An Ontario Superior Court judge has ruled that Facebook Canada’s termination clause violated employment standards legislation, awarding a former research director 10 months’ notice but rejecting his claim to millions in forfeited stock units.
D.W., a University of Toronto computer science professor who worked part-time as Director of Research Science at Facebook Canada, was terminated in December 2023 after 3.25 years of employment. The company had acquired his consulting firm in 2020, and his employment agreement recognized his nine years of prior service for statutory purposes only.
Termination clause deemed unenforceable
The court found Facebook Canada’s employment agreement invalid because it contained a probationary period clause that contradicted Ontario’s Employment Standards Act. The agreement stated that during the first three months of employment, “including any prior service with Chatham Labs Inc. or its predecessors, the Company may terminate your employment at any time by providing you with two (2) weeks of advance notice or base pay in lieu of notice.”
Given D.W.’s nine years of service with his acquired company, he was entitled to eight weeks of notice and nine weeks of severance pay under the ESA, not merely two weeks as the contract specified.
Facebook Canada argued that general language in the contract promising compliance with employment standards legislation would “cure” the problematic clause. The court rejected this argument, following Court of Appeal precedent that such “saving” provisions cannot remedy specific contractual terms that violate the ESA.
The judge noted this approach “exploits vulnerable employees who hold unequal bargaining power in contract negotiations” and “flouts the purpose of the ESA – to protect employees and to ensure that employers treat them fairly upon termination.”
Common law notice period
With the employment agreement deemed void, the court applied common law principles to determine reasonable notice. Despite D.W.’s relatively short tenure as an employee, several factors supported a longer notice period.
The court considered D.W.’s highly specialized role managing 150 technical employees in human-computer interaction research, noting there were only seven technology companies in Toronto with research centres requiring such expertise. His age of 44 was viewed as mid-career rather than senior, which slightly reduced the notice period.
A significant factor was the $20 million D.W. received when Facebook acquired his company, plus substantial stock grants. The court considered this compensation when assessing the experience factor, though it noted the acquisition release was “narrowly drafted” and didn’t release Facebook Canada from providing reasonable notice upon termination.
The judge awarded 10 months’ notice, accounting for D.W.’s specialized skills, management responsibilities, and limited comparable employment opportunities, while factoring in his acquisition payment and successful mitigation through returning to full-time university work.
Stock units forfeited despite notice period
D.W. claimed entitlement to Restricted Stock Units worth millions that would have vested during his notice period. He argued that forfeiting these units violated Section 61 of the ESA, which requires employers to maintain employee benefits during statutory notice periods.
The court disagreed, finding that RSUs are not “wages” or “benefits” under the ESA. Section 61 requires employers to continue “benefit plan contributions” during notice periods, but RSUs constitute a separate form of compensation not captured by this provision.
The judge relied on Court of Appeal precedent establishing that the ESA’s definition of wages includes only “monetary remuneration,” required ESA payments, and prescribed allowances. “Had the legislature chosen to include other forms of compensation in ‘wages’ it could have adopted a more expansive definition that would include stock options and RSUs,” the court noted.
RSU agreements upheld
D.W. challenged both the 2020 and 2021-2023 versions of Facebook’s RSU agreements. The 2020 agreement explicitly terminated vesting during any notice period, while later versions contained language suggesting RSUs would vest during statutory notice periods only if “applicable employment standards legislation explicitly requires continued entitlement to vesting.”
The court found both versions enforceable. The later agreements’ conditional language was deemed clear rather than misleading, similar to termination provisions promising “only the minimum payments and entitlements, if any, owed to you under the [ESA].”
D.W. also argued that language allowing RSU forfeiture even if termination was “later found to be invalid or unlawful” rendered the agreements void as attempts to contract out of ESA protections. The court rejected this argument, distinguishing RSU agreements from employment contracts and noting that D.W.’s “contractual entitlements were independent of any relief he may have been entitled to receive under his employment agreement, the ESA, or the common law.”
Payment delays and damages
Facebook Canada failed to pay D.W.’s statutory entitlements for 10 months, only doing so after he commenced legal proceedings. The company characterized this as “administrative error” and “internal misunderstanding” about paying statutory entitlements without a signed release.
D.W. sought $75,000 in punitive damages, arguing that as a large employer, Facebook Canada should model ESA compliance. The court rejected this claim, finding the conduct “more than an unintentional administrative error but falling short of reprehensible conduct.”
While noting the payment timing suggested Facebook Canada “were prepared to let the Applicant’s entitlements languish,” the judge concluded the conduct didn’t rise to the level of being “harsh” or “malicious” sufficient to warrant punitive damages.
For more information, see Wigdor v. Facebook Canada Ltd., 2025 ONSC 4051.
