Employee Resignations in the UK: A Guide for Employers

Good to know: handling an employee resignation properly protects your organisation from disputes, keeps your team’s morale steady, and makes sure the departing employee leaves on good terms. Every employee resignation triggers a set of legal obligations around notice, pay, and holiday, and getting any of them wrong can lead to a costly claim. This guide walks you through what to do from the moment an employee resigns to their last day, covering notice periods, pay in lieu, exit interviews, and the legal risks employers need to watch for. Use it as practical guidance alongside your own employment contract templates and ACAS guidance, rather than as a replacement for legal advice on individual cases.

Receiving a Resignation: Immediate Next Steps

When an employee resigns, the clock starts immediately. Here’s what to do in the first 48 hours.

1. Get it in writing. A verbal resignation is valid, but you should always ask the employee to confirm it in writing. This protects both sides if there’s ever a dispute about the date notice was given, or about how genuine the resignation actually was. If an employee resigns in the heat of the moment, for example during an argument or a difficult meeting, some employers allow a short cooling-off period before accepting it. This isn’t a legal requirement, but it’s good practice and reduces the risk of a claim that the resignation wasn’t a clear decision.

This page sets out the whole process, from the first message you receive to the final payslip, so you have a single point of reference whenever a member of your team hands in their notice. Bookmark this page, or share it with any line manager who might need it when someone on their team decides to move to a new job.

2. Confirm receipt and acknowledge the last day. Reply to the employee in writing. Confirm you’ve received the resignation, state the notice period that applies, and set out the expected last day of employment. This removes any ambiguity later.

3. Check the employment contract. Pull up the contract and check the notice clause, any garden leave provisions, restrictive covenants, and holiday entitlement. Every contract should set out how much notice a resigning employee must give, but not all do, which is where statutory notice comes in.

4. Loop in payroll and the relevant line manager. Payroll needs the last working day to calculate final pay and any accrued holiday. The line manager needs to plan handover, cover, and possibly a replace-and-recruit timeline.

5. Decide on communication. Agree with the employee how and when the departure will be announced to the rest of the team. Handled well, this protects your reputation both internally and with clients. If you’re ever unsure of the right approach, it’s worth taking advice from HR or an employment specialist rather than guessing, particularly if the job is senior or client-facing. A consistent process gives both you and the departing employee a sense of security, whatever job they’re moving on to next.

Understanding Notice Periods and Statutory vs. Contractual Notice

The notice period is the length of time between an employee telling you they’re leaving and their actual last day. Getting the notice period right matters for pay, cover planning, and legal compliance.

Statutory notice periods

Under the Employment Rights Act 1996, every employee is entitled to a minimum period of notice, known as statutory notice. For resignations, the position is simple:

• Employed for less than one month: no statutory notice period applies.
• Employed for one month or more: the employee must give at least one week’s notice.

That’s it. Unlike employer-given notice, which increases with length of service (one week per year of service up to a cap of 12 weeks), the statutory minimum an employee owes you doesn’t grow the longer they’ve been with you. A person who has worked for you for ten years still only owes you a week’s notice under statute, unless their contract says otherwise.

Contractual notice

Most employers don’t rely on the statutory minimum alone. A well-drafted employment contract will set a longer, fixed notice period, commonly one month for junior roles and up to three months for senior or specialist positions. The rule to remember: whichever notice period is longer, statutory or contractual, is the one that applies.

For example, if a contract states a two-week notice period but the employee has worked for you for three years, the statutory position for employer-given notice would actually be three weeks. For an employee resigning, though, the contractual period usually governs as long as it’s equal to or longer than the statutory one week.

What if there’s no written contract?

Every employee is legally entitled to a written statement of employment particulars from day one, which should set out the notice period. If your organisation hasn’t issued one, or the contract is silent on notice, the statutory minimum applies by default.

Can an employee give less notice?

An employee can ask to leave with less notice than their contract requires, but you’re under no obligation to accept. If you do agree, put the new arrangement and revised last day in writing. If an employee simply walks out and gives less notice than required without agreement, that’s technically a breach of contract, though pursuing a claim against a former employee is rarely worth the time or money involved. You’re entitled to refuse an early departure request if it genuinely leaves the business exposed, but weigh that decision against the goodwill you’ll lose if you refuse without good reason.

Managing the Notice Period: Garden Leave and Pay in Lieu of Notice (PILON)

Once notice has been given, you have three broad options for how the notice period actually plays out.

Option 1: The employee works their full notice period

The default position. The employee continues in their usual role, on their usual pay, until their last day. This is the right choice when a smooth handover matters and there’s no risk to your business from the employee remaining active day to day.

Option 2: Garden leave

Garden leave means the employee remains employed and continues to receive their usual pay and benefits, but you don’t require them to come into work or carry out their usual duties. It’s commonly used when:

• The employee is joining a competitor and you want to limit their access to sensitive information.
• You need to protect client relationships or confidential data during the transition.
• The role is client-facing and a lame-duck notice period could damage those relationships.

For garden leave to be enforceable, the right to impose it should ideally be set out in the employment contract. Without an express clause, you can still agree it with the employee, but you’re on weaker ground if there’s a dispute.

Option 3: Pay in lieu of notice (PILON)

PILON means ending the employment immediately and paying the employee a lump sum equivalent to what they’d have earned during their notice period, instead of requiring them to work it, or place them on garden leave.

A few points worth knowing:

• If the contract has a PILON clause, this is straightforward and the payment is taxed as normal earnings, including tax and National Insurance.
• If there’s no PILON clause but both parties agree to it anyway, this is technically a breach of contract by the employer, though it rarely causes issues since the employee usually welcomes it. Where the employer agrees to full pay for the remainder of the notice period as a lump sum, confirm the figure and the date it will be transferred in writing.
• PILON should reflect basic pay for the full notice period, and depending on the contract, may need to include the value of benefits the employee would have received.

Whichever route you take, put it in writing to the employee, including the calculation of any payment and the confirmed last day.

Final Pay, Holiday Accrual, and Benefits

Getting final pay right is one of the most common sources of dispute after an employee resigns, so it’s worth being careful here.

What final pay should include

• Usual salary up to and including the last day worked (or the PILON figure if applicable).
• Any accrued but untaken holiday.
• Outstanding expenses.
• Any contractual bonus or commission owed, calculated per the contract terms.
• Statutory sick pay, if the employee was on sick leave and still entitled to it during their notice.

Holiday pay on departure

Holiday accrues throughout employment, including during the notice period. When an employee resigns, you need to calculate:

• How much holiday they’ve accrued for the current holiday year.
• How much they’ve already taken.
• The balance, paid out at their normal pay rate.

If an employee has taken more holiday than they’ve accrued at the point of departure, most contracts allow you to deduct the difference from final pay, provided the contract has a clear clause permitting this. Without one, recovering the money can be difficult.

Deductions from final pay

You can only make deductions from an employee’s final pay if the contract allows it, the employee has agreed to it in writing, or it’s required by law (such as tax and National Insurance). Be careful here. Unauthorised deductions can lead to a tribunal claim, even where the amount involved is small.

Benefits, pensions, and other entitlements

Check what happens to pension contributions, private medical cover, company car, adoption leave or parental leave entitlements already agreed, or any other benefits during the notice period and after the last day. Some benefits stop immediately; others continue until the end of a contractual notice period. Set this out clearly in your departure letter so there’s no confusion, and give the employee the details of what happens to each benefit in writing.

Conducting Effective Exit Interviews

An exit interview isn’t a legal requirement, but it’s one of the most useful tools available to any organisation trying to understand why people leave, and it’s good practice to offer one to every departing employee.

Why bother with an exit interview

• It surfaces patterns. One resignation might be personal. Several from the same team or manager is a signal worth acting on.
• It protects your reputation. A departing employee who feels heard is more likely to speak well of your organisation afterwards, and less likely to leave a negative review.
• It can flag legal risk early. If an employee mentions issues that sound like they could support a constructive dismissal argument, you want to know before they leave, not after a tribunal claim lands.

How to run one well

• Keep it separate from the line manager wherever possible. Employees are more candid with HR or a neutral member of the team than with the person they report to.
• Use a consistent set of questions so you can compare answers over time.
• Ask directly about pay, workload, management, and career progression, the areas most likely to explain a resignation.
• Don’t turn it into a counter-offer negotiation. If you want to make a counter-offer, do that separately and early, ideally before the resignation becomes final.
• Record what’s said, with the employee’s knowledge, so the details can inform decisions later.

Timing

Aim to hold the exit interview in the final week of employment, once the employee has had time to process their decision but before they’ve mentally checked out entirely. Don’t expect every employee to speak freely in this meeting. Some will be candid about pay, their new employer, or their reasons for leaving; others will keep it brief out of politeness, and that’s fine too.

Key Legal Risks (Constructive Dismissal and Disputes)

Most resignations are straightforward. Some carry real legal risk if handled the wrong way. Here’s what to watch for.

Constructive dismissal

If an employee resigns because you (or your organisation) fundamentally breached their employment contract, for example through unpaid wages, a unilateral pay cut, sustained bullying, or a serious breach of trust, they may argue they were constructively dismissed. In that scenario, a resignation is treated in the same way as a dismissal for legal purposes, and the employee may bring a tribunal claim.

To reduce this risk:

• Address grievances promptly and fairly, before they escalate to resignation.
• Don’t make significant changes to pay, hours, or role without proper consultation and agreement.
• Keep a clear paper trail of any performance or conduct issues, and how they were handled.
• Take any resignation letter that references mistreatment or a breach seriously, and investigate rather than simply accepting it at face value.

Disputed resignations

Occasionally an employee will later argue they didn’t actually resign, that they were pressured into it, or that they said it in the heat of an argument and didn’t mean it. This is why getting resignations confirmed in writing matters so much. If there’s genuine doubt about how clear and unambiguous the resignation was, it’s worth pausing before you accept it and formally confirm the last day, and having a short conversation to check the employee’s intentions.

Gross misconduct during notice

If an employee is found to have committed gross misconduct after resigning but before their last day, you can generally still dismiss them without notice or notice pay, following a fair process. Resigning doesn’t protect an employee from being dismissed for gross misconduct during their notice period, and the responsibilities of both parties under the contract continue to apply right up to the last day.

Restrictive covenants and confidentiality

If the departing employee is heading to a competitor, check any restrictive covenants in the contract, such as non-compete or non-solicitation clauses. These need to be reasonable in scope and duration to be enforceable, so take advice before trying to rely on one.

Retirement as a special case

If a member of staff is choosing to retire rather than resign for another job, the same notice rules generally apply, though many organisations offer more flexibility around the departure date and handover, given the different circumstances. There’s no default retirement age in the UK, so an employee can choose to retire whenever they decide to, and you should treat that decision the same way you’d treat any other resignation from a process point of view.

Conclusion and Best Practices for Offboarding

Keep this page handy as a reference for your HR team and line managers alike.

Every employee resignation is an opportunity to protect your organisation, support the departing employee, and set a clear example for the rest of your team about what a professional departure looks like. A few best practices worth building into your standard process:

• Always get the resignation and the agreed last day confirmed in writing.
• Check the employment contract for notice, garden leave, and PILON provisions before deciding how to manage the notice period.
• Calculate final pay and holiday accurately, and be careful with any deductions.
• Offer every departing employee an exit interview, and actually act on what you learn.
• Watch for warning signs of constructive dismissal, and address grievances before they lead to a resignation.
• Keep the process consistent, whoever the employee and whatever the reason for leaving.

Handled well, an employee resignation doesn’t need to be stressful. With a clear process, the right paperwork, and a bit of care around pay and communication, you can manage any departure, from a junior team member moving on to a senior employee choosing to retire, in a way that protects your organisation and leaves the door open for a good reference down the line.

If you’re expanding your team in the UK and want support building compliant HR processes from day one, Goodwille can help you get it right from the start.