Even when Facebook is successfully sued, the terminated employee does not necessarily recover everything they claim. Indeed, many recent Canadian employment law decisions confirm that the expectations of terminated employees often need to be moderated.
In Wigdor v Facebook Canada Ltd., 2025 ONSC 4051, the Ontario Superior Court ruled on a dispute over the entitlements of Daniel Wigdor, a former senior employee at Facebook Canada. While Wigdor successfully challenges some of the terms of his employment agreement, he failed in his efforts to claim additional equity-related compensation.
In 2011, Wigdor founded a technology consulting company, Chatham Inc., where he was also an employee. The Chatham business was successful, and it was acquired by Facebook Canada in 2020.
While at Facebook, Mr. Wigdor oversaw a team of around 150 people. In addition to his salary and benefits, Mr. Wigdor was eligible to receive compensation in the form of Restricted Stock Units (RSUs), potentially worth millions of dollars.
RSUs entitle an employee to receive stock in their employer company, but the employee only receives that stock when the RSU "vests" in the employee. Generally, employers set RSU vesting dates some years in the future of whenever the employee first receives the RSUs as a way of encouraging employees to stay with the company. RSU agreements such as those which Facebook provided to Wigdor often provide that all unvested RSUs are effectively cancelled if the employee stops working for the company. If an RSU is cancelled before it vests, then the employee gets nothing.
In December 2023, about three years after Chatham was purchased, Facebook terminated Wigdor's employment. The employer offered a severance package, which Wigdor refused to sign back, in part because it prevented him from claiming all unvested RSUs.
The three main issues in the ensuring lawsuit were as follows: 1) whether the termination clause in Wigdor's employment contract could limit his entitlement to termination pay, 2) whether Wigdor's contract or related documents could prevent him from claiming unvested RSUs, and 3) whether Wigdor had the right to claim punitive damages from Facebook.
The Employment Contract Termination Clause
The termination clause in Wigdor's contract provided that if Facebook terminated him without cause, then he would only be entitled to the minimum amounts of notice of termination and severance pay required by the Ontario Employment Standards Act (ESA).
The problem with the termination clause was that it gave Facebook the right to terminate Wigdor without cause and without notice or pay in lieu of notice during the first three months of his employment. The challenge for the employer was that, pursuant to the mandatory provisions of the ESA, the contract recognized that Wigdor's prior service with Chatham for the purposes of the employment with Facebook. The result was a conflict about whether or not the prior service with Chatham, reaching back to 2011, was in fact properly recognized as the ESA requires.
The Court ruled that where an employment contract conflicts with the ESA, then the whole contract is void. Facebook attempted unsuccessfully to argue that the termination contract did not violate the ESA because the termination clause included a general provision which "cured" the clause. The provision in question stated that in no event would Wigdor's entitlements upon termination be less than the minimum requirements set out by employment standards legislation.
The Court rejected the employer's argument and held that provisions that violate the ESA are not cured by general statements that promise compliance with legislation. As a result, the Court held the contractual termination to be void and awarded compensation based on ten months' pay in lieu of notice of termination.
RSU Entitlement: Binding Document Even When Contract Voice
A significant point from the decision is the pergence between the approach which the Court followed regarding the employment contract and the separate claim for RSU-related damages. The Court accepted that Wigdor's entitlements, if any, to RSUs were governed by a series of RSU agreements that were distinct from his employment contract. The RSU agreements clearly provided that Wigdor would lose all unvested RSUs on the date he was terminated. The Court rejected three arguments made by Wigdor, and held that all unvested RSUs were cancelled upon the termination of employment.
Firstly, Wigdor argued that because the ESA requires employers to continue paying employee benefits during the statutory notice period, Facebook could not cancel the RSUs on the date he was terminated, because the cancellation date was the beginning of his notice period. The Court rejected this argument, holding that RSUs are not a "benefit" within the meaning of the ESA and therefore employees have no statutory entitlement to RSUs during their notice period.
Secondly, Wigdor attempted to argue that his 2021-2023 RSU agreements were void because of their ambiguity. He pointed to language that provided that RSUs would not vest during the notice period, unless "applicable employment standards legislation" required continued RSU vesting during the notice period. According to Mr. Wigdor, the ESA does not require vesting during the notice period, but the language of the agreements suggests that it does, making the agreements ambiguous. The Court disagreed and ruled that the provision was not referring to any specific legislation, but instead merely accounting for the fact that legislation could be amended by proactively stating its compliance with any future legislation.
Thirdly, Wigdor pointed to language in the RSU agreements that provided that unvested RSUs would be cancelled upon Mr. Wigdor's termination even if Mr. Wigdor was terminated unlawfully. He argued this was a violation of the ESA because it purported to deprive him of compensation he was entitled to upon an unlawful termination. The Court accepted the employer's argument, which was that any entitlement to RSUs was governed by agreements that were separate from Wigdor's employment contract. In other words, it is not improper to have distinct contractual provisions for RSUs which are separate from the employment contract.
Punitive Damages: Require Supporting Facts
Wigdor also claimed $75,000 in punitive damages because Facebook had allegedly failed to pay his entitlements under the ESA for 10 months after his Wigdor's termination. The company successfully argued that the failure to pay was an unintentional administrative error that was not so extreme as to merit punishment. The Court found that the delay was not "harsh" or "malicious" and therefore did not merit punitive damages.
Takeaways for Employers
The Wigdor case touches on several important areas of employment law. On employees' entitlements to termination pay, it serves as a reminder that every part of a contract must comply with relevant legislation. On equity-based forms of compensation, it affirms that they can be structured so as to be a contractual right that is not treated identically to the rights of an employee under their employment contract. The decision also suggests a more cautious approach to imposing punishment on employers in the form of punitive damages. When taken together, these outcomes form some comfort to employers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
