Checklist for when an employee leaves your business

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Confirm the resignation or dismissal in writing

An employee may give notice to end his or her employment in many ways. He or she may talk to his or her line manager first or send an email.

If he or she does not provide one soon after giving notice, you should him or her to give notice in writing – by handing you a formal resignation letter.

This letter not have to be lengthy. A statement that the employee is giving notice and the date on which he or she does so is enough. He or she does not have to state reasons or intentions.

You should then confirm receipt of the notice in writing and set out the date on which employment terminates. If you would like the employee not to attend work during his or her period, you should also state the last day of attendance.

If you have dismissed your employee, a dismissal letter acts as written confirmation to the employee. It should include the same information.

Notice period

The employment contract usually states the notice period. If it does not, the statutory notice period applies.

Depending on the past performance of the employee and the role that he or she is in, you will need to decide whether you would like the employee to work his or her full notice period. You may have a general business policy for this, but you are also able to decide on a case by case basis.

You or the employee may wish to terminate employment before the end of the notice period, for example to provide a quick, clean break. Provided you both agree to this, it is perfectly legal. The employee may decide on terms on which he or she will agree – usually a payment. This is known as a settlement agreement.

You may prefer to place the employee on gardening leave, and pay him or her in lieu of all or part of his or her notice period. The employee remains employed by you during the notice period (and therefore is contractually bound to agree to the terms of employment), yet does not attend work. If you wish for this, you should provide specific notice.

Payments in lieu of notice (PILONs) are useful where the employee has access to confidential information and a period of non-access might help protect it further than a confidentiality agreement alone, and also where he or she may disrupt other employees or the business.

PILONs do require that the employment contract states that they are possible.

If you would like your employee to work his or her full notice period, you should confirm this in writing including the date on which employment will terminate.

Pay the employee and issue a final payslip

Within a reasonable time after the employee leaves, you must pay him or her any outstanding pay.

This includes pay for overtime, for untaken holiday, bonus payments, statutory sick pay (SSP), maternity, paternity or adoption pay, PILON and any redundancy payment (if redundancy has occurred).

Tax and P45

You should notify HM Revenue and Customs whenever an employee leaves employment.

Record the employee’s leaving date on his or her payroll record and make deductions when you send your next Full Payment Submission (FPS), unless you’re paying the employee a company pension.

You must give the employee a P45 slip. HMRC can provide these if you cannot print them yourself.

Conduct an exit interview

Exit interviews can help you uncover issues within your business about which you may not be aware.

Usually, it is best for somebody who does not work with the employee to conduct the interview. Having the interview conducted by line manager, or anyone else who may have strong opinions about the employee, is usually not ideal because the interviewer may not ask the most valuable questions.

Likewise, while a senior member of staff may find the exercise rewarding, the employee may not be willing to be open to someone in a position of management.

The interviewer could ask questions about any aspect of the business or working for the business. If he or she can do so appropriately, it may also be very useful for you as an employer to know whether there are any circumstances that might lead to the employee, or any other employee claiming discrimination or unfair dismissal. If you think that there may be these issues, they are best resolved for the employee leaves.

You can use a template to make sure you ask all the questions you intend.

References

Employers are not obliged to give references unless it is a term of the employment contract.

However, most employees will ask at a later date, so it is a good practice to provide one voluntarily.

The reference given should be true, fair and accurate. It should not include your opinion on the employee. If you feel there is little positive to write, you can simply confirm that the employee worked in his or position between the dates of employment. Not including praise sends as strong a message to a future employer as doing so.

Bear in mind that an under data protection law, an employee can ask his or her employer to give him or her information held about him or her. That includes your reference. So you should be careful that your reference could not be claimed to be libellous, discriminatory or defamatory of character.

Ask for company property to be returned

You may have provided the employee with company property for his or her employment.

You may not want to reuse some of this property (for example, a uniform), but the nonetheless, it is good practice to ask for it.

Property may include mobile telephones, laptops, tablets, bags, clothes, security passes, and keys and keycards.

You should also ask for logins and passwords to online and software accounts, and subsequently change these to prevent further access.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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