Resigning before the end of a contract if you know you won't get paid?

[SanitysSake]

A friend of mine is currently working for a company that is about to go bust.

They and a few of their colleagues are contracted to work until the end of March. They 'should' be receiving their Feb pay at the end of March and their March pay at the end of April. Their January pay was already delayed in Feb by 10 days and took some 'pressure' to obtain.

They all suspect they will not get paid for Feb at the end of March and know they will not get paid for March in April. The company is in serious trouble and many senior managers have resigned within the last week. Although the reasons have not been confirmed 'officially' - because of confidentiality clauses within the office; it is widely known that the company is about to go bust and the resignations are unilaterally money related.

It is understood that it is likely they will be in breach of contract if they resign before the contract period has ended - but don't want to continue to work, knowing they'll be working for 'free' - or until remedy has been achieved - if it can be achieved - through the courts.

Despite knowing they will probably have to go to Employment Tribunal if they don't get paid - they just don't want to work, accruing more debt to the company - if they have to then just have to go through the courts to try and reclaim it - knowing that the company will do whatever it can to avoid paying them.

Having a look at their contracts, it appears resignation is possible, but that appropriate notice must be given (2 weeks, which takes the individuals up to the end of their contracts anyway) Subsequently, can you go 'sick' during your 'notice period'?

Could any learned Employment Law people advise as to whether a) resignation could be possible? b) whether going 'sick' for the rest of the employment period would be 'acceptable' without breach of contract being claimed. c) Any suggestions on how to approach this situation?

The amount of money at stake for each individual is considerable and although the amount is immaterial; the stress and impact on each individual for not getting paid is considerable.

Would be seriously grateful for any steer on this issue.

-x-

I'm no lawyer, but surely the company is in breach of their contract if they don't pay the workers on the expected date? In which case, it would be ok to walk? Your friend should get professional advice specific to her circumstances though. I think if the company is going to go bust they won't be getting anything, whether it's owed or not. I am assuming that they are unsecured creditors?

Yes, the company would be in breach, but this wouldn't be established until the end of March and they don't want to work the last 20 odd days of March, knowing they won't get paid for it - until they go to court - if the court can get any money out of the company. So the first breach of contract on the part of the company would be the end of March and the second, at the end of April for March's pay.

They were in breach for January's pay, but they ended up getting the money, albeit 10 days late.

I would think that in these circumstances they would be within their rights to resign and effectively give no notice period. If their contracts end in a couple of weeks anyway and the company is teetering on the brink of going bust they don't have anything left to lose. As far the issue of outstanding pay for February and March they would be regarded as unsecured creditors if the pay doesn't materialise as expected. It might be worth filing a claim with the administrators of the company when it does go into liquidation but sadly they would only get payouts if there is any money or any assets left after secured creditors have been paid. I would cut my losses now if I was in their position as it sounds like staying until the bitter end isnt going to ensure they are paid properly.

Breach of contract issue that is the biggest issue.. I don't want my mate to face counter charges... despite the company being against the wall...

If they leave early they will be in breach of contract unless there is a clause in the contract allowing them to do so and they comply with the conditions of that clause. In theory the company could sue them for damages to cover any loss the company suffers as a result of their early departure. However, companies rarely sue employees who leave without notice and, if the company does go under, it is unlikely they would spend money on legal action.

Is any holiday owed?