If you are fired without cause in Canada, stock options that would have vested during your legal notice period can form part of your severance compensation.

Your employer can sometimes limit those rights through clear and enforceable wording in your employment contract or stock option plan. But don’t assume your options disappeared simply because the company says vesting stopped on your last day of active work.

Stock options can represent a substantial part of compensation for executives, technology employees, sales professionals and other workers. Before signing a severance package, review the employment agreement, option plan, grant documents and vesting schedule together.

⚠️ Don’t sign a release until you know what happens to both your vested and unvested options. Once you sign, you usually can’t return and claim additional compensation for equity that was left out.

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What Happens to Stock Options When You Are Fired?

What happens to your stock options depends on whether they are vested, when they would have vested and what your employment and stock option agreements legally provide.

A stock option gives you the right to buy company shares at a set exercise or “strike” price. Options normally become available to exercise according to a vesting schedule.

When employment ends, there are usually two separate issues:

  • Vested options: Options you already earned before termination can remain exercisable for a limited period under the plan.
  • Unvested options: Options scheduled to vest later can form part of your termination damages if they would have vested during the period of notice you should have received.

The company’s stated “termination date” is not always the end of the legal analysis.

Do Unvested Stock Options Continue During Severance?

They can. If you would have received or vested in stock options during your common-law reasonable notice period, their value can form part of your wrongful dismissal damages.

Canadian common law aims to put a dismissed employee in the financial position they would have occupied if proper notice of termination had been provided.

For example, assume:

  • You are entitled to 12 months of common-law notice
  • A block of options was scheduled to vest six months after you were fired
  • You would have remained entitled to those options if you had worked through that period

The value of those options can form part of the compensation you are owed unless legally enforceable terms clearly remove or limit that right.

Options scheduled to vest after the end of the applicable notice period are usually a different matter. Common-law damages do not normally extend your employment indefinitely.

💡 Your severance package is not just salary. Stock options, bonuses, commissions, benefits and other regular compensation can all matter when calculating what you would have received during the notice period.

Learn more about severance pay in Canada.

What Happens to Vested Stock Options After Termination?

Vested stock options often remain exercisable after termination, but the plan can impose a short deadline to exercise them.

Your stock option documents might provide 30, 60, 90 days or another period after termination to exercise vested options. The exact deadline depends on your plan.

This can create an immediate financial decision. If the deadline passes, an otherwise valuable vested option can expire.

After termination, confirm:

  • How many options are already vested
  • The exercise price
  • The current expiry date
  • Whether termination shortens that expiry date
  • What the plan means by your termination or cessation date
⚠️ Don’t wait until a severance dispute is resolved before checking the exercise deadline for already vested options. A contractual exercise window can expire much sooner.

Can a Stock Option Plan Stop Vesting at Termination?

Yes, but the employer needs legally enforceable terms that clearly limit rights that would otherwise continue during the notice period.

Canadian courts look closely at wording that attempts to remove bonuses, options or other incentive compensation after dismissal.

The Supreme Court of Canada has established a practical two-step approach for incentive compensation:

  1. Would you have received the compensation if you had worked through the reasonable notice period?
  2. If yes, does the contract or plan clearly and legally remove that entitlement?

Words such as “active employment,” “actively employed” or “termination date” do not automatically decide the issue. The whole agreement and the applicable provincial employment standards law must be considered.

What if the stock option plan is separate from my employment contract?

The separate plan still matters. Employees should provide the lawyer reviewing their severance with every grant agreement, plan document and amendment—not just the main employment contract.

If you are reviewing equity terms before accepting a job, consider an employment contract review.

What About RSUs and Other Equity Compensation?

RSUs, PSUs and other equity awards can also form part of termination compensation, although each type of plan operates differently.

Stock options and restricted stock units are not the same thing. A stock option gives you the right to purchase shares at a specified price. An RSU normally gives you shares after the unit vests without requiring you to pay an exercise price.

But the same larger question often applies after termination: what equity would you have received if proper notice had been given?

Important 2026 Ontario decision on RSUs

Ontario employees received an important clarification in August 2026. In Wigdor v. Facebook Canada Ltd., the Ontario Court of Appeal found that RSU provisions stopping vesting immediately upon termination violated Ontario employment standards because they removed ongoing vesting during the statutory notice period.

The clauses were unenforceable, and the employee received damages for RSUs that would have vested during his 10-month common-law notice period—worth approximately US$4.7 million.

The case involved RSUs rather than traditional stock options, but it is an important reminder that an employer’s equity-plan wording must comply with minimum employment standards before it can limit greater common-law rights.

Employees with substantial equity compensation should also review our guides to bonuses and severance pay and executive employment contracts in Canada.

What Should You Do If You Are Fired With Stock Options?

Collect every equity document and have the stock options valued before signing your severance package.

  1. Get your vesting schedule. Identify what is vested and what was scheduled to vest next.
  2. Check exercise deadlines immediately. Don’t accidentally allow vested options to expire.
  3. Collect all agreements. Keep your employment contract, option plan, grant agreements and amendments.
  4. Calculate your proper notice period. This determines which future vesting dates can matter.
  5. Check the employer’s severance calculation. Confirm whether options and other equity were included.
  6. Don’t sign the release first. Have the plan wording and termination package reviewed together.

For many non-unionized employees, common-law termination compensation is significantly greater than employment-standards minimums. Depending on age, position, length of service and the availability of similar work, severance can reach 24 months’ pay.

If your employer has excluded valuable equity from your package, read our guide to wrongful dismissal in Canada.

⚠️ Unionized? Disputes over termination compensation and equity benefits generally need to be addressed through your union and the grievance process. Samfiru Tumarkin LLP’s employment law team can’t assist with unionized workplace disputes.

Stock Options After Termination FAQs

Do I lose all my stock options when I am fired?

No. Vested options and options that would have vested during your legal notice period can still have value and legal protection.

Do stock options count toward severance?

Yes, when they form part of your compensation and would have vested during the applicable notice period, unless enforceable terms validly limit the entitlement.

Can my employer stop vesting on my last day?

Only if the applicable contract and plan wording legally permits it. Your physical last day at work is not automatically the end of your common-law compensation rights.

How long do I have to exercise vested stock options after termination?

Check your plan immediately. Post-termination exercise periods vary and can be much shorter than the option’s original expiry date.

Are RSUs the same as stock options?

No. RSUs normally deliver shares after vesting, while stock options give you the right to purchase shares at a set price.

Stock options can make a severance package worth far more than its salary component suggests. Don’t let an employer’s termination letter determine the value of your equity without checking the contract, plan documents and applicable law.

Samfiru Tumarkin LLP helps non-unionized employees assess stock options, RSUs, bonuses and other incentive compensation after termination and determine whether those amounts belong in their severance package. Our employment lawyers can help you get the compensation you’re owed.

Fired With Stock Options or Equity?

Don’t assume unvested compensation disappeared on your last day. Have your employment agreement, equity plan and severance package reviewed together.

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