Death in service: How to deal with the death of an employee

**Collaborative post**

If you run a company, the death of any of your employees could hit you hard psychologically. However, if a death does happen, you need to know how to react to it – as the employee’s family left behind will not only be grieving but also potentially in financially challenging circumstances. 

Fortunately, you might be in a good position to ease their monetary hardship – but you should tread carefully to make sure your actions are both legally sound and sensitive to the employee’s relatives.

Who else needs to know about the employee’s death?

The news should be sent to not only the employee’s relatives but also any party you are legally required to notify. In any part of the UK except Northern Island, you must report a death in the workplace to police and the Health and Safety Executive (HSE), the UK Government’s website states. 

In Northern Ireland, you would need to report a workplace death to the Health and Safety Executive for Northern Ireland (NSENI). However, no matter where in the UK your company is based, you must report the death even if the employee was working off-site when they passed away. 

Was the employee part of a group life insurance scheme?

You probably offer a wide range of benefits in an attempt to attract and keep especially talented employees. These benefits could include a ‘death in service’ benefit, where employee life insurance is arranged on a group basis and enacted for every employee participating in the scheme.

You might have specified certain eligibility criteria for this benefit. For example, employees may have needed to pass an initial probation period or complete a particular length of service before the benefit was available to them. 

So, you should check whether the recently deceased employee was indeed in receipt of a death in service benefit from you, the employer. If so, a multiple of the late employee’s annual salary could need to be paid out – but to what party exactly? 

Where should the money paid out from death in service go? 

The Money to the Masses website urges employees eligible for a death in service benefit to speak to their company’s HR department to check whether they have nominated beneficiaries who will receive any potential payout from the death in service scheme.  

In the case of someone who has recently died while in your employment, there could be pre-named beneficiaries such as their spouse, life partner or children. As the Evening Standard explains, the payout could even be sent directly to them – though the money is more likely to initially be paid into what is called a ‘discretionary trust’.

Though you would be a trustee of this trust, the role would give you the responsibility of making sure the benefit is distributed in adherence to the late employee’s wishes. This is a strong incentive for employers to offer a ‘death in service’ benefit as standard, since eligible employees will be able to see what a reassuring financial safety net this benefit could present for their family.