It is not uncommon for employers and small businesses to have to respond to the death of an employee – 20% of deaths in NZ in 2021 were of people under the age of 65.
In other articles we’ve looked at how to manage workers who use a lot of sick leave and the process for dismissing an employee due to medical incapacity (medical termination).
But what happens when the worst of all possible things comes to pass and a valued member of the team dies?
In this post, we’ve put together some thoughts on the process for businesses to follow on the death of an employee, balancing sensitivity and empathy with attention to practical matters.
(Please note that we don’t cover the death of an employee on the job or at work, as this requires a completely different response, with the involvement of various authorities, and broader health and safety implications.)
Immediate support and communication
When you learn of the employee's passing, prioritise offering support to their family and coworkers. Express condolences sincerely and offer assistance in any way possible.
Inform the rest of your team with honesty and compassion, ensuring they understand the situation. They may have already heard via word of mouth or social media, so sharing appropriate details can help reassure people and stop rumours spreading.
Explain how you plan to support the person’s family and affected employees.
You may want to let people finish work early and to offer time off work for any colleagues who were close to the recently deceased.
Notify relevant parties
Inform necessary stakeholders - such as customers, partners, and vendors - about the loss, ensuring transparency while respecting the deceased employee's privacy and the family's wishes regarding the announcement.
If appropriate, and in consultation with the family of the deceased, you might choose to include mention of this in any company newsletter, mailer, or on social media. If the employee worked closely with a couple of key contacts, clients, or suppliers, you may want to reach out to these people directly.
Managing your employment obligations
Contact your payroll provider and let them know that the employee has passed away. Their final pay will be processed and paid to their current bank account.
If the bank has frozen their account, then you should retain the final pay until you’re formally advised of the identity of the authorised representative of the person’s estate.
If you pay an employee’s final pay to anyone who’s not the authorised representative of the estate, you may be required to pay that money again.
All payments are taxed as normal - there is no special tax rate to use in the case of an employee’s death.
Also communicate with the deceased’s family about any benefits the person may have had with the company, e.g. life insurance. It may be that the family doesn't know about everything the person had in their remuneration package.
Sensitive handling of personal belongings
Coordinate with the family to respectfully handle the deceased employee's personal belongings in the workplace.
Offer support in packing and returning belongings or allow the family to collect them at their convenience. This might be outside your normal operating hours.
Grief support for employees
Recognise that the loss may deeply affect your team members. Offer EAP, grief counselling or access to support resources to help them cope with their emotions. Check in regularly to see how people are and what help they may need. Encourage open communication among your team.
Provide flexibility regarding work arrangements if your people ask for it or you can see the need.
If staff have been invited to the funeral or ceremony, share the details and consider giving them time off work to go to the funeral.
If appropriate, consider honouring the person at work, e.g. creating a book of condolences for staff to contribute to or holding an event or service to honour the person.
Also remember to take care of yourself! The grieving process can be exhausting, both emotionally and physically.
Bereavement leave
Some employees may qualify for bereavement leave.
Employees (permanent, fixed-term, part-time or casual) are eligible for bereavement leave if they’ve worked for you for 6 months, whether that is continuously or for an average of 10 hours per week, and at least one hour in every week or 40 hours in every month.
If it’s the employee’s immediate family member who has passed away (e.g. partner or spouse, parent, grandparent, sibling) they are entitled to 3 days’ bereavement leave.
In other cases where you accept the employee has suffered a bereavement, they are eligible for 1 day’s leave. There are rules around the factors you can consider (e.g. the closeness of the association between the employee and the deceased person, or whether the employee has to take responsibility for all or any of the arrangements for the funeral or ceremonies), but we recommend accepting any reasonable employee request for a day’s leave.
Bereavement leave can be taken at any time and for any purpose relating to the bereavement - it doesn’t have to be taken straight away or on consecutive days.
You can agree to give employees additional bereavement leave above the minimum entitlement.
You may also consider letting employees take annual or unpaid leave if they aren’t eligible for bereavement leave.
Learn more about bereavement leave on the Employment.govt website.
Review and update your policies
Take this opportunity to review your company's policies regarding bereavement leave, employee benefits, and succession planning.
Consider whether adjustments or updates are necessary to better support employees during difficult times.
Plan for transition and continuity
An employee’s passing will leave a professional as well as personal gap in your team, so you will quickly need to assess the impact of their absence on ongoing projects and responsibilities.
Develop a plan for redistributing tasks, hiring a replacement if necessary, and ensuring business continuity while allowing staff time for grieving.
If the person was a manager or key team member, you may need to find a replacement as soon as possible. Be upfront about informing anyone that the replacement person is going to work with, e.g. colleagues, key contacts outside the business.
Follow up with compassion
Check in with the family periodically to offer ongoing support and assistance as they navigate their loss. Similarly, continue to support your team members in their grieving process and adjust expectations accordingly. Remember that not everyone grieves in the same way or at the same time.
Losing a valued employee is a deeply saddening experience, but by approaching the situation with empathy, professionalism, and care, small businesses can navigate this challenging time while honouring the memory of their colleague.
