Employee vs. User; and when to make inactive or delete?

Uncheck the field Display Employee Record

Mark the User as Inactive. If you delete the User and do not move all of their assigned records, You'll not be able to do it in the future. Additionally, there is some data such as Activity Logs, Activities, etc. that will no longer display correct data if you delete the User

To add to Jeff Bickart's comment, if you want to read more about this process, you can find that in the User Management section of the Administration Guide: https://support.sugarcrm.com/Documentation/Sugar_Versions/11.3/Sell/Administration_Guide/Users/#Deactivating_Users. You can also read more about the Reassign Records tool at https://support.sugarcrm.com/Documentation/Sugar_Versions/11.3/Sell/Administration_Guide/Users/#Reassigning_Records