In Wigdor v. Facebook Canada Ltd., the Ontario Superior Court found vesting restrictions contained in equity-based compensation plans - in this case, Restricted Stock Unit (RSU) plans - to be enforceable, despite finding a separate termination clause to be unenforceable. This ruling has significant implications for Ontario employers, clarifying critical distinctions between equity-based compensation and standard employment entitlements under the Employment Standards Act, 2000 (ESA).
In 2020, Meta Platforms Inc. acquired Chatham Labs Inc., a technology consulting firm founded by the plaintiff, Daniel Wigdor. As part of the acquisition, Wigdor’s consulting relationship - spanning nearly a decade with Meta’s subsidiaries - came to an end and he became an employee of Facebook Canada, Meta’s Canadian subsidiary. Wigdor’s employment contract with Facebook Canada explicitly recognized his prior years of service, but solely for the purpose of determining his minimum statutory entitlements under the ESA.
Nevertheless, Wigdor’s employment contract included a clause that purported to limit his termination entitlements within the first three months of employment to just two weeks’ notice or pay in lieu thereof. The clause directly conflicted with Facebook Canada’s obligation under the ESA to recognize Wigdor’s service with Chatham (which was deemed a predecessor of Meta/Facebook Canada under the ESA). Wigdor’s near decade of prior service would have warranted greater notice of...
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