In season three finale Florence is forced to retire because of her age. Then at the end her birth certificate is destroyed and she was going to say then the actress who played her died. How did they explain her absence then?

They really didn't explain it. Harry mentioned it to Christine in the episode entitled "The Next Voice You Hear" when Christine questions him about his capability to feel loss. He just says, "When Selma died I felt loss. When Florence died I felt loss." He then continues he logic to Christine. But this is the only time it's really mentioned. Hope this helps.