Ontario courts may be increasingly willing to scrutinize equity compensation clauses using the same strict ESA-based analysis applied to termination clauses, rather than treating equity plans as a separate category.
A recent Ontario Superior Court decision has added a new layer to the evolving law around equity compensation on termination, and it may signal a different analytical approach than the one taken in Wigdor v. Facebook Canada Ltd., 2025 ONSC 4861, which is currently under appeal.
In Liggett v. Veeva Software Systems, Inc. and Veeva Systems Inc., Justice Des Rosiers was asked to consider whether restrictive vesting language in a stock option and RSU plan successfully disentitled an employee from equity compensation during the notice period. The Court found that it did not.
The RSU and Stock Option Language at Issue
The employer relied on plan language stating that unvested options and RSUs would immediately expire when the employee’s “Service” ended, defined as the date the employee was no longer actively providing services, regardless of whether the termination was later found to be unlawful.
The plan also expressly stated that vesting would not be extended by any statutory notice period, garden leave, or similar period, and gave the company broad discretion to decide when service ended.
On its face, this language appeared to be designed to close the door on any equity entitlement after termination.
The Court disagreed.
Why the Court Found the RSU Clauses Invalid
Justice Des Rosiers identified several fatal problems with the plan language.
1. ESA Non-Compliance Voids the Clause
The Court held that tying the loss of equity entitlements to the date the employee stopped actively working violated the Employment Standards Act 2000 (“ESA”). Under the ESA, termination does not legally occur until the minimum statutory notice period has expired.
Any clause that treats the last active working day as the termination date is inconsistent with the ESA and therefore unenforceable.
This mirrors the long-standing principle that ESA violations invalidate termination-related clauses, even where the employee ultimately receives more than the statutory minimums.
2. “Actively Providing Services” Fails Under Matthews
The Court also relied on the Supreme Court of Canada’s decision in Matthews v. Ocean Nutrition. As in Matthews, the language attempted to disentitle the employee from compensation that would otherwise have accrued during the notice period by defining termination as the last day of active work.
The Court confirmed that this approach does not remove an employee’s common law entitlement to compensation that would have been earned during the notice period, including equity-based compensation, unless the language does so clearly and lawfully.
3. Discretion Without Guardrails Creates Ambiguity
The plan granted the employer exclusive discretion to decide when an employee stopped providing services, including whether they might still be considered active during a leave of absence.
The Court found this problematic. Discretionary authority, without clear guidelines for how that discretion will be exercised, creates uncertainty and ambiguity for employees. Ambiguous compensation clauses are interpreted in favour of the employee.
4. The Contract Was Overly Complex and Confusing
Finally, the Court took issue with the structure and readability of the plan itself. The applicable provisions depended on cross-referencing multiple sections and substituting jurisdiction-specific language.
The Court emphasized that employees should not be required to piece together complex documents to understand what they are giving up on termination.
The Court’s Key Takeaway
Justice Des Rosiers summarized the governing principle succinctly:
Employers must clearly and lawfully explain what happens to equity compensation on termination. Language that violates the ESA, or that misleads employees about their rights during the notice period, will not be enforced.
Importantly, the Court confirmed that the same analytical framework applies to RSU and equity clauses as applies to termination clauses generally.
Why This Case Matters, Especially in Light of Wigdor v. Meta
This decision appears to take a different approach than the one adopted in Wigdor v. Facebook Canada Ltd., where the Court enforced equity plan language that limited post-termination entitlements, favouring the employer. That decision is currently under appeal, with the Ontario Court of Appeal scheduled to hear the matter on April 23, 2026.
Liggett v. Veeva suggests that Ontario courts may be increasingly willing to scrutinize equity compensation clauses using the same strict ESA-based analysis applied to termination clauses, rather than treating equity plans as a separate category as was done in Wigdor v. Facebook Canada Ltd.
As Liggett v. Veeva was not being appealed, it now stands as binding trial-level authority in Ontario.
Practical Takeaways for Employers and Employees
For Employers
- RSU and stock option plans must comply with the ESA, not just contract law.
- Defining termination as the last active working day is risky.
- Discretionary language must be constrained and transparent.
- Complex, cross-referenced plans increase enforceability risk.
For Employees
- Equity forfeiture clauses are not always enforceable.
- ESA violations can invalidate equity restrictions, even in sophisticated plans.
- Do not assume RSUs or options are lost simply because the plan says so.
- Legal advice is critical before accepting termination packages involving equity.
Looking Ahead
With the Wigdor appeal pending, Ontario law on equity compensation at termination remains in flux. For now, Liggett v. Veeva reinforces a key message: equity clauses are not immune from the same scrutiny that applies to termination clauses.
Further appellate guidance is expected, but employers would be well advised to review their equity plans now rather than wait for clarity after the fact.
How Minken Employment Lawyers (1990) Can Help
For advice on equity compensation, RSUs, stock options, and termination rights, with more than three decades of experience, our team of trusted professionals help employers and executives.
Contact Minken Employment Lawyers (Est. 1990) today for a confidential consultation at 905-477-7011 or contact@minken.com to connect with our team.
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Please note that this article is for informational purposes only and does not constitute legal
Related Topics
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- Supreme Court of Canada Ruling in Dufault v. Municipality of Ignace Stands: ESA Compliance in Termination Clauses Is Non-Negotiable
- Ambiguous Termination Clauses Will Be Interpreted in Favour of Employees