You may need a lawyer to write him a letter explaining this, but with no contract and no payment, you owe him nothing.

“What would happen if I don't give him anything?” - He could in theory sue you for it. However, this also provides you an opportunity to collect your back pay, but without a contract both parties might have trouble being made whole.

I don't call someone who never paid me an employer. "Freeloader wants MY source code" It's yours btw, you wrote it.

agree with bruglesco and Wesley Long

"The biggest reason I left is it seems we both don't have a leg stand on." I'm surprised you didn't leave as soon as you found out you weren't going to get paid. Next time, don't stay at a position where you aren't getting paid. Unless you want to do volunteer work.

Do utterly nothing until you get paid.

You say you didn't get paid, but when did you agree to get paid? After the work is done? Month-to-month? Did you agree to get paid?

"Are there any laws or any legal action he can take against me?" - yes. You cannot hold his source code as ransom - you are risking a lawsuit. You should talk with a lawyer, hand over the source code, then do whatever you have to do legally to get paid. Depending on the amount you are owed, small claims court may or may not be appropriate.

@JoeStrazzere I don't think you can qualify this as "ransom". After all why the employer is asking the source code if there is not a contract to start with ? Without contract there is not his (the employer) source code. To me seems like a try to get some free work done.

@Dukeling To make it clear, back in September I asked for payment and after speaking to him, he said to make some final changes and to hold off for a couple weeks as he was waiting for the funds. A couple weeks came and went, still nothing from him and I couldn't get contact him, then I come to find out he left the country. I told him then I was no longer doing work for him and fast forward a month and a half, this is the situation I'm in now.

@Gianluca - it's hard to see how the OP owns the source code. Thus, offering to hand over something that isn't yours in exchange for money - that says ransom to me. I'm not saying that it isn't justified, just that it's ransom. The OP should be careful here.

@JoeStrazzere The OP by default owns code the OP writes. Exactly what causes ownership to transfer to the employer, and probably what constitutes an employer, can vary from jurisdiction to jurisdiction, and I really don't know Canadian law. In the US, it might depend on whether OP was nominally a contractor or a regular employee, for example, due to the work-for-hire laws. In the US, there's usual no formal employment contract, and it might be different in Canada, and if so I don't know what happens without such a contract.

I noticed that your alleged employer wants the source code, indicating that he doesn't have a copy. This suggests that you did the work completely independently to some sort of specification. What sort of interaction did you have with the company?

@JoeStrazzere Aren't such agreements roughly: the employer gives money, OP gives code, and the employer didn't hold up their part? It seems comparable to choosing a candy bar in a vending machine - no-one would expect the vending machine to produce the candy bar before you put in money.

@Dukeling - usually the worker gives time, the employer gives pay. The code belongs to the employer.

@JoeStrazzere If the employer sues, that would be the best possible outcome for OP. All the OP is going to give up is source code, but in exchange he's very likely to get his pay.

@DaveG - maybe. It's not likely to be a family court where every grievance is heard and an equitable settlement is reached. Instead, the OP may have to defend himself. Better to give the employer the source and separately make the employer defend himself in court over the non-payment of wages. It should be a far simpler case to win.

@JoeStrazzere the fact that the employer is trying to strongarm / hoodwink OP rather than just having a lawyer send him a scary letter makes me think the employer isn't really interested in getting the law involved.

@DaveG - maybe. Or maybe the employer is just trying to take an easier route first. I guess the OP will need to decide if he wants to call the employer's bluff or not. I agree with the answer "You need a lawyer" if the OP decides to withhold the source code.

@Gianluca - I don't know enough Canadian law to comment on such a statement. In most places, it's the employer-employee relationship that has that effect.

@JoeStrazzere You are right, but the employer-employee relationship start when there is some sort of contract. If there is not a contract, when precisely start the relationship ?

@Gianluca - the OP used the term "employer".