Court rules that RSUs are contractual, not wages under ESA

On July 8, 2025, the Ontario Superior Court of Justice (the “Court”) released its decision in Wigdor v. Facebook Canada Ltd.¹ In this case, the Court found that an employer’s restricted stock units (“RSUs”) were contractual entitlements and independent of relief that a terminated employee may be entitled to under their employment agreement, the Employment Standards Act, 2000 (the “ESA”), or at common law. This decision provides much needed clarity to employers and affirms that RSU plans cannot breach sections 60 or 61 of the ESA (i.e., the sections that address termination entitlements during the statutory notice period) because RSUs do not constitute “wages” or “benefits” within the meaning of the ESA.

The Applicant, Daniel Wigdor (“Wigdor”), was granted RSUs both at the beginning of his employment with Facebook Canada (“Facebook”) in September 2020 and on an ongoing basis. These RSU grants were awarded under separate RSU Agreements:

1. The 2020 RSU Agreement
2. The 2021-2023 RSU Agreements, which contained different language
   

When Wigdor’s employment was terminated by Facebook, he was offered payments worth more than his statutory minimum entitlements under the ESA in exchange for a full and final release. Wigdor did not accept the offer or sign the release because it precluded him from making a claim for the forfeiture of his unvested RSUs, which were valued in the millions of dollars.

In the application, Wigdor argued that the language in the 2020 RSU Agreement violated the ESA which required employers to “maintain all terms and conditions of employment during the statutory notice period.” Regarding the 2021-2023 RSU Agreements, Wigdor argued that the language deliberately misled employees about their entitlements on termination by stating that the unvested RSUs would be terminated unless “applicable employment standards legislation explicitly requires continued vesting during the statutory notice period”. Since the ESA does not expressly require RSUs to vest during the statutory notice period, Wigdor argued that the wording imports an ambiguous term into the RSU agreements, and as such, the entire provision is void.

Finally, Wigdor argued that the language in the RSU agreements which stated that “all RSUs will be forfeited”, even if the termination was found to be unlawful, is a common defect. Wigdor contented that this was an attempt to contract out of the ESA, and therefore, it made both RSU agreements void and unenforceable.

In setting out the legal framework, Justice Leiper reaffirmed that RSUs, like stock options, are not “wages” under the ESA. The ESA’s definition of “wages” and “regular wages” only includes monetary remuneration, payments required under the ESA, and certain prescribed allowances. The Court reasoned that had the legislature chosen to include other forms of compensation in “wages”, it could have adopted a more expansive definition that included stock options and RSUs. On this basis, the Court rejected Wigdor’s argument that the termination language in the RSU agreements violated section 61 of the ESA.

The Court also found that the language in the 2021-2023 RSU Agreements did not mislead employees or contain a common defect. Justice Leiper noted that while there may be instances where a termination is found to be unlawful in the context of an employment contract via the operation of sections 53 and 74 of the ESA, those provisions do not apply to RSU agreements.

Based on the foregoing, the Court declined to find that the 2020 RSU Agreement or 2021-2023 RSU Agreements were void and unenforceable.

This decision affirms that RSU rights are governed by the wording of the contractual agreements between the employer and employee. These contractual rights are independent of any relief that an employee may be entitled to under their employment agreement, the ESA, or at common law. Nevertheless, RSU plans must still contain clear and unambiguous language to be valid and enforceable.