When an employee dies

Practical steps when an employee dies

Payroll issues

You or your payroll department, if you have one, must calculate the final pay amount owed to the employee. You should make sure this is paid to the deceased employee's personal representative, usually the executor of the estate.

You will need to consider whether the employee was:

• due any outstanding payments of wages
• due tax credits
• due to make payments from their salary, such as student loan or child support payments
• receiving statutory payments, eg maternity pay
• a member of a company share scheme

Payments made after an employee's death are still subject to the same tax rules as normal. However, Class 1 National Insurance contributions (NICs) - from both employer and employee - do not have to be made.

You will also have to remember to complete a final P45 form on behalf of the deceased employee.

For information on deducting tax and NICs from the final payment, download the employer's further guide to PAYE and NICs from the HM Revenue & Customs website (PDF).

Occupational pension schemes

A surviving spouse or other dependants may be entitled to receive a survivor's pension.

In some cases, a lump sum payment may become available. This will usually be paid to the surviving spouse or to the executor of the estate.

The trustee of the pension scheme will be able to provide further detail on any payments which need to be made to the deceased's dependants.

Management issues

You will need to talk to the employee's manager about how to cover their workload in the short term, before a new individual can be appointed to the position.

It is usually advisable to get temporary cover, rather than asking other employees to take over the deceased person’s workload. See our guide on recruiting and interviewing.

Subjects covered in this guide

• Introduction
• The legal implications when an employee dies at work
• Practical steps when an employee dies
• Letting people know when an employee dies
• Dealing with next of kin when an employee dies

 

 Print This Page

Source - Business Link; Crown Copyright.