Letter to a retiring employee confirming final payments and requesting return of company property

Author: Stephen Simpson

When to use this model retirement letter

Use this model letter to confirm a retiring employee's final payments and request the return of company property.

Letter wording

[Sender's name]
[Sender's address]
[Sender's town]
[Sender's postcode]
[Date]

[Recipient's name]
[Recipient's address]
[Recipient's town]
[Recipient's postcode]

Dear [ ]

As your retirement date of [date] is rapidly approaching, we would like to clarify the final arrangements for [your outstanding holiday pay/other payments due/your pension entitlement].

We note that you will have accrued [number] days' holiday on your retirement and that you will have already used your whole accrued annual leave entitlement by the date of your retirement. This means that you will not be entitled to any further payment in relation to your holiday when you retire.

[OR

On your retirement date, you will have accrued [number] days' holiday. You have already used or booked [number] days' holiday in this holiday year, leaving you with [number] days left. We ask that you arrange with [name of individual/the line manager] to take this remaining holiday before you retire on [date]. This means that you will not be entitled to any further payment in relation to your holiday when you retire.

OR

On your retirement date, you will have accrued [number] days' holiday. You have already used [number] days' holiday in this holiday year, leaving you with [number] days left. We ask that you arrange as soon as possible with [name of individual/the line manager] to take any remaining holiday that you still wish to take. You will be paid for any accrued annual leave that you have not taken by your retirement date in [your final wages/a separate payment].

OR

On your retirement date, you will have used [number] days' holiday in excess of the annual leave that you have accrued. You have already used [number] days' holiday in this holiday year, but you will have accrued only [number] days by your retirement date. You will be required to reimburse the organisation for this additional leave that you have taken. We suggest that [the amount be deducted from your final wages/you make a separate payment to us, to be paid to [name of individual/the HR department]]. Please contact [name of individual/the HR department] to discuss how you would like to make these payments.]

[We note that you owe the organisation additional money for [an outstanding loan].

The organisation is happy for you to continue to pay this back after you have retired. We suggest that the payments be made in [number] stages, payable on the [date] of each month. Please contact [name of individual/the HR department] to discuss how you would like to make these payments.

[OR

The organisation proposes to deduct £[amount] from your final wages to pay off the remainder of the loan.] ]

[As you will be aware from the statement from our pension provider, which you should already have received, you are entitled on your retirement to an occupational pension of £[amount] per year. On your death after retirement, your spouse or other financial dependant will receive an annual pension of £[amount]. Further details of your occupational pension entitlement are contained in the pension statement. You should contact [name and contact details of pension provider] if you have not received this statement or have any other concerns or queries about your occupational pension.]

[You are entitled to a state pension [when you reach the age of [65] [, which has been estimated in your pension statement as being an annual amount of £[amount] ].

You should already have received information about the state pension and an invitation to apply from the Pension Service. If you have not received this information, you should contact the Pension Service immediately.

[OR

You should receive information about the state pension and an invitation to apply for a state pension from the Pension Service prior to reaching the age of [65]. If you do not receive this information by three months before your [65th] birthday, you should contact the Pension Service immediately.] ]

[We ask that, on your last day in the office, you return all property that belongs to the organisation. Items that can be returned to your manager include [list the appropriate items, and expand on them as necessary]:

  • [books;
  • hardware;
  • office equipment;
  • keys;
  • security passes;
  • credit cards; and
  • any other property belonging to the organisation.]

[Please contact the IT department to arrange for the return of your laptop. You should also ensure that any documents belonging to the organisation are returned, whether hard copy or on your machine. Any documents that you have on your workplace computer's desktop or home computer should be copied to [details of shared drive] and, in the case of your home computer, should then be permanently deleted from it.]

[I understand that you also have use of a company car. Please contact [name of individual/the HR department] to arrange for the return of the company car to [the head office].]

[Please sign the attached copy of this letter and return it to [name] to signify your agreement to the proposed deductions from your wages.]

Yours sincerely

[ ]

How to use this document

This is an example document and should be adapted to suit your circumstances.

Law relating to this document

Leading statutory authority

Employment Rights Act 1996
Equality Act 2010
Working Time Regulations 1998 (SI 1998/1833)
Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 (SI 2011/1069)

An employer can make a deduction from the employee's salary to cover the cost of unreturned property only if there is a specific clause in the employee's contract of employment that permits it to do so in such circumstances, or if the employee has signed a written agreement signifying his or her consent to the making of the deduction. The clause or agreement would have to restrict the deduction that could be made from the employee's salary to the second-hand replacement cost of the unreturned property.

Similarly, to ensure that deductions made from pay to recover unpaid amounts such as loans provided by the organisation are lawful, the employee must give his or her prior written agreement (or the employer must have a contractual power to do this in the employee's contract of employment).

The Working Time Regulations 1998 provide an entitlement to workers on termination of employment to pay in lieu of any untaken statutory annual leave. This entitlement must be calculated on a pro rata basis according to the proportion of the holiday year worked by the worker before employment ended.

It is also common for the employer to make a deduction from the employee's final salary to recover any holiday pay received by the employee in excess of his or her accrued entitlement at the time the contract of employment ends. Again, agreement should be sought from the employee before doing this (or the employer must have a contractual power to do this in the employee's contract of employment).

A retiring employee might be entitled to an occupational pension on his or her retirement. It is also good practice to remind the employee that he or she may be entitled to a state pension and give him or her some basic information as to how it can be claimed.

Notes

None.

Warning

None.

Future developments

None.