Ending contract prematurely due to inconsistent pay

Question

I work in a vibrant startup. I love the culture, I love the environment. But recently the company I'm in ran into a financial problem, and it hit my payroll. At first I just get downpayments to my salary. Now I get nothing.

My contract says I can leave the company in six months from the time I started working for them, or opt to continue my employment with them. Today's my fifth month with them.

Meanwhile I've received offers from other companies, four out of six of which I have turned down because despite my delayed wages, I told them I need to honor my six-month contract with my current employer.

Today, however, changed my mind.

My employers revealed to me that they could possibly let us all employees go because they could not pay us consistently. But it is not a sure thing. They assured me that I could get my back wages by the end of the week. With my bills nearing deadlines I had to follow up on their promise.

As of my performance I admit lacking focus in one sprint, delaying a module for one month. But when I asked my boss about my performance they told me it was okay and understanable. We spent a month practically working from our homes because we got locked out of our old office. The wages were delayed and it was summertime, where heat rises to distracting and dangerous levels where I live.

Awhile ago, I emailed the management, Skyped them, sent SMS about the urgency of my financial situation, that I need to pay the bills, etc. I had no money to travel to work even, and that I told them too. I called them many times but I could not reach their telephone numbers, and despite being online all the time they did not reply to my messages.

I'd like to think that it's not entirely their fault they ran into a financial problem, that they don't even know where to get the money to pay me, at least that's what they're telling me. But I admit feeling insulted at their radio silence on the matter. Especially that I live away from my family, my bills are racking up and they need to be paid, and I will run out of food very soon.

I feel truly sorry for their financial problems. Being an entry-level developer, I had to work long hours for little pay to rack up on work experience and get the hang of my craft. Low pay is fine with me, I just wished it were consistent. My finances would be in trouble in two months and my credit will get messed up if they don't give me my back wages within the week. Which they haven't at all.

I am taking the risk of posting this question using my real name because the problems I am having are real, despite my boss's emphasis on company secrecy. I'm in a really desperate financial setback right now.

So how do I exit gracefully? Many companies here in the Philippines are particular about the sanctity of contracts, but I really want to leave. How do I explain to my prospective employers that my company is good, but I need to eat and pay bills, and their current offer does not fulfill my needs. I also have a few pieces of equipment my current employer lent me that are worth a sum. I was also wondering if I could use that as a bargaining chip--for most likely collateral--"I will keep this until you pay me." without facing legal repercussions.

UPDATE: So far the answers told me to get a lawyer, and run the hell out of my company. I greatly appreciate all of your answers, the latter I am doing right now. However, I am not about to let go of the paychecks my would-be former employers owe me. I earned that, fair and square. I will go to a lawyer, I assure you. But I was hoping for a more strategic advice how to make them pay me what they owe me. One that doesn't need lawyers and government intervention, because putting it through the government is just too much hassle for me.

Answer 1

So how do I exit gracefully? Many companies here in the Philippines are particular about the sanctity of contracts, but I really want to leave. How do I explain to my prospective employers that my company is good, but I need to eat and pay bills, and their current offer does not fulfill my needs. I also have a few pieces of equipment my current employer lent me that are worth a sum. I was also wondering if I could use that as a bargaining chip without facing legal repercussions.

I am not a lawyer but I am Filipino.

Give your notice and leave. You do not need to explain to prospective employers about your (dire) financial situation. In fact, I'd recommend against it.

Do not use company-issued equipment as a bargaining chip. That would be immoral, unethical, and probably illegal. Not only is it wrong, doing that will damage your professional reputation, expose you to legal action, and weaken your position if the dispute goes to a third party.

If they continue to withhold your salary, consult a lawyer and the Department of Labor's National Labor Relations Commission. From what I hear, the hearings, decision, and action take relatively quickly.

If the company doesn't have the money to pay you with (which seems possible), then I am sorry but you probably won't get anything.

I also recommend you change your user name. You don't want people reading that you were contemplating blackmailing your previous company with issued equipment.

Answer 2

First off, I'm not a lawyer nor do I reside in the Phillipines so bear in mind this is coming from a more general (and decidedly American) point of view.

Contracts are a two-way street. All too often, companies treat them as nothing more than shackles to be put on people working for them without considering that contracts have obligations for both parties.

What you need to look at is whether or not they've met their own obligations. Clearly they have not. At that stage, I would submit that they're currently in breach of contract which at the minimum gives you flexibility as to what to do.

Were it me, I would remind them of the measures you've taken in attempt to get paid and since they aren't paying you they are now in violation of contract and it needs to be considered breached. I would then go my own way.

As for repercussions for them claiming that you violated it by leaving, those will likely be limited to them not paying you anymore anyway. If they can't afford to pay you, they can't afford to pursue breach of contract, can they?

And even if they did pursue it, you can respond that to continue to work for them would be to do so for free since you're not getting paid.

I personally wouldn't sweat it too much, to be honest. Having said that, it's always a good idea to seek legal counsel in your particular country.

Answer 3

There are two sides to this:

• Go get a new job immediately. Your current employer is not fulfilling his part of the contract. Paying on time is the minimum duty he has. He is not even managing that. While failing to do that, your employer even fails to communicate this fact properly. Run and don't look back. It does not matter who is at fault. This company is failing. Get off board.If you are unsure about your contract, ask a lawyer.

• Fix your personal finances. Any time in your life, something can happen that impacts your ability to make money. Your employer might file for bankruptcy. His factory might burn down. Or maybe you get sick. You need a personal comfort space in which you can operate. If you worry about costs for transportation and food after your employer has not paid you for one or two months, this is bad. Very bad. You need to save money until you have enough to live your current lifestyle for a period of time it normally takes you to get another job. If you negotiate with your employer from a position of weakness because you worry what might happen without the next paycheck, you have already lost.