--- title: "Ending Employment: Payroll Tasks to Complete Without Delay" description: Ensure smooth payroll when ending employment. Handle final pay, accrued holiday, PILON, deductions, P45, and HMRC compliance accurately and efficiently. image: https://www.dhpayroll.co.uk/hubfs/made%20redundent.jpg --- [Skip to main content](https://www.dhpayroll.co.uk/blog/ending-employment-payroll-tasks-to-complete-without-delay#main) [![dhpayroll](https://www.dhpayroll.co.uk/hs-fs/hubfs/Child%20Theme%20July/logo-header.png?width=207&height=56&name=logo-header.png) ![dhpayroll](https://www.dhpayroll.co.uk/hs-fs/hubfs/Child%20Theme%20July/logo-header.png?width=207&height=56&name=logo-header.png) ![dh payroll logo](https://www.dhpayroll.co.uk/hs-fs/hubfs/dh%20payroll%20logo.png?width=50&height=36&name=dh%20payroll%20logo.png) ![dh payroll logo](https://www.dhpayroll.co.uk/hs-fs/hubfs/dh%20payroll%20logo.png?width=50&height=36&name=dh%20payroll%20logo.png)](https://www.dhpayroll.co.uk/) - [Home](https://www.dhpayroll.co.uk) - [Show submenu for About About](https://www.dhpayroll.co.uk/about-us) - [About](https://www.dhpayroll.co.uk/about-us) - 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[Technology](https://www.dhpayroll.co.uk/blog/tag/payroll-technology) - [Research & Insights](https://www.dhpayroll.co.uk/blog/tag/payroll-research-insights) - [Thresholds & Rates](https://www.dhpayroll.co.uk/blog/tag/payroll-thresholds-and-rates) - Show submenu for Contact Contact - Contact - [Contact](https://www.dhpayroll.co.uk/contact-us) - [Request a Call back](https://www.dhpayroll.co.uk/request-a-call) - [Request a Quote](https://www.dhpayroll.co.uk/request-a-quote) - [Locations](https://www.dhpayroll.co.uk/locations) - [0808 196 0948](tel:08081960948) - - - [0808 196 0948](tel:08081960948) # Ending Employment: Payroll Tasks to Complete Without Delay November 10, 2025 ![Ending Employment: Payroll Tasks to Complete Without Delay](https://www.dhpayroll.co.uk/hubfs/made%20redundent.jpg) When an employee leaves, their final pay often differs from their usual salary. Differences arise from accrued holiday, deductions, final expenses, bonuses, payments in lieu of notice (PILON), and payroll timing. Completing these tasks in the correct order reduces disputes and ensures compliance with HMRC, GDPR, and the Data Protection Act 2018. This guide outlines the essential payroll steps to follow when employment ends, with a focus on accuracy, clarity, and timing. ## **Key Payroll Tasks to Complete When Ending Employment** ## **1. Confirm the Final Working Date** The official last day sets the stage for payroll, holiday calculations, and [HMRC reporting](https://www.gov.uk/government/organisations/hm-revenue-customs). Check: - Contractual notice period - Any agreed change to notice (documented in writing) - Whether the employee works their notice or receives PILON Record the final working date in your payroll system once confirmed. Consistency ensures accurate RTI and P45 reporting. **2. Gather Pay Information Before Final Payroll** Collect all pay-related items before processing the final run. Include: - Basic earnings to the final working date - Overtime and shift payments - Approved commission - Bonuses earned - Expense reimbursements with receipts - [Salary sacrifice](https://www.dhpayroll.co.uk/blog/deductions-from-wages) adjustments Do not enter termination details until all time and earnings entries are approved. Miss timed entries often require payroll reprocessing. ### **3.Calculate Accrued Holiday** Determine unused holiday to the final working day. Steps: 1. Review annual leave entitlement 2. Calculate leave taken to date 3. Subtract from accrued entitlement 4. Include the remaining balance in the final pay If the employee has taken excess leave, deduct only if the contract explicitly allows it. ### **4. Payment in Lieu of Notice (PILON)** If the employee does not work their notice period, [PILON](https://www.acas.org.uk/final-pay-when-someone-leaves-a-job/pay-during-the-notice-period) applies. - Treated as earnings subject to PAYE and NIC - Statutory redundancy is tax-free up to £30,000 - Enhanced redundancy above £30,000 is taxable Maintain clear records of the calculation method, date, and supporting policy or agreement. ### **5. Include Other Pay Elements** Review all remaining items owed: - Commission tied to invoicing or delivery - Performance bonuses linked to completed periods - Call-out or standby payments - Mileage reimbursements with receipts Include only payments linked to work already completed. ### **6. Deduct Outstanding Amounts (If Contractually Allowed)** Recover any amounts owed if the contract permits: - Training costs subject to repayment rules - Salary advances or employee loans - Unreturned equipment where recovery is authorised Itemise all deductions on the final payslip. ### **7. Run Final Payroll** Steps: - Process all earnings and deductions - Review payroll summary for accuracy - Validate totals before closing the payroll period Final pay should follow the usual pay date unless a written agreement states otherwise. **8. Issue the Final Payslip** The final payslip must clearly show: - Total pay - Deductions - Tax and NIC totals - Holiday paid out or recovered - Notice pay, if applicable - Any redundancy payments Clarity prevents disputes and supports internal audit requirements. ### **9. Generate and Provide the[P45](https://www.gov.uk/paye-forms-p45-p60-p11d)** After final payroll: - Mark the employee as a leaver in the Full Payment Submission (FPS) - Submit RTI to HMRC - Produce the P45 and give it to the employee The P45 shows earnings and tax to date, enabling the next employer to apply the correct tax code. ### **10. Secure Payroll and HR Records** Good record management supports compliance and reduces risk: - Retain payroll records for at least three complete tax years (HMRC may require up to six for certain items) - Archive holiday, bonus, and notice calculations - Record reason for leaving - Ensure[storage is GDPR-compliant](https://www.dhpayroll.co.uk/blog/understanding-gdpr-and-payroll-in-the-uk-for-employers) Remove system access once final pay processing is complete to prevent unauthorised access. ### **11. Avoid Common Errors** High-risk areas to check: | **Issue** | **Impact** | **Prevention** | | --- | --- | --- | | Leaving date missing in FPS | HMRC shows employee as still employed | Include date in final RTI | | Holiday miscalculated | Disputes or underpayment claims | Use full pay records and correct entitlement tables | | Incorrect P45 information | Tax issues at new employer | Verify tax code, pay-to-date, and NIC figures | | Expense claims submitted after leaving | Unpaid reimbursements | Agree cut-off dates and communicate clearly | Include an approval step for all final pay calculations to maintain an audit trail**.** ### **12. Review Payroll Processes After Business Changes** Adjust routines after: - Hybrid or remote working arrangements - Workforce growth - Payroll platform changes - New job structures or pay models - Multiple managers inputting earnings Even small process improvements can reduce errors and ensure consistency. ## **Conclusion** Ending employment requires a defined payroll sequence: confirm the final working date, collect all pay adjustments, calculate holiday, apply notice pay, deduct authorised amounts, run payroll, issue payslip and P45, submit RTI, secure records, and remove system access. Clear, consistent processes protect both employer and employee, maintain compliance, and reduce disputes. Accuracy and documentation are more effective than complexity. 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