What to do when an employee leaves your business

This content was reviewed on 1 May 2024.

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Saying goodbye to staff under any circumstance brings with it the admin required for a smooth and compliant transition. From handling HR requirements to maintaining security, you’ll want to follow an employee exit checklist to make sure you’ve not left anything out and reduce the risk of an employment tribunal claim. 

FSB Employment Protection share some must-do tasks for your employee exit checklist and where you can find additional support as a small employer.   

Why do I need an employee exit checklist? 

Making sure you follow the correct procedures gives you the reassurance that you’re protecting your business whilst also maintaining good working relationships with those departing. 

You’ll have different considerations and responsibilities depending on why your employee is leaving.  

Leaving voluntarily  

Moving locations, changing career paths, seeking new opportunities - there are a variety of reasons why an employee might decide it’s time to take the next step. If this is the case, you need to get dated, written confirmation of their resignation so you can start the process of them leaving the company and hiring a replacement if necessary. 

How much notice does an employee need to give? 

Employees don’t need to give notice if they’ve worked for you for less than a month, unless their employment contract says otherwise. Once they’ve worked for you for more than a month, statutory notice of one week will apply. However, you may have stipulated in their contract that this must be longer, for example one month’s notice.  

End of a contract 

If you’ve hired someone on a fixed-term basis, or perhaps an apprentice has reached the end of their time with you, this is another scenario where you’ll need to follow the right processes as they move on from your business on the agreed date. The expiry of a fixed-term contract is regarded as a dismissal in law. 

Dismissal or redundancy 

When you dismiss an employee and end their contract, this must be done fairly. This is particularly important where the employee has at least 2 years’ service and so has unfair dismissal rights. For example, where you are dismissing due to misconduct, you should ensure you have collected evidence of the misconduct, followed a fair process, including any process set down by your own disciplinary procedure, if relevant, and have given the correct notice. Failure to do so can result in claims of unfair and/or wrongful dismissal, which may lead to an employment tribunal.  

Additionally, employees do not need to have been employed by you for any minimum period in order to bring a claim of unlawful discrimination, if relevant, or a claim for dismissal for an automatically unfair reason (FSB members may refer to our factsheet on the FSB Legal and Business Hub on ‘Dismissing Short-Serving Employees’ for further guidance around this).  It’s always best to get an employment specialist’s guidance before taking any action.  

Now that we’ve looked at what you might need to do in certain situations, let’s consider what you should when any employee leaves.  

Payroll and final pay 

You need to tell HMRC when an employee leaves. 

1. Put the employee’s leaving date on their payroll record 
2. Make deductions as normal when you send you next Full Payment Submission 
3. Give the employee a P45 

You’ll also need to: 

• Confirm their notice period.  
• Decide whether it’s best for your employee to work their notice period or offer payment in lieu. An alternative is to place your employee on ‘garden leave’ where this is provided for in their contract, in order to prevent your employee from having further access to customers, clients and staff and to prevent the employee from working for a competitor during their notice period.
• Arrange cover for the employee where necessary. 
• Handle any leftover contractual holiday that has been accrued. 

Company property and access to systems 

• Return company property, such as laptops, phones, vehicles, keys, or anything else the employee had to do their job. 
• Revoke access to IT systems, emails and other online accounts. 

Ensuring a smooth transition 

Communicating with customers and clients 

If the member of staff was customer-facing, or perhaps an account manager for a specific client, you’ll need to make sure they’re not left in the dark. 

Forward their emails to another inbox so that you don’t miss any emails from someone who thinks the person still works for you.  

Handover 

If needed, you should ask the employee to put together a handover covering: 

• projects in flight 
• work in progress 
• anything managed solely by that person 

Should I conduct an exit interview? 

If someone is leaving your business for a new role, you could ask them what led them to this decision as well as their opinion of your company culture and career opportunities for progression. 

Staying secure 

Finally, whilst the physical security aspects, like returning keys or fobs to the premises, might sound obvious, you should also be aware of any potential cyber security issues.  

You should already have a business password policy or multi-factor authentication system in place which will help you to prevent any unauthorised access once someone no longer works for you. This is especially important if the employee had access to sensitive or confidential information. By using a password manager, you can see at a glance who has access to different company accounts. Most accounts will also let you see which devices are currently linked and allow you to revoke access remotely.