Pay - an overview of obligations
Calculating final pay
When an employee leaves, you must give them:
- any outstanding pay including overtime
- any outstanding holiday pay
- bonus payments, if earned
- Statutory Sick Pay, if they are entitled to it
- Statutory Maternity Pay, if they are entitled to it
- pay instead of notice if you are not allowing the employee to
work their notice period
Some businesses also give the employee:
- a pension refund, depending on the rules of the scheme
- a golden handshake or extra payment as optional
compensation for loss of their job
- contractual redundancy pay if you have made an employee redundant
What you should deduct from an employee's final pay
You must deduct the following items from what you
owe the employee:
- income tax (PAYE)
- relevant National Insurance contributions
Some businesses also deduct:
- money given for season ticket loans
- any other outstanding loans
- amounts to be paid under any car leasing agreements
Redundancy payments
If you make an employee redundant, you should give them statutory
redundancy pay in addition to their contractual pay if they have
been working for you continuously for at least two years since turning
18. For more information, see our guide on making an
employee redundant or use our interactive tool to
get a checklist of how to handle potential redundancies.
Subjects covered in this guide
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