Dealing with leavers

When an employee leaves your company, you must provide them with a P45. You must also ensure that they’re excluded from any future payroll processing. To do this, you need to mark them as a leaver. You need to do this before you update their final payment and submit the Full Payment Submission (FPS).

If you need help with the FPS, read our Full Payment Submission (FPS) article.

If you pay your employee in arrears, enter their leave date after you process their payment. This ensures they appear on your pay run for their final payment.

Note: If the leaver was in your workplace pension scheme, you also need to contact the pension provider to tell them the employee has left.

If you pay the leaver after their finish date

  1. Postpone setting their finish date until after the pay run is complete.
  2. The FPS includes the employee’s pay information.
  3. Mark the employee as a leaver.
  4. Complete the next pay run.
  5. The FPS includes the employee’s finish date.

HMRC now knows that the employee is a leaver and has all the necessary pay information.

To mark an employee as a leaver

To mark an employee as a leaver:

  1. From the Employees tab, select Bulk Actions.
  2. Select the relevant employees in the Select Item column, then Add finish date.
  1. Enter the Finish date for all of your chosen employees, then select Save.

You can now process the employee’s final pay and generate their P45 information.

Once you successfully submit an FPS, you cannot edit the employee's details or reinstate them.

Print a P45 for a leaver

You must give the leaver their P45 after you’ve processed their final pay in this employment.

  1. Select Employees in the navigation menu.
  2. Select the Filter button, then select the Include employees who have left checkbox.
  3. Select the employee's record, then select Print P45 in the top right of the page.
You can print the P45 or save it from your browser.

Employees who notify you of their leave date after the final pay run

If an employee notifies you they're leaving after their final pay run and you have submitted the FPS for that period:

  • Mark the employee as a leaver as normal.

  • Process the next pay run as normal.

When you process the pay run, a correction to the earlier FPS is automatically sent to HMRC. This notifies them of the leaver.

An employee may still appear after you complete their final pay run and submit your FPS to HMRC. This happens if you enter the employee’s leave date after you complete the pay run.

Employee marked as a leaver in error

If you mark an employee as a leaver but have not completed a pay run, you can reactivate their employee record. Once reinstated, they can begin to receive payslips again.

  1. From the Employees tab, select the employee you want to reactivate.
  2. Under Employment Details, in the Finish Date box, remove the date.
  3. Select Save.

If you’ve submitted your FPS to HMRC, you must contact us to reactivate the employee's record.

Employee passes away

If an employee passes away, process their final pay with no NI deductions and notify HMRC.

When processing the final pay;

  • The earnings aren’t subject to national insurance (NI).
  • The earnings are subject to tax using the employee’s normal tax code.
  • If the employee is a member of a pension scheme, contact the pension provider. Check if you should deduct a pension contribution.

Process payments without NI liability

To do this, create a new salary payment which is taxable but exempt from NI:

  1. From the Settings tab, select Payment & Deduction Settings.
  2. From the Payments tab, select Create New Payment.
  3. Enter the details of the new payment as follows:
Payment Category Select Salary from the drop-down list.
Payment Type Select Taxable Non-NIable from the drop-down list.
Name Enter the name of the payment you want to appear on payslips.
Description Enter any text to explain the purpose of the payment.
Include in Calculation of:

If you need to deduct pension contributions, select the following as appropriate:

  1. Select Save.

You must then set the employee as a leaver and process their final pay run. Make sure you use the new payments or deductions at the edit pay stage.

You’ve now processed your employee’s pay with no NI deductions and informed HMRC that they’ve left.

The employee should now be set as a leaver on your Payroll. If they are still showing after completing the above, find out why a leaver might still appear