Dealing with leavers
When an employee leaves your company, you must provide them with a P45 and ensure that they’re excluded from any future payroll processing. To do this, before updating their final payment and submitting the full payment submission (FPS), you must mark them as a leaver.
If you pay your employees in arrears, to ensure they appear on your pay run for the final payment, you need to enter the leave date after you process their payment.
Before you mark an employee as a leaver, you need to check that their Previous Tax Details state that they are an existing employee. To check this, follow these instructions
- 1. Go to the Employees tab, then click the button next to the relevant employee.
- 2. In the Last working day box, enter the last date on which the employee actually worked for the business. Alternatively, you can mark an employee as a leaver by setting their Finish date inside their employee record.
- 3. Check the Previous Tax Details, and ensure the Starting Basis shows This is an existing employee.
- 4. Click Save.
You’ve now marked the employee as a leaver. When you’re ready to do so, you can now process the employee’s final pay and generate their P45 information.
Once you successfully submit an FPS, it’s not possible to edit any details or reinstate the employee.
You must print the P45 and give it to the leaver after you’ve completely processed their final pay in this employment.
- 1. Go to the Employees tab, then select the Include employees who have left check box.
- 2. Open the leaver’s employee record and click Print P45.
The P45 report opens in a new window or tab and you can choose to print or save it from your browser.
- 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 also has all the necessary pay information.
Occasionally, an employee may notify you that they’re leaving the business after you’ve already processed their final pay run and submitted your full payment submission (FPS) to HMRC.
If this happens, you should mark the employee as a leaver as normal. When you process your next pay run, a correction to the earlier submitted FPS to HMRC is automatically sent, correctly notifying them of the leaver.
You may notice that an employee is still showing 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.
If you’ve marked an employee as a leaver in error but have not completed a Pay run and submitted an FPS since doing so you can reactivate their existing employee record. Once reinstated, they can begin to receive payslips again.
- 1. Go to the Employees tab and click the employee you want to reactivate.
- 2. Click Edit.
- 3. Under Employment Details, in the Finish Date box, remove the date. Click Save.
In the unfortunate event that an employee passes away, you must process their final pay with no NI deductions and notify HMRC that the employee no longer works for you. For more information about how to do this, please refer the article, How to process the final pay for an employee who has died.
The employee should now be set as a leaver on your Payroll. If they are still showing after completing the above, there may be further things you need to check.