21 December 2015
What to do when an employee resigns
As an employer, it is inevitable that at some point employees will leave. Managing the exit process is often something which is overlooked but it can have a significant impact upon employee relations and morale within an organisation. Employment lawyer Paul Lawton at Buckinghamshire based law firm B P Collins LLP, advises employers on how to best manage employee resignations.
Should you try and persuade the employee to change their mind?
It is a common misconception that notice given by an employee is not valid unless it is “accepted”. An employer cannot however refuse to accept someone’s resignation. Similarly, once an employee has given a valid notice of resignation, the resignation is effective and can neither be "refused" by the recipient or "withdrawn" by the person giving it, without the other's agreement.
However, if an employee resigns verbally in the heat of the moment, an employer may want to give them an opportunity to reflect, particularly where the employee is raising a grievance about how they have been treated. In these situations, it may be better to discuss the employee’s concerns in order to seek an amicable resolution rather than having to defend a litigation claim at a later stage.
Issues to think about before employment ends
Issues that an employer may want to consider upon being notified about an employee leaving include the following:
- It is always best to avoid uncertainty and ensure that the employee has put their resignation in writing. The employer will need to check their contract of employment to see when the contractual notice period will end.
- The employer should write to the employee to confirm receipt of their notice and provide information about how the notice period will be managed, and if applicable, details of their last working day.
- Consider whether the move is likely to breach any of the terms of the employee’s contract. If they are moving to a competitor, are there restrictive covenants that need to be enforced? If so, the employer will need to take advice quickly in order to protect its commercial position.
- Decide whether the employee should work their notice period. If you are concerned about the employee poaching customers or staff, they may have a contractual right to be paid in lieu for all or part of their notice period or to be put on garden leave.
- Agree and/or decide what will be said to customers and other employees about the employee’s resignation.
- Decide whether you want the employee to take any outstanding holiday during their notice period.
- Consider how the company wants to manage the loss of resources: will they recruit externally or cover the work internally?
- Conduct an exit interview to establish why the employee is leaving.
- Ensure that a proper handover takes place.
Issues to address on termination of employment
When an employee leaves, an employer will typically want to protect its commercial position by taking the following steps:
- Retrieve all company property such as company car, laptop, mobile, security pass, keys, uniform and tools.
- Ensure the employee hands over all company documents and copies.
- Terminate the employee’s access to the computer network and telephone system.
- Stop their membership of any benefit schemes, such as pension, life assurance and private health insurance, unless you have agreed otherwise.
- Organise a final payment to the employee, including any outstanding pay or pay in lieu of notice, accrued holiday pay, overtime, bonuses and commission. You may be able to deduct money from the final payment if the employee has taken more holiday than they have accrued and there is a contractual right to deduct such a payment.
- Remind the employee about any restrictive covenants that might affect what they can do after they leave their job and any confidentiality clauses that are in their contract of employment. Check that they understand what is expected and the consequences of any breach.
- Issue a P45.
- Think about what you will say in any written or verbal references.
Is a settlement agreement needed?
If there is a potential dispute about the employee’s departure, the employer may want to protect its position by offering the employee a financial settlement subject to the employee entering into a binding agreement that will prevent the employee from bringing any claims. This is known as a settlement agreement. There are understandably risks in regard to offering settlement agreements, not least because the employee has to take independent legal advice on the agreement which the employer will most likely have to pay for. It is always therefore best to take advice before offering an employee a settlement agreement.
If you would like more specific advice in relation to a particular resignation and what you need to do, or are considering offering a settlement agreement, we can help you. If an employee is leaving to join a competitor, please speak to a member of the B P Collins employment law team about your options.
Call 01753 279029 or email email@example.com for expert advice.