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Employment - Application (ESA). Wigdor v. Facebook Canada Ltd.
In Wigdor v. Facebook Canada Ltd. (Ont CA, 2026) the Ontario Court of Appeal partially allowed the employee's appeal (and dismissed the employers' cross-appeal), here where the appeal was brought against "the application judge’s order dismissing his claim for the value of Restricted Stock Units (“RSUs”) that would have vested during the common law notice period".
Here the court considers the application of the ESA, this turning on the structuring of business dealings between a large tech corporation and an academic technology consultant:[123] .... the application judge’s conclusion that the ESA did not apply to Dr. Wigdor’s RSU entitlements is contrary to the application provision of the ESA, the record in this case, and authority of this court.
[124] Section 3 of the ESA provides (with certain exceptions that are not applicable in this case) that:... the employment standards set out in this Act apply with respect to an employee and his employer if
(a) The employee’s work is to be performed in Ontario; or
(b) The employee’s work is to be performed in Ontario and outside Ontario but the work performed outside Ontario is a continuation of work performed in Ontario. [125] This language speaks to the broad application of the ESA to employees who perform work in Ontario. This is consistent with the ESA’s purpose as remedial legislation, designed to extend its protections to “as many employees as possible”: Machtinger, at p. 1003; Wood at para. 28.
[126] The only reasonable conclusion on the record in this appeal is that Dr. Wigdor’s RSU entitlements were part of his employment compensation. As I have outlined above at paras. 107, 118-19, the employment agreement and the RSU Agreements structure Dr. Wigdor’s RSU entitlements as employment compensation. Further, the RSUs that vested during the time Dr. Wigdor was employed by the Respondents were treated as employment income. Thus, the ESA applies to the RSU entitlements.
[127] The Respondents’ submission that the ESA does not apply to the RSU entitlements that were subject to the 2020 RSU Agreement amounts to an argument that because the 2020 RSU entitlements are connected to the purchase of Chatham, the ESA does not apply, despite the fact that the documents in relation to Dr. Wigdor’s employment and RSU entitlements structure the RSUs as employment compensation.
[128] This court rejected that argument in Groves. Groves involved circumstances where a shareholder, officer, and director of a corporation sold his shares to another corporation, resigned as an officer and director, and then became an employee of the purchaser corporation. His employment was subsequently terminated without cause. In the appeal in wrongful dismissal action, one of the arguments made by the employer was that the summary judgment motion judge erred by failing to interpret the employment contract in the context of the commercial sale of the shares and that the principles from Wood – and the ESA – were not applicable because the circumstances involved a commercial transaction. This court rejected the argument that the motion judge failed to consider the full factual context. The court also rejected the argument that the ESA did not apply, stating at para. 13:To the extent that UTS is advancing an argument that in the context of a commercial contract, the ESA provisions do not apply, we disagree. There is nothing in the ESA that indicates that it is inapplicable in employment relationships connected to commercial transactions. [129] In this case, the parties chose to make the purchase of Chatham contingent on Dr. Wigdor becoming an employee of the Respondents, and chose to structure the purchase deal and the employment agreement with the RSU entitlements as employment compensation for Dr. Wigdor. The choice to structure the RSU entitlements as employment compensation, including the 2020 entitlements, means the ESA applies. The Respondents must live with that choice.
[130] Third, the application judge’s reliance on Mikelsteins was misplaced.
[131] Mikelsteins is distinguishable from the circumstances of this appeal. Mikelsteins concerned an “employee-owned engineering firm” that allowed certain employees to purchase shares in the parent corporation using their own funds. When an employee decided to purchase shares, their rights regarding the shares were determined by the terms of the shareholders agreement. This court held that receipt of shares was not employment compensation subject to the ESA for two reasons: (1) because the employee had to purchase the shares using their own funds; and (2) because the employee’s rights as a shareholder in relation to the shares, once the employee made the choice to purchase the shares, were determined under the shareholders agreement, not the employment contract: Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515, at paras. 2-6, 12-19; Mikelsteins v. Morrison Hershfield Limited, 2021 ONCA 155, at paras. 11-13, leave to appeal refused, [2019] S.C.C.A. No. 363.
[132] By contrast, as I have outlined above, in this case the RSU entitlements were a form of employment compensation that automatically vested in consideration of ongoing employment.
[133] For these reasons, I conclude that the application judge erred in finding that the ESA did not apply to the RSU entitlements. I have explained earlier in these reasons why the RSU Agreements do not meet ESA minimum standards and are not capable of validly contracting out of Dr. Wigdor’s common law right to reasonable notice.
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