How HR Should Handle Pay When an Employee Resigns

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Reader Question: How Should HR Handle Pay When an Employee Resigns?

I just recently read your article on How to Handle an Employee Resignation, and had a question. We had an employee resign in a resignation letter and offer two weeks notice.

The employee's resignation was welcome and we didn't believe keeping him around for two more weeks would benefit our other employees or the job. So, we indicated that his services would end that same day.

We walked the employee out and wished him all the best in his future job.

When you suggest that the company pay for his time, does that mean the company should pay for the additional two weeks time that was given as notice?  It sounds as if you recommend that we should pay the employee as if he had been allowed to continue when we accepted the resignation?

Human Resources Response

I would pay for the employee's two weeks just exactly as if he or she had worked for the two weeks. My article about how to handle a resignation definitely recommends this. Here's why you may want to pay out the employee's time when you walk them out of your company at their resignation.

You don't want to set a  precedent or find yourself in a situation in which you treat employees differently. Assuming that you might want a good, valued employee to work the two weeks after her resignation, or to recognize her past contributions by paying for her time, you want to leave your options open.

Paying some, and not other employees, following a resignation, no matter your reason, could be interpreted as discrimination.

If other employees know that you may not allow them to work out their two weeks' notice or receive pay for the notice time, you encourage employees to not to give two weeks' notice at resignation.

You will create an environmental norm in which people just quit if they want to earn the pay for their last two weeks on the job. They just don't tell you until their last day. 

Since you can assume that most employees do want the interim pay at resignation, you will not want employees to believe that their only option is to quit without notice.

You are grateful that this employee, whom you wanted to fire anyway, is leaving. There's nothing wrong with a little thank you gift (two week's pay) for the time, energy, paperwork, and so forth, that you just saved with his resignation.

Two weeks' pay is peanuts in comparison to what your organization may have experienced if you had gone the traditional routes of a performance improvement plan (PIP) or progressive disciplinary action. Thank your lucky stars, hand him a final paycheck, and say good bye.

There is very little likelihood that this employee would be in any position to sue you for any reason about his resignation. If he or she did, when you paid for the two weeks following his resignation, you look like a good guy - which is always good when you're standing in a court of law.

Your objective in wanting to remove the employee from your employment is accomplished and all should be well.

But, do check with your own employment law attorney before you take action.

More About Resignation


Susan Heathfield makes every effort to offer accurate, common-sense, ethical Human Resources management, employer, and workplace advice both on this website, and linked to from this website, but she is not an attorney, and the content on the site, while authoritative, is not guaranteed for accuracy and legality, and is not to be construed as legal advice.

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