Employee offboarding checklist: what to do when someone leaves
A leaver touches payroll, IT, the asset list, the rota and the filing cabinet in the space of a few weeks. This is the order to do it in, with the parts the law fixes marked apart from the parts that are just good housekeeping.
Five things are legal requirements when an employee leaves: correct notice, final pay including any accrued but untaken holiday, a P45, no deduction from that pay without prior written agreement, and keeping payroll records for three years after the tax year. Everything else - equipment back, access removed, handover done, an exit conversation - is not required by statute but is where the cost and the risk actually sit. Do it in the order below and nothing is left to the last afternoon.
What do you do on the day someone resigns?
- Acknowledge the resignation in writing and state the last day of employment. Work it out with the notice period calculator if the contract counts in months.
- Check the notice given against the contract. The statutory minimum from an employee is one week once they have a month's service, however long they have worked for you; the contract usually asks for more.
- Decide how notice will be served: worked, on garden leave, or paid in lieu if the contract allows it. See garden leave vs PILON.
- Tell payroll, IT and whoever runs the rota the same day.
If you are the one ending the employment, the statutory minimum notice is one week after a month's service, then one week for each complete year from two years, up to 12 weeks. An employee with two years' service can ask for written reasons for dismissal and must be given them within 14 days; that qualifying period is set to fall to six months for dismissals from 1 January 2027.
What has to be in the final pay?
| Item | Rule | Watch for |
|---|---|---|
| Pay to the last day | Contractual | Part-month salary method: use the one in the contract, and the same one for every leaver. |
| Accrued, untaken holiday | Must be paid in lieu on termination (Working Time Regulations 1998, reg 14) | This is the one time statutory holiday can be paid instead of taken. Work it out with the leaver holiday calculator. |
| Holiday taken but not yet accrued | Recoverable only if a relevant agreement, usually the contract, says so | No clause, no clawback. |
| Pay in lieu of notice | Contractual if there is a PILON clause | Taxed as earnings; see the PENP calculator. |
| Untaken TOIL, commission, bonus | Whatever the contract or policy says | Unpaid hours can pull average pay below the minimum wage. |
| Deductions (kit, training costs, loans) | Unlawful unless required by statute, in the contract, or agreed in writing beforehand (Employment Rights Act 1996, s.13) | The agreement must pre-date the event, not just the deduction. |
Payroll then gives the leaver a P45, puts the leaving date on the payroll record with the last payment and reports it on the next Full Payment Submission.
What is the checklist for the notice period?
- Agree the handover: what they own, who takes each thing, and what must be written down.
- List the equipment issued to them from the asset register, so the return list is ready and not rebuilt from memory.
- List every system they can log in to, including the ones IT does not manage: banking, social media, supplier portals, shared mailboxes.
- Agree how remaining holiday will be used: taken during notice or paid.
- Tell the team and any clients, with wording the leaver has seen.
- Hold the exit conversation with someone other than the line manager. The exit interview form has the questions.
- Remind them, in writing, of any confidentiality or post-termination terms in the contract.
- Move ownership of shared files, calendars and recurring meetings.
- Transfer anything on a personal device or account that belongs to the company.
- Collect equipment, keys, passes and company cards, and sign each item back in on the register.
- Remove access at the end of the working day: email, single sign-on, shared passwords, door codes, payment cards.
- Set an out-of-office that names who to contact. Do not keep reading a leaver's mailbox as if it were theirs.
- Confirm the forwarding address for the P45 and the final payslip.
What do you do after they have gone?
- Pay and P45. Run the final pay on the normal date and issue the P45.
- Pension. Tell the pension provider the leaving date.
- Records. Keep PAYE records for three years from the end of the tax year they relate to. For the rest of the file, data protection law sets no fixed period: you decide how long each kind of record is needed and delete it after that. The HR data retention schedule sets the periods out.
- References. There is usually no legal duty to give one, apart from some regulated sectors such as financial services or where you agreed to in writing. If you do give one it must be fair and accurate. Decide a single policy, such as dates and job title only, and apply it to everyone.
- The vacancy. Decide whether to replace like for like before the advert goes out; see fair recruitment.
What goes wrong most often?
- Deducting for an unreturned laptop without a clause. Without prior written agreement it is an unlawful deduction, even when the laptop really is missing.
- Leaving access live. Shared logins and the systems outside IT's control are the ones still working six months later.
- Holiday worked out on the wrong leave year. Accrual runs from the start of your leave year to the last day, not the calendar year.
- Deleting everything, or nothing. Both are data protection failures. A schedule fixes it.
Frequently asked questions
What must an employer give an employee when they leave?
Final pay to the last day, payment for any accrued but untaken statutory holiday, and a P45. An employee with two years' service who is dismissed can also ask for written reasons, which must be given within 14 days.
Can an employer deduct the cost of unreturned equipment from final pay?
Only if the contract allows it or the employee agreed in writing before the event that led to the deduction. Without that, section 13 of the Employment Rights Act 1996 makes it an unlawful deduction from wages.
Does an employer have to pay untaken holiday when someone leaves?
Yes. Regulation 14 of the Working Time Regulations 1998 requires a payment in lieu of statutory holiday that has accrued and not been taken by the termination date. Holiday taken in excess can be recovered only if a relevant agreement provides for it.
Does an employer have to give a reference?
Usually not. There is a duty only where there was a written agreement to give one or in a regulated industry such as financial services. A reference that is given must be fair and accurate.
How long should an employer keep a leaver's records?
PAYE records must be kept for three years from the end of the tax year they relate to. For other records data protection law sets no specific period, so the employer decides how long each type is needed and should record that in a retention schedule.
Sources
Checked against the primary source on 4 October 2026.
- Employment Rights Act 1996, s.86 - minimum notice from employer and employee
- Working Time Regulations 1998, reg 14 - payment in lieu of untaken holiday, and recovery of excess leave
- Employment Rights Act 1996, s.13 - when a deduction from wages is lawful
- gov.uk: what to do when an employee leaves - the P45 and the payroll leaving date
- gov.uk: PAYE, keeping records - three years from the end of the tax year
- gov.uk: getting a job reference - when a reference must be given, and that it must be fair and accurate
- Employment Rights Act 1996, s.92 - written reasons for dismissal within 14 days
- ICO: collecting and keeping employment records - no specific time limit in data protection law
This is general guidance for UK employers and is not legal advice. Take advice on anything contested, unusual or expensive.
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