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When an employee is leaving your business, there are lots of things to think about. You might be losing a valuable member of your team and even a friend, and you may well be focused on finding a suitable replacement so your business can continue its growth. However, there are some important legal and administrative steps to remember whenever an employee leaves your business. This is both for your employee’s benefit and that of your business. This article will explain what: 

  • you need to remember before the employee’s final day;
  • to do on their last day; and 
  • you will need to do afterwards. 

What to Remember Before the Employee’s Final Day

After an employee resigns, there are things they should do to ensure a smooth transition. These include completing any leftover or outstanding work and conducting a good handover process. A good handover should enable whoever is taking over their responsibilities to understand: 

  • what is required;
  • the wider context (such as any important relationships they need to maintain); and 
  • administrative details like where to find the documents or products that they will need to be dealing with.

From your perspective as an employer, it is important to ensure that the above handover best practices are happening. You should be clear as to who will be picking up the different work responsibilities from the departing employee. You should also make sure there are no ‘surprises’ after the employee leaves. 

Another good idea is to conduct an exit interview with the leaving employee. This exit interview should be a free and frank discussion where you can get feedback from the employee about:

  • their experience at work; 
  • the business; and 
  • anything else that might be relevant or useful.

What to Remember on the Employee’s Final Day

Because the employee’s final day can be full of other events, like a leaving morning tea or party, sometimes you can skip the less exciting administrative steps. However, there are a few things to make sure happen on the employee’s last day. 

One non-optional step is to calculate the employee’s final pay, including any holiday leave owed, and pay it to them. However, you can do this on their final payday rather than their final day at work.

You should also make sure that you (or another employee) collects all company property from the leaving employee before the end of the final day. Alternatively, you can do this immediately after, such as if the employee cannot easily return a company uniform until the next day. Remember to check for any company property like:

  • computer and electronic equipment;
  • a mobile phone if supplied. Sometimes an employer and employee will agree that the employee is gifted or buy their company telephone or agree that the number is transferred to the employee. This should be done in writing beforehand; 
  • company files, manuals, forms, customer contact lists;
  • tools;
  • staff uniform;
  • credit and charge cards or taxi chits;
  • identification card and building access (either key and electronic); if there is passcode access, you may want to consider changing the code; and
  • a company vehicle.

The employee themselves should set up:

  • an auto-forward and out-of-office auto-reply on their emails;
  • a system to forward their phone calls; and 
  • an out-of-office message on their voicemail. 

You should remember to remove their access to online systems, like a financial platform or a shared file server.

You could also consider providing a reference to the employee or offering to act as a referee about your employment relationship. Note that for starting-out wage rate employees, you should always provide a written reference or at least a statement of service saying how long they have worked for the employer. This is so that the new employer will be able to work out the date that they need to be paid (at least) the adult minimum wage.

What to Remember to Do After the Employee’s Final Day

When an employee has left your business, there are a few final things to do to check off the process and legal requirements. You must update their personnel file in your records, with:

  • their last day of work; 
  • last pay amount;
  • final payout including holiday pay; and 
  • archive their personnel file and any associated records. 

You must keep these records for at least seven years to comply with your obligations. 

For both your employee’s sake and your own, you should also make sure the employee is removed from all email distribution lists and contact lists at the end of the employment relationship. They should also lose their access to IT systems or the like. 

Key Takeaways

The process you need to follow when an employee leaves your business includes:

  • steps before the employee leaves; 
  • what happens on their final day; and 
  • what to do after their final day.

Among other things, you should ensure that: 

  • a good handover occurs between the employee and whoever is taking their work responsibilities; 
  • that all company property is collected; 
  • you calculate their final pay, including holiday pay; and 
  • you update the relevant personnel file after the end of the employment relationship. 

If you want to know more about what processes to follow when an employee leaves your business, contact LegalVision’s employment lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

What should an employer do before an employee leaves?

Ensure a smooth transition by helping a good handover take place and being clear with other employees about who is taking the responsibilities of the departing employee. The employer should also conduct an exit interview with the departing employee.

What should an employer do on an employee’s final day?

Collect the employee’s company property, calculate their final pay, and ensure that the employee sets up an auto-forward system and out-of-office automatic reply on their email.

What should an employer do after an employee’s final day?

Update the employee’s personnel file and then archive the file for seven years. Additionally, check the employee has been removed from email and contact lists and any access to the business’ computer systems.

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