Can My Friend Quit His Job with 3 Months' Notice Despite Unpaid Compensation?

One of my friends is working in a very senior position. As per his appointment letter, he can leave the service on his own only after two years by giving 3 months' notice. He is not a confirmed employee as of now. Moreover, the company is not paying him the compensation as per his appointment letter for the last 11 months due to financial problems. Can he leave the job by giving 3 months' notice? What could be the implications? Please advise.

Can you clarify whether his monthly compensation has not been paid at all for the last 11 months or if it has been paid less than what is mentioned in the appointment letter?

Does your friend hold shares in the firm? What does the clause for the two years of continuous employment say? Could you share it in actual words? Ideally, every clause is conditional. Hence, if we read it, we might be able to find a way out.

Looking forward to hearing from you!

Dear Friends, Thanks for your valuable inputs. Please note that, first of all, my friend's monthly compensation has not been paid uniformly for the last 11 months (i.e., his monthly net take-home is around Rs 70,000/- per month, and he has only been paid an average of Rs 16,000/- per month). When asked, the management always said that due to financial problems, the compensation is not being paid properly, but the salary would be streamlined, and the backlog would be cleared very soon. My friend does not hold any share in the firm. The appointment letter has a clause that states the employee can leave the service after 2 years by giving a 3-month notice; otherwise, he has to surrender 3 months of his salary.

The latest update is that my friend has completed only 1 year of service and is not even a confirmed employee. Since the organization has failed to honor his monthly compensation for the last 11 months as per his appointment letter, he has already submitted his resignation to the management with a 3-month notice period, requesting the management to release him with all his pending dues. What could be the implications? Please advise.

From your reply, it is discernible that the management admits its obligation to the compensation agreed upon in the letter of appointment and its failure to comply with it due to financial difficulty. It also seems that upon completing his first year of service under the management within the period of the minimum stipulated service, your friend tendered his resignation suo moto with 3 months' notice due to the continued failure to pay the monthly compensation for the last consecutive 11 months. It is therefore clearly indicative of your friend's natural apprehension about his future and his firm decision to jump out of the ship before it sinks. The possible implications, as I understand, would be as follows:

(1) Notwithstanding the failure to fulfill one of the specific conditions of the contract to pay the agreed monthly compensation by the management, the contract was terminated at the instance of your friend. Therefore, the management has to accept his resignation and relieve him upon the expiry of the notice period.

(2) The question of clearance of the dues to your friend would be a separate issue in case of failure by the management.

Thank you very much for your valuable inputs. Regarding the clearance of the dues (for the past 11 months) of my friend, could you kindly advise if the Management has the intention to release him without clearing his backlogs? Is there any way to recover the dues?

Thank you.

Better to let him jump out of the sinking ship and reach the shore safely first, and do the salvaging later through civil remedy. In such a contingency, seek the advice of a civil lawyer for the recovery of the dues.