Dismissing an employee vs. leave of absence

If your benefits are managed by Gusto, dismissing an employee will also terminate the employee's health benefits. Make sure to keep the employee active if they are not truly dismissed. 

Dismissed employees

Once the employee is dismissed, they will stay in your account under the list of dismissed employees but you will not be charged for them on your monthly Gusto invoice moving forward. A dismissed employee will also trigger our system to dismiss their benefits. 

Terminations with insurance carriers may take several processing days. To avoid overpayment on your insurance invoice, make sure to dismiss the employee in your Gusto account as soon as possible. 

Any premium overpayment will be processed by the insurance carrier and credited back to you on the following month, given that the carrier has processed the termination by the time the new invoice is generated. 

Leave of absence

If your employee is taking a temporary leave of absence, you can skip the employee on payroll and the system will recognize each skipped payroll as a missed deduction. When the employee returns to work, we'll apply deduction corrections to capture the deductions that were lost during the employee's leave. Keeping them active but skipping them on payroll will ensure that their benefits remain active while removing them from payroll. 

Questions & Answers

Q: Can I dismiss someone with a future date?
A: Yes. When you are dismissing your employee, we will ask you to enter their last day of work. Enter the future date there.  

Q: Can I rehire an employee?
A: Yes. You can select the employee's name from the list of dismissed employees and rehire the employee at any time.

Q: Will the employee appear on my invoice if I skip them on payroll?
A: Yes. We will still be handling the tax paperwork and benefit management for this employee so the employee will appear on your Gusto invoice until they are dismissed from your team.

Note: This article is relevant to companies who have benefits managed by Gusto. If your benefits are managed externally, we will not terminate a dismissed employee's health benefits.

 

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