu of notice.

The Applicant employee appealed the application judge’s decision in respect of their RSU entitlements, while the Respondent employer cross-appealed the application judge’s decision that the employee was entitled to common law notice.

The outcome of the appeal has the potential to affect a wide range of employers. Many organizations now rely on equity‑based compensation structures to attract, retain, and incentivize key employees. The questions before the Court of Appeal in this case matter because, if RSU vesting must be continued during a statutory notice period or if RSUs are treated as “wages” for the purposes of the ESA:

• forfeiture clauses in equity plans could be vulnerable to challenge;
• termination costs — particularly for senior or highly compensated employees — could increase materially and unpredictably; and,
• other minimum statutory payments which are based on the definition of “wages”, such as statutory vacation pay and holiday pay, would have to include the value of employee equity entitlements 

As an intervener, CACE is not advocating for either party on the merits of appeals and cross appeals. Rather, its submissions focus on the broader policy and practical implications of treating RSUs as statutory wages within the wage-based entitlement framework of the ESA, which include impacts on the calculation of vacation pay and holiday pay. 

Regardless of the outcome, Wigdor v. Facebook Canada Ltd. is likely to be a significant decision in the evolving law of employment compensation in Ontario. Employers should closely monitor the Court of Appeal’s reasons once released. We will provide updates once the Court of Appeal releases its decision.