An Employee Has Died: HR Checklist for UK Employers

The death of an employee creates both human and administrative challenges. HR teams need to handle the practicalities sensitively and correctly — both out of respect for the employee and their family, and to comply with legal obligations around payroll, HMRC, and employment contracts. This guide provides a structured checklist for UK employers navigating this situation.

Immediate steps: payroll and internal communication

The first priority on learning of an employee's death is to prevent any further salary payments being processed. This means notifying the payroll team immediately so that the deceased is removed from the next payroll run. Any payments made after the date of death will need to be recovered from the estate, which creates administrative complexity that is best avoided.

Before notifying the wider workforce, ensure that the line manager and senior HR have been informed, and that the approach to communicating with colleagues has been agreed. This matters for several reasons: it ensures the communication is sensitive and accurate, it allows any workplace-based employee assistance or support to be prepared, and it means colleagues do not learn of the death through informal channels or social media before any formal communication.

If the death was sudden or the employee was known to be unwell, the employer should also consider whether any colleagues may be particularly affected and may need additional support. Many employers have Employee Assistance Programmes (EAPs) that provide bereavement counselling — make sure staff are reminded of this resource.

Cancel or suspend access to the employee's work systems, email account, and any physical access (key fobs, access cards) promptly — ideally the same day. An active email account in a deceased person's name can cause confusion and, in some cases, presents a fraud risk.

Calculating the final pay

The estate of the deceased employee is entitled to all pay that was due and unpaid at the date of death. This has two main components:

Outstanding salary: calculate the salary due for the period from the last pay date to the date of death, on a pro-rata daily basis. For example, if the employee was paid on the last working day of each month and died on the 15th, the estate is entitled to approximately half a month's salary.

Accrued but untaken annual leave: under the Working Time Regulations 1998, an employee's right to annual leave accrues continuously. On death, any accrued leave that was not taken must be paid out to the estate as a cash sum. This right cannot be forfeited — even if the employment contract or company policy attempts to limit carry-over of leave, the statutory minimum of 5.6 weeks per year must always be paid out on termination (including termination by death). Calculate the untaken leave at the employee's normal daily rate of pay.

Any other outstanding payments — unpaid expenses, unpaid overtime, bonuses that have been earned but not yet paid — should also be included in the final settlement.

The P45 process for deceased employees

Issuing a P45 when an employee dies follows a different process from a standard P45 on resignation or retirement. The P45 must still be completed, but it should not be sent to the employee's home address — instead, it should be sent to HMRC directly.

When running the final payroll for the deceased employee, use the PAYE reference number as normal. Mark the employee as having left in the payroll software using the leaving date as the date of death. Some payroll software systems have a specific option for death; where this is not available, process the final pay as a leaver and submit the Full Payment Submission (FPS) to HMRC in the normal way.

HMRC may contact the employer if there is a tax refund due for the employee. The refund will be issued to the estate rather than directly to the family. If the employee had an outstanding tax liability at the date of death, HMRC will deal with this with the executor as part of the estate administration.

Retain the completed P45 and all related payroll records — the executor or HMRC may request these as part of the estate's tax affairs.

Death in service benefit: the group life insurance claim

Many employers provide a death in service benefit as part of their employee benefits package, typically paying a lump sum of two to four times the employee's annual salary to nominated beneficiaries. This is usually arranged through a group life assurance policy with an insurer.

Notify the group life insurance provider as soon as possible after the employee's death. Most providers have a specific bereavement claims team. The claim process typically involves:

• Submitting a claim form completed by the employer, confirming the employee's details, dates of employment, and salary
• Providing a certified copy of the death certificate
• Providing details of the nominated beneficiary — this is why the nomination of beneficiary form is so important (see below)

The nomination of beneficiary form is a document (separate from a will) that the employee completes to indicate who they would like to receive the death in service benefit. Crucially, death in service benefits are usually held in trust by the employer/insurer, which means they fall outside the estate for inheritance tax purposes — but only if a nomination form has been completed. If no nomination form was completed, the trustees (typically the employer) have discretion over who receives the benefit.

Check your HR records immediately for a completed nomination form. If no form was completed, the insurer will still pay out — but the trustees will need to exercise their discretion, which may delay the payment and may not align with the employee's wishes.

Timeline and documentation for the executor

The executor of the deceased employee's estate will need to provide the employer with authority to release the final payment. Employers should be prepared to share the following with the estate:

• A statement showing the final pay calculation, including salary and accrued holiday
• Details of any pension contributions or occupational pension scheme membership — the pension scheme trustees will also need to be notified separately
• Details of any outstanding expenses claims or overpayments
• The employer's payroll reference number, which may be needed for HMRC correspondence

The final payment should typically be made at the next regular payroll run after receiving authority from the executor. Do not make the final payment in cash or to individuals without written authority from the executor — this exposes the employer to the risk of paying the wrong person and being required to pay again.

Also remember to notify the workplace pension provider (if the employee was enrolled in a pension scheme) — pension death benefits are separate from the death in service benefit and will be managed by the pension trustees according to their scheme rules.