Guide: Managing leavers

When an employee leaves the company, it's essential to follow the correct procedure to ensure that their final pay and any benefits or deductions are accurately calculated. This process is commonly referred to as the 'Leaver Process' in payroll software. This guide provides a comprehensive walkthrough of this process.

1. Start the Leaver Process Upon receiving the notification that an employee is leaving the company:

• Access the main dashboard of your payroll software.
• Locate and select the employee's profile.
• Click on the 'Leaver' or 'Termination' option (depending on the terminology used in your software).

2. Enter the Leaving Date

• Specify the employee's last working day. This will determine when the final paycheck will be processed.

3. Final Pay Calculation Depending on the terms of employment, the final pay may include:

• Outstanding salary.
• Accrued but untaken vacation days.
• Any bonus or commission due.
• Deductions (if any), such as unpaid loans or advances.

Ensure that you review the calculations provided by the software for accuracy. For help making a payment to a leaver, see: How do I make a payment to a leaver? 

4. Process Final Deductions In some cases, there may be final deductions such as:

• Recovery of training costs.
• Deductions for damaged company property.
• Any other deductions as per the employment agreement.

5. Benefits and Pensions

• Terminate any benefits that the company offers, such as health or life insurance.
• For pension contributions, make sure to update them as per the leaving date. See How do I update employer pension contributions? 

6. Provide the P45 Form (or equivalent) Depending on your jurisdiction, when an employee leaves a company, they may need to be provided with a form (like the P45 in the UK) that details their pay and the taxes that have been deducted during the tax year. For help producing a P45 form for leavers, see:

How do I produce P45s for leavers? 

7. Archive Employee Data Most payroll software will allow you to archive or deactivate the employee's profile, ensuring that they do not appear in future payroll runs but keeping their historical data for reference.

8. Notify Relevant Authorities (if applicable) In certain regions, companies may need to notify tax authorities or other relevant bodies about the employee's departure.

9. Final Audit and Review

• Double-check all entries related to the leaver to ensure no errors or omissions.
• Confirm that the final pay matches the figures on the software.

10. Process the Final Payroll

• Run the payroll for the leaver.
• Ensure that payment is made through the preferred method, be it bank transfer, cheque, or any other method.

The leaver process is crucial to ensure that employees who depart from the company receive accurate compensation and that all regulatory requirements are met. By following the steps above, you can confidently manage this transition using your payroll software.

Note: The specific steps and terminology may vary based on the payroll software in use and regional regulations. Always refer to the software's documentation and seek local legal advice when in doubt.