Executive Summary: Key Legal and Evidentiary Issues

• Employment agreement’s termination clause was found to contravene the Employment Standards Act (ESA) and was declared void.

• The applicant was awarded 10 months’ common law notice due to the unenforceable termination provision.

• RSU (Restricted Stock Unit) agreements were deemed enforceable and excluded from ESA protections.

• The court rejected the argument that RSU forfeiture clauses unlawfully circumvent statutory employee protections.

• Meta’s 10-month delay in paying statutory entitlements did not meet the threshold for punitive damages.

• Release signed during a prior share purchase transaction did not waive rights against the new employer on termination.

Background and nature of the employment relationship

Daniel Wigdor, a professor at the University of Toronto specializing in human-computer interaction, was employed by Facebook Canada Ltd., a subsidiary of Meta Platforms Inc., beginning in September 2020. Before this, he had worked through his consulting company, Chatham Inc., which was later acquired by Meta. As part of that acquisition, he transitioned to employment at Facebook Canada, carrying over significant experience and responsibility, including managing a team of 150 people. His compensation package included a substantial base salary, benefits, and equity in the form of Restricted Stock Units (RSUs).

Termination and the resulting legal dispute

In December 2023, Facebook Canada terminated Wigdor’s employment without cause. He was offered his statutory minimum entitlements under the ESA, but only on the condition that he sign a full and final release, which included forfeiting rights to his unvested RSUs. Wigdor refused to sign. As a result, Meta withheld all termination-related payments, including statutory entitlements, until nearly 10 months later—only after Wigdor initiated legal proceedings.

Wigdor brought an application seeking common law damages for wrongful dismissal, entitlement to the value of forfeited RSUs, and punitive damages for the delayed statutory payments and improper conditioning of payments on a release.

The termination clause and ESA compliance

The employment agreement included a termination clause that sought to limit Wigdor's entitlements during the first three months of employment to only two weeks' notice, even when counting his prior service with Chatham. The court found this provision violated multiple sections of the ESA, including those that require recognition of prior service in business acquisitions. Citing well-established case law, the court ruled that even a single ESA violation renders the entire termination clause void and unenforceable. The court also rejected Meta’s argument that a “saving clause” could cure the defective language. As a result, the court applied the common law to determine Wigdor’s notice entitlement.

Assessment of reasonable notice

Applying the Bardal factors, the court determined that Wigdor was entitled to 10 months’ notice. While he had only 3.25 years of formal employment with Facebook Canada, the court considered his prior 9 years of continuous related service, his specialized skills, managerial role, and limited availability of similar employment in the market. The share purchase transaction and the release Wigdor signed at that time did not waive his rights to reasonable notice from his new employer. The court found the release applied narrowly to his former employer and not to Facebook Canada.

RSU entitlement during the notice period

Wigdor argued that the RSU agreements violated the ESA and should not be enforceable, as they provided for immediate forfeiture of unvested RSUs upon termination, including during the notice period. However, the court found that RSUs are not considered "wages" or "benefits" under the ESA. Drawing on prior appellate decisions, the judge held that the ESA only mandates continuation of wages and benefit plan contributions during the statutory notice period—not equity-based compensation like RSUs. The RSU agreements were clearly worded and lawfully excluded vesting during the notice period. Therefore, Wigdor was not entitled to any compensation for the unvested RSUs.

Punitive damages claim

The court considered whether Meta’s delay in paying ESA entitlements warranted punitive damages. Although Meta attributed the delay to internal confusion, the court found that this explanation lacked credibility and demonstrated a disregard for Wigdor’s basic statutory rights. Nevertheless, the conduct did not reach the high threshold required for an award of punitive damages. The court concluded that while the employer's conduct was dilatory and poorly explained, it was not malicious or high-handed enough to justify a punitive award.

Final result and implications

The court found in favor of Wigdor on the central issue that his employment contract's termination clause was unenforceable, awarding him 10 months of common law notice. However, he was unsuccessful in his claims for RSU compensation and punitive damages. The decision underscores the importance of ESA compliance in termination clauses, while also confirming that RSUs are not protected under statutory employment entitlements. It also highlights the risks employers face when delaying ESA payments or conditioning them on unlawful releases.