Whether you resigned or were let go, here is what happens to your unvested RSUs — and what you may still be entitled to.
An RSU (Restricted Stock Units) is a promise from your employer to give you company shares at a future date — called the vesting date. Until that date arrives, you do not own the shares. You have a right to receive them — but only if certain conditions are met, usually continued employment.
A simple example: you are granted 1,000 RSUs that vest equally over four years — 250 per year. If you leave after two years, you have received 500 shares. The remaining 500 are unvested.
What happens to those unvested 500 depends entirely on why and how your employment ended.
If You Quit
When you voluntarily resign, the general rule is straightforward — unvested RSUs are forfeited. You walked away from the job, and the vesting conditions were not met.
However, there are exceptions worth knowing:
Your plan documents may say otherwise — some RSU plans include provisions for partial vesting on resignation, especially for long-service employees or under specific circumstances. Read your equity plan carefully.
Notice period matters — if you gave proper notice and your employer accepted it, RSUs scheduled to vest during your notice period may still be payable depending on your plan terms.
Negotiation is possible — if you are resigning to accept a competing offer, some employers will accelerate vesting as part of a retention negotiation or departure agreement. It is worth asking.
If You Quit
This is where it gets legally significant — and where many employees in Ontario are shortchanged without realizing it.
When you are terminated without cause, you are entitled to a notice period — either working notice or pay in lieu. During that notice period, your employment relationship continues in the eyes of the law. That means RSUs that would have vested during your notice period should vest — or you should be compensated for losing them.
Example: James is terminated without cause. His employer offers him 8 weeks of pay and walks him out the door. James had RSUs worth $80,000 scheduled to vest 6 months from his termination date. A lawyer assesses his common law notice at 12 months. Because those RSUs would have vested during his 12-month notice period, James is entitled to their value as part of his severance — even though he never worked those 12 months.
Ontario courts have consistently held that employees are entitled to compensation for RSUs lost during the reasonable notice period — not just base salary.
If You Were Fired for Cause
If your employer successfully establishes just cause, you are generally not entitled to notice — and therefore not entitled to unvested RSUs that would have vested during a notice period.
However — just cause is a very high legal bar in Ontario. Most employers who claim it cannot prove it. If you were terminated for alleged cause and had significant RSUs outstanding, it is worth getting legal advice on whether the cause claim holds up. If it does not, your full notice entitlement — including RSUs — may be restored.
The "Clawback" Problem
Some RSU plans contain clawback provisions — allowing the employer to recover vested shares or their cash value if you leave within a certain period, join a competitor, or are terminated for cause.
These clauses are worth scrutinizing carefully. In Ontario, overly broad clawback provisions may not be enforceable — particularly if they conflict with your ESA entitlements or were not properly disclosed at the time of your hire.
What Your Equity Plan Document Says — And Why It Matters
Every RSU grant is governed by a plan document — sometimes called an equity incentive plan, stock plan, or grant agreement. This document sets out:
- What happens to unvested RSUs on termination
- Whether cause affects your entitlement
- Any post-termination exercise windows
- Clawback or forfeiture conditions
Read it carefully. Then have a lawyer read it alongside your employment contract and termination offer — because what the plan says and what Ontario law entitles you to are sometimes two different things, and Ontario law takes precedence where there is a conflict.
The Bottom Line
Unvested RSUs are not automatically lost when your job ends. If you were terminated without cause, Ontario law may entitle you to the value of RSUs that would have vested during your reasonable notice period — and that amount can be substantial. Do not accept a severance offer that ignores your equity until you understand what you are giving up.
