Guide

Pay: employer obligations

Calculating final pay when a worker leaves employment

When a worker leaves your employment, you must give them:

  • any outstanding pay, including overtime
  • pay in lieu for any untaken holiday
  • bonus payments, if earned
  • any statutory sick pay, if they are entitled to it
  • pay instead of notice if you do not require them to work their notice period - note that the contract of employment must provide for this, otherwise the employee must agree to it
  • redundancy payment, if due

If the worker leaves before or during their statutory maternity or adoption pay period, you must also start paying - or continue to pay - them statutory maternity or adoption pay.

You could also give them:

  • a pension refund, depending on the rules of the scheme
  • a lump-sum payment as compensation for loss of their job
  • an enhanced redundancy payment if you have made them redundant - this might be either contractual or paid on a discretionary, and non-discriminatory, case-by-case basis

What you should deduct from a worker's final pay

You must deduct the following items from what you owe the worker:

  • income tax
  • relevant National Insurance contributions

You might also need to deduct, for example:

  • money given for season ticket loans
  • any other outstanding loans
  • amounts to be paid under any car leasing agreements