HR · 21 February 2022

Everything You Need To Do When An Employee Leaves Your Business

What to Do When an Employee Leaves Your Business

When an employee leaves your business, it can be a difficult time. There are many things to consider, such as what caused them to leave and what you need to do to ensure a smooth transition. Most importantly, you will need to make sure that you tick all the legal boxes when they leave and that you protect your company from any potential issues.

In this article, we will discuss exactly what to do when an employee leaves your business. We will also offer some tips for recruiting top talent so that you can quickly find the right replacement.

Ask Why They Want to Leave

When someone hands in their notice, you need to ask them why they are leaving the company and what the reasons for resigning are. This will give you a chance to understand what you can improve for the future, and it may help you to retain other members of your team in the future. There are lots of things that could be causing them to leave, including:

  • A lack of career opportunities
  • Unrealistic targets or workloads
  • They don’t feel appreciated by you or their colleagues
  • The company culture is not a good fit
It may be that you can resolve the problems and persuade them to stay with your business. However, if it’s too late for that, then you need to ensure there are no hard feelings when they leave. For example, an employee who feels like they were not appreciated may leave with a bad taste in their mouth and criticise your company to other potential employees. This is why it’s important to try and end the relationship on amicable terms if that is what you both decide.

Offer New Terms

Once you know the reasons why your employee wants to leave, you can also ask them if there is anything you could do with their job role or contract that would convince them to stay. For example, this may involve offering more flexible working hours if they are struggling with their current hours or a pay rise if they feel they are not being paid enough.

If they are leaving because of the company culture, then you could try and change that with new policies or by hiring or retraining managers. Of course, it may be the employee themselves who is the issue in which case it is better to just wish them luck and let them go.

If the employee is leaving to take on a new job role, you may be able to offer them a counter-offer that is more lucrative than their current one. However, it’s important to note that this may cause other members of your team to become disgruntled if they feel that you are not offering them the same opportunities.

Accept their written notice

Accept their Written Notice and Arrange the Notice Period

When an employee gives notice, it is legally required for you to accept it in writing. You also need to arrange the notice period, which is the amount of time they are required to work before leaving.

If you have an employment contract in place, then it will likely state the notice period that is required. If there is no contract, or the contract does not state a notice period, then you should have a conversation with them to work out what is best for both parties.

It may be that you want to waive the notice period altogether so that you can find a replacement for their position as quickly as possible. Alternatively, you might want them to stay until the end of the notice period so that they can train up their replacement and ensure a smooth transition. Whatever the case, it must be an agreement between you and the employee and it must be put in writing.

Pay Your Employee any Outstanding Pay

When an employee leaves, you need to ensure that you pay them any outstanding money that they are owed. This includes their final salary, holiday pay, and any other benefits that may be due to them. It is illegal to refuse to pay an employee when they leave, so you need to make sure that everything is sorted out before they walk out the door.

However, if your employee refuses to work their notice period, then you do not need to pay them for that time. In this situation, it is best to speak to a lawyer so that you know what your next steps should be. Your former employee may attempt to take legal action against you for not paying them, so you must ensure that you are doing the right thing.

Notify HMRC

When an employee leaves your business, it’s important to let HMRC know within a month of their departure date. You should do this using form P45. This is a document that shows their gross pay, tax and National Insurance contributions for the year to date. It is a legal requirement for you to provide your employee with a P45 once they leave your business, so make sure that this is something you arrange before they go.

Your former employee will need this form to give to their new employer so that they can pay the correct amount of tax. If you do not provide them with a P45, then your ex-employee could be fined by HMRC for failing to supply it within 14 days of leaving.

You can find more information about how to arrange form P45 on the government’s website.

Arrange an Exit Interview

Exit interviews are a great way of finding out why people are leaving your business. Unlike your earlier discussion, it may be better if this is conducted by someone who was not the employer’s direct manager or superior so that they are more likely to open up about exactly why they want to leave.

Again, the information that you gather during these interviews can help you to improve the way things are done in future and may help retain some of your other employees who were thinking about leaving too.

It may be that the employee opens up about a reason they had not previously divulged. If this is the case, you could use it to try and negotiate a different outcome with them. For example, they may have expressed dissatisfaction with their working hours or location but if this is something you can change then it’s worth considering as an option.

If they still want to leave, make sure you tell them that the door is always open if they change their mind (if this is the right move for your business).
provide a reference

Provide a Reference

Once your employee has left, you should provide them with a reference. This document will state the employee’s job title, start and end dates of employment, and their key strengths and attributes.

It is best to give your employees a reference as soon as possible after they have left your business so that there are no delays in finding new work. You should also make sure that the reference is accurate and up-to-date.

While you may feel disgruntled about the employee leaving, it is usually best to just give them a reference and move on. This way, you can focus on finding a replacement and ensuring that your business does not suffer as a result of the departure.

Get Back any Company Property

Before an employee leaves, make sure you get back any company property that they may have in their possession. This includes items such as laptops, phones, or other equipment.