Recovering a locked iphone

Passcode? Connect the device to a computer If you forgot your iPhone passcode - Apple Support

Password? Have the employee try iforgot.Apple.com to reset.

Of course, you should be using some MDM to manage your devices to not rely on any individual.

Going forward, if your company is going to issue iPhone's to employees, you should be using Mobile Device Management on them. This would ensure you have access to the device when the phone is returned.

See this link about it --> Intro to mobile device management profiles - Apple Support

If you are in possession of the original purchase receipt, you can ask Apple to unlock the phone with verifiable proof of ownership. Otherwise, you have a useless device on your hands.

You're right they can't unlock a Managed device, which since you let everyone just set up their own personal IDs on their devices, this device isn't managed. It should have been though, which would prevent you from being in this situation.

As the employer, surely you keep receipts for company purchased assets?

As long as you have the original proof of purchase, Apple will help you.

And you're welcome. Your company definitely needs to take control of company owned assets and Mobile Device Management is the way to do that.

See How to remove Activation Lock - Apple Support

Activation lock requests are made online. I’m not sure that apple will unlock a device that is corporate owned (they have not in the past).

As long as you have the original purchase receipt, which would show the iPhone serial number on the receipt, Apple will likely accept it to help you.