The cost of a bad employee goodbye: protecting your business from legal claims

As your HR consultant in Ipswich, I'll explain how proper offboarding of employees protects your business from costly legal action long after an employee has left.

You might assume that once an employee leaves, your legal risks end. You've processed their final pay, collected company property, and wished them well. Job done, right?

Unfortunately, that's often not the case. Poor handling of an employee's exit can lead to significant headaches and costly legal claims down the line, pulling you away from growing your business and hitting your profits.

The Leeds United Example

In 2024, a high-profile tribunal case involving Leeds United Football Club highlighted just how expensive a botched offboarding can be. Their former technical director, Nigel Gibbs, successfully sued the club and was awarded over £330,000 for unfair dismissal and breach of contract.

What went wrong? Communication broke down after Mr Gibbs raised concerns about how the club was run. Crucially, Leeds United failed to follow proper dismissal procedures, delayed his final pay, and mishandled key paperwork. The tribunal ruled that these combined issues amounted to both unfair dismissal and a breach of contract.

This case is a stark reminder that your risk doesn't end when employment does. For any business, big or small, proper offboarding and meticulous documentation could have prevented such a costly outcome.

What proper offboarding looks like for your business

Offboarding is much more than just collecting company keys or deactivating an email account. It's about managing the entire exit process in a fair, consistent, and legally sound way. Here are the practical steps you can take right now to protect your business:

Clear communication and documentation

When issues arise, formal communication is essential. Document every conversation, confirm next steps, and keep all decisions in writing. This transparency reduces the risk of claims that someone was unfairly pushed out.

A structured exit process

If an employee's working relationship must end, manage their exit formally. Hold a clear meeting, confirm their notice period, and set out clear terms for final pay, handover duties, and any ongoing confidentiality or restrictive covenants.

Timely final pay and paperwork

Late or incorrect final pay is a common trigger for breach of contract claims. Paying everything owed on time and issuing accurate paperwork demonstrates fairness and professionalism, preventing unnecessary disputes.

Consistency for all leavers

Apply the same standards and processes to every departing employee, regardless of their role or seniority. Inconsistent treatment significantly increases your business's risk of unfair dismissal or discrimination claims.

Professional closure

Hold a final meeting to confirm next steps, ensure all company property is returned, and formally restate any confidentiality clauses or restrictive covenants. A clean, professional closure helps prevent misunderstandings and future disputes.

The lesson for every business owner

The Leeds United case clearly demonstrates that poor offboarding can create serious legal and financial risks. For small businesses, how you handle an employee's exit is just as important as how you manage them while they're with you.

A fair, consistent, and structured offboarding process protects your people, your business's reputation, and ultimately, your finances. It's about building a stronger foundation and avoiding unnecessary stress.

Ready to strengthen your offboarding process?

If you're looking to review and strengthen your exit processes, taking the pressure off potential legal claims, I can help.

As an outsourced HR consultant in Ipswich, I work with UK businesses to ensure their offboarding procedures are watertight. I can help you:

• Review and strengthen your current exit and offboarding processes.

• Draft compliant offboarding policies and templates tailored to your business.

• Provide training for your managers to handle difficult exits confidently.

• Ensure final pay and documentation meet all legal standards.

Don't leave your business vulnerable to unexpected legal costs. Book a confidential call today, and let's discuss how a robust offboarding strategy can give you peace of mind and protect your bottom line.