Offboarding well in the United Kingdom
Reviewed by Mellow Editorial Team, HR & payroll content team
When an employee leaves your business, you have a defined set of legal obligations to meet — final pay, tax documents, references, and data handling — alongside practical steps that protect the business and treat the departing person fairly.
Confirm the leaving date and agree notice
The leaving date determines almost everything else: final pay calculation, P45 timing, and when access should be removed. Confirm it in writing as soon as the departure is agreed, whether through resignation, redundancy, or dismissal.
Check the employee's contract for the notice period. If either party wants to waive notice, get that agreement in writing too. Where notice is not worked, you may need to make a payment in lieu of notice (PILON) — this is subject to income tax and National Insurance in the same way as regular salary.
Calculate and pay the final salary correctly
Final pay must cover everything the employee is owed up to and including their last day. Work through this checklist:
Basic salary. Pay for all days worked in the final pay period, prorated if the leaving date falls mid-period.
Outstanding holiday. Employees are entitled to 5.6 weeks' statutory annual leave per year (28 days including bank holidays for a five-day week worker). Calculate how much of the current leave year they have accrued, subtract what they have taken, and pay any remainder as holiday pay. If they have taken more leave than they accrued, you may be able to make a deduction — but only if the contract explicitly allows it.
Bonuses and commission. Review the contract. Contractual bonuses must be paid; discretionary ones depend on the scheme rules and the circumstances of departure.
Notice pay and any redundancy pay. Statutory redundancy pay, where applicable, is calculated using a government formula based on age, length of service and weekly pay. It is tax-free up to the prevailing HMRC limit; amounts above that threshold are taxable.
Run the final payroll through your usual Real Time Information (RTI) process. Submit a Full Payment Submission (FPS) to HMRC on or before the final payday, marking it as the employee's last payment.
Issue the P45
You must give the employee a P45 on or before their last day, or as soon as practically possible afterwards. The P45 shows their total pay and tax deducted in the tax year to date. Without it, their next employer will have to put them on an emergency tax code, which can leave the employee with an incorrect deduction and an awkward conversation to resolve.
Keep a copy. You will also report the leaving date through the FPS.
At tax year-end, you do not need to issue a P60 to employees who have already left — a P60 is only for those on the payroll on 5 April. You do, however, still need to submit the annual payroll reports accurately reflecting the leaver.
If the employee had taxable benefits in kind, include them on the P11D you submit to HMRC by 6 July after the tax year ends.
Handle pensions, references and ongoing obligations
Pension. If the employee was enrolled in a workplace pension, notify the pension provider of the leaving date. The employee's contributions stop; their pot remains theirs. Give them the pension provider's contact details if they ask.
References. You are not legally required to provide a reference, but if you do, it must be accurate and not misleading. A factual statement confirming job title, employment dates, and a brief description of the role is low-risk and sufficient in most circumstances.
Restrictive covenants. If the contract contains non-compete, non-solicitation or confidentiality clauses, remind the employee of them in writing at departure. This creates a clear record that they were notified.
Garden leave. If you place the employee on garden leave during their notice period, they remain employed, continue to accrue holiday, and you continue to pay them. Their contract obligations — including confidentiality — remain in force.
Remove access and manage data properly
Revoke system access, email accounts, building passes and any shared credentials on or shortly after the last day. The timing should be proportionate to the role; for someone with access to sensitive data or financial systems, same-day removal is sensible.
Under UK GDPR, you must handle the employee's personal data lawfully after they leave. You can retain records you have a legitimate basis to keep — payroll records, for example, should generally be kept for at least six years to satisfy HMRC requirements. Data you no longer need a basis to hold should be deleted in line with your retention policy.
The Employment Rights Act 2025 has strengthened day-one rights for employees, which affects how you manage dismissals and redundancies in particular. If the departure involves any dispute, take legal advice before the final day rather than after.
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