Do Your RSUs and Stock Options Keep Vesting After You're Fired? Ontario's Courts Say Often Yes

If part of your pay comes in restricted share units, stock options, performance units, or a share plan, the number on your termination letter is probably not your real severance. Ontario law measures wrongful dismissal damages by what you would have earned if the employer had given you proper working notice, and that includes equity. This is not a fringe argument; it is settled law from the Supreme Court of Canada and a long line of Ontario Court of Appeal decisions, and Ontario courts have kept testing new plan wording in decisions through 2025 and 2026.

Do RSUs and stock options keep vesting after termination in Ontario?

When you are dismissed without cause in Ontario, you are entitled to reasonable notice of termination or pay in lieu of it. For a mid-career professional that can easily be 8 to 24 months, depending on your age, service, role, and job market (see how much severance you're owed). The legal question is what your compensation would have looked like over that period, because damages are meant to put you in the position you would have been in with proper notice.

In Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, the Supreme Court of Canada set out a two-part test that Ontario courts now apply to bonuses, RSUs, options, and other incentives. First, would you have received the payment or vesting as part of your compensation during the reasonable notice period? Second, if so, does the wording of the contract or plan unambiguously take away or limit that common law right? If the answer to the first question is yes and the answer to the second is no, the value belongs in your damages.

For equity, the first step is usually easy. If your grant schedule shows tranches vesting three, six, or eleven months after your termination date, and your notice period runs twelve months, those tranches would have vested. The fight is almost always at step two, and that is where employees do better than most people expect.

Why doesn't the fine print in your equity plan take it away?

Employers almost always point to termination language in the grant agreement or plan text. Courts read that language strictly against the employer, because it was drafted by the company and imposed on you. Several recurring employer arguments have been rejected at the Court of Appeal level.

• "Your units are cancelled if your employment terminates for any reason." In O'Reilly v. IMAX Corporation, 2019 ONCA 991, this kind of wording did not defeat the employee's claim. Termination "for any reason" is presumed to mean a lawful termination, meaning one with proper notice, so RSUs and options vesting within the 24-month notice period were included in damages.
• "You must be actively employed on the vesting date." In Paquette v. TeraGo Networks Inc., 2016 ONCA 618, the Court of Appeal held that an active-employment requirement does not, on its own, remove your common law right. Had you been given proper notice, you would have been actively employed through the notice period. The question is never whether the plan has conditions; it is whether the wording unambiguously removes your right to damages.
• "The plan documents, read together, exclude you." In Milwid v. IBM Canada Ltd., 2023 ONCA 702, IBM's layered equity documents were found ambiguous, the ambiguity was resolved in the employee's favour, and RSU damages across a 27-month notice period were upheld.
• "The forfeiture terms were in the plan booklet." In Maynard v. Johnson Controls Canada, 2022 ONSC 3863, forfeiture provisions that were never actually disclosed to the employee could not bind him, and the court awarded the full value of the forfeited RSUs on top of salary and bonus.

The pattern across these cases is consistent: vague, boilerplate, or buried exclusion language does not survive. To take away equity that would have vested during your notice period, the employer needs wording that clearly covers an unlawful termination without notice, and it needs to have brought that wording to your attention.

When can an employer actually keep your unvested equity?

Honesty matters here, because some plans do hold up. In Battiston v. Microsoft Canada Inc., 2021 ONCA 727, the trial judge had sided with the employee because harsh forfeiture terms were never drawn to his attention. The Court of Appeal reversed on that point: every year the employee had clicked a box certifying he had read the stock award terms, and that certification counted as notice even though he never actually read them. More recently, in Wigdor v. Facebook Canada Ltd., 2025 ONSC 4861, carefully drafted forfeiture language in an RSU agreement was enforced, with the court noting that RSUs are not "wages" under the Employment Standards Act.

Two practical lessons follow. First, those click-through grant acceptances you sign every year are real contracts, and courts may hold you to them whether or not you read them. Second, whether your equity claim is strong or weak turns on the exact wording of your grant documents and how they were presented to you. That is a document review question, not a guess, and it is exactly the kind of thing to resolve before you sign anything (see our severance offer review).

How much could your equity be worth over a notice period?

Here is a simplified example. A senior manager with ten years of service is terminated and her reasonable notice period is assessed at 12 months. She holds RSU grants that vest 300 units per quarter, and the shares trade at $45. Her employer's offer is based on salary only and says all unvested units are forfeited on her last day.

That is $54,000 the salary-only offer simply ignores, before counting any bonus, benefits, or pension value over the same window. Stock options are valued similarly, based on the spread you lost the chance to realize on options that would have vested and been exercisable during the notice period. If the share price moved, valuation dates matter and are worth arguing about. The same logic applies to annual bonuses; we cover that in detail in bonus entitlements when you're terminated and being fired before your bonus vests.

What should you look for in your grant agreement?

Pull your grant agreements, the plan text, and any acceptance emails or click-through confirmations, then look for these:

• The termination definition. Does the plan define your termination date as your last day worked, and does it expressly say the date is not extended by any notice period, damages, or pay in lieu? Express language like that is the biggest red flag for your claim.
• "For any reason" wording. If forfeiture is triggered by termination "for any reason" without expressly covering termination without notice or unlawful termination, courts have read that in the employee's favour.
• Active-employment conditions. "Must be actively employed on the vesting date" is common and usually not enough on its own to defeat you.
• How you accepted the grant. Did you sign or click to certify you read the terms each year? That cuts against a Battiston-style argument that you never had notice of them.
• Conflicts between documents. If the offer letter, plan, and grant notice say different things, that ambiguity is resolved against the employer.
• Carve-outs for statutory notice. Many post-2020 plans permit vesting only through the short Employment Standards Act notice period. That is a floor, not your full entitlement, and it does not answer the common law question.

What should you do before signing a severance release?

A signed release almost always ends your equity claim permanently, even if you later learn the plan language was unenforceable. Employers know most employees value the offer on salary alone, which is why equity-heavy severance offers deserve extra scrutiny (here is what to check before you sign).

1. 1.Gather every equity document: grant agreements, plan text, award notices, acceptance confirmations, and your latest brokerage or plan-portal statement showing unvested holdings.
2. 2.Map your vesting schedule against a realistic reasonable notice period, not the ESA minimum in the offer letter.
3. 3.Value each tranche that falls inside that window, including options spread, using current share prices.
4. 4.Compare that total to the offer. If the offer is silent on equity or expressly forfeits it, treat that as a negotiation point, not a final answer.
5. 5.Do not sign the release until an employment lawyer has reviewed the plan language against the Matthews test. Deadlines in severance letters are pressure tactics and can almost always be extended.

Your severance is your full compensation over the notice period, not just your salary. If equity is part of how you were paid, it is part of what you are owed, and the case law in Ontario is firmly on your side more often than employers let on. Start with the fundamentals in our guide to severance pay in Ontario, then get your offer and your grant documents in front of a lawyer through our severance offer review before you sign anything.

About the Author

Daniel Carter

Legal Writer, Mirza Law

Daniel Carter is a legal writer at Mirza Law in Toronto. He writes about layoffs, employment contracts, and the steps to take before you sign anything from your employer.

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