When an employee leaves a job, their employer is required to pay them for the work they have done up to their leaving date, minus the usual deductions such as National Insurance contributions and tax, student loan repayments, pension contributions and others. It is illegal for an employer to withhold salary simply because an employee leaves the job. However, there are certain circumstances in which an employer may legally withhold all or part of an employee's final salary payment.
If the employee does not work their notice period
If the employee leaves without notice, or does not work their full notice period, they are almost certainly breaking their employment contract. In this case, although the employer is still required to pay for all the work completed, they should not expect to be paid for the amount of the notice period that was not worked. If, when the employee hands in their resignation, they still have holiday owing to them, their employer may insist they take the holiday during the notice period. This could result in an earlier actual last day at work, but the employer should still pay them up to the end of their notice period.
If the employee works in retail and there have been shortfalls
In retail businesses, such as shops and restaurants, an employer is entitled to make deductions from staff pay to cover shortfalls in the till. Under normal circumstances, the employer is not allowed to deduct more than 10% of an employee's gross pay in any pay period. However, if the employee leaves their job, the employer can deduct the full amount owed from their final pay packet.
If the employer has paid for significant training
In some jobs, such as accountancy traineeships, the employer is investing substantial sums in training individual employees. For these jobs, the contract will often state that, if the employee leaves before they have completed the training or before the employer has derived any benefit from the employee's new skills, then the employee has to pay for the training. The costs can run into thousands of pounds and few employers are willing to agree repayment terms that last beyond the end of the employment. They are much more likely to withhold money from the employee's final salary.
If certain other circumstances apply
An employer may withhold salary from an employee if the employee has previously been overpaid and the employer is deducting the excess. Deductions may also be made, including from a final salary, if the employee has taken part in a strike or other industrial action during the pay period. There may also be circumstances in which Statutory Sick Pay (SSP) has to be paid back, or in which pay is deducted because an employee arrived late. Finally, if an employee who is leaving has already taken more holiday than they are due pro rata, then they owe their employer that holiday pay and it may be withheld from their final salary payment.