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Handling Christmas payroll can be challenging for small and medium-sized enterprises (SMEs). The festive season brings unique considerations, from adjusted pay dates to calculating Christmas bonuses. Getting it right is extremely important, ensuring that employees are paid on time and in compliance with HMRC regulations – and avoiding costly mistakes.
In this guide to Christmas pay, we’ll cover everything SMEs need to know, from navigating Christmas pay dates to using technology to streamline the process.
What is Christmas payroll?
Christmas payroll refers to the specific adjustments employers make to ensure that staff are paid correctly during December. With bank holidays and potential early payments to consider, processing December payroll often requires extra planning and attention to detail.
During this period, payroll teams must navigate changes in Christmas pay dates, including reporting requirements for HMRC, holiday entitlements, and any discretionary bonuses or overtime payments. Proper planning helps to ensure a smooth payroll experience, and could mean the difference between a happy and an unhappy Christmas for your employees.
What are typical Christmas pay dates?
Christmas pay dates can vary depending on your payroll schedule and how the festive bank holidays impact your processing timelines. Employers often need to adjust their Christmas pay day to make sure payments are made on time.
Bank holidays like Christmas Day and Boxing Day can delay payroll processing, which may lead to missed payments if not addressed in advance. To avoid disruptions, some businesses move the pay date forward so they can avoid the bank holidays. However, this means a shorter payroll processing deadline for December, and requires precise planning to ensure correct reporting to HMRC.
FCS reporting for Christmas pay
If you decide to process an early Christmas pay day, it’s important to ensure that your Full Payment Submission (FPS) to HMRC is accurate. Incorrect FPS reporting can result in penalties or confusion over employee tax codes. Early payments must be reported with the correct payment date to avoid compliance issues.
Christmas pay dates for weekly payroll
For businesses running weekly payroll, the festive period can require multiple adjustments. Bank holidays can interrupt the usual schedule, so it’s important to plan around these dates. Reporting payments accurately through HMRC systems is critical, as any errors can affect Universal Credit claims for employees.
Christmas pay dates for monthly payroll
Monthly payroll presents similar challenges, and careful planning ensures that employees receive their wages without unnecessary delays. If your regular pay date falls between Christmas and New Year, early payments may be necessary to accommodate bank holidays. However, you must process these changes in line with HMRC requirements to avoid compliance issues.
Should you pay employees early at Christmas?
Deciding whether to pay employees early during the festive season depends on your company’s circumstances and policies. While an early Christmas pay day can be a nice goodwill gesture, it’s not without challenges for the business, as well as risking financial strain for employees in January.
Considerations for adjusting dates for Christmas pay include:
- Full Payment Submissions (FPS) and Employer Payment Summary (EPS) reporting requirements
- The potential impact on employees receiving Universal Credit
- Processing Bacs files and payments within adjusted timelines
What happens if FPS reporting for Christmas pay is incorrect?
Incorrect FPS reporting for Christmas pay can lead to significant problems, including penalties from HMRC. Misreporting may also cause issues with employees’ tax codes and Universal Credit payments, leading to dissatisfaction. Accurate reporting ensures compliance and avoids unnecessary complications.
Are you obliged to pay employees more for working over Christmas?
Another aspect of calculating Christmas pay is any higher rates you’ve agreed to pay those working during bank holidays. Failure to honour these agreements can be detrimental to employee trust and morale. However, it’s worth noting that employees don’t have a statutory right to extra pay for working on Christmas Day unless it’s specified in their employment contract. Whether you offer additional pay or overtime rates is at your discretion and should align with company policies and contractual agreements.
Managing absences and holiday pay over Christmas
Managing absences and calculating holiday pay can be complex at the best of times, but it can be especially tough for businesses dealing with December payroll. Employers must account for holiday entitlements, carry-over rules and statutory sick pay (SSP), all while dealing with the shorter timelines presented by seasonal bank holidays.
Absence management software is a useful tool for accurately tracking holiday usage, which can take the burden off your payroll team. When integrated with a dedicated payroll solution, you can further minimise manual data entry and simplify pay calculations to ensure compliance and accurate employee payments. This level of precision is particularly valuable during the busy Christmas payroll season.
Handling Christmas payroll can be challenging for small and medium-sized enterprises (SMEs). The festive season brings unique considerations, from adjusted pay dates to calculating Christmas bonuses. Getting it right is extremely important, ensuring that employees are paid on time and in compliance with HMRC regulations – and avoiding costly mistakes.
In this guide to Christmas pay, we’ll cover everything SMEs need to know, from navigating Christmas pay dates to using technology to streamline the process.
December payroll checklist
Preparing for December payroll requires careful organisation to avoid delays and mistakes. We’ve put together this checklist to help you complete all the necessary tasks on time.
Agree on Christmas pay dates
Decide whether to adjust your Christmas pay dates, and make sure to communicate these changes to employees and payroll teams with plenty of notice. Setting expectations early helps to avoid misunderstandings and ensures that payroll runs smoothly. When calculating pay for those working over the holidays, avoid mistakes when paying employees by taking care to reflect their contractual entitlements.
Set December payroll task deadlines
Payroll teams should plan tasks well in advance, from preparing payroll runs to submitting FPS reports. Getting organised early allows more time to resolve potential issues and keeps the overall process on track. Using tools with automation capabilities to improve payroll processes can enhance efficiency and accuracy, taking the burden off your team during this busy time of year. This also frees up HR professionals to focus on more people-centric tasks.
Advise employees about remaining annual leave
If your holiday year ends in December, make sure to remind employees early about unused annual leave. Confirm whether they can carry it over or if payment in lieu is an option. Setting expectations avoids last-minute disputes and ensures compliance with holiday pay regulations. Reviewing our guide to annual leave can help you to clarify your policies and make sure everyone is making the most out of their allowance.
Confirm Christmas bonuses
If your company offers Christmas bonuses, make sure these are accounted for in the December payroll run. Review relevant tax rules and consider whether you should pay bonuses as cash payments, vouchers or gifts. Using tools that manage incentive pay simplifies this process and ensures compliance while ensuring that every employee receives what they’re entitled to.
Calculate Christmas pay accurately with Access PaySuite
Handling Christmas payroll efficiently is vital for maintaining employee satisfaction and regulatory compliance. From understanding the implications of adjusting Christmas pay dates to managing holiday entitlements, getting it right demonstrates professionalism and care for your workforce.
Access PaySuite’s payroll software simplifies these processes with tools designed to handle every aspect of December payroll, from FPS reporting to calculating bonuses. To learn how we can support your business during the festive season and beyond, book a demo or contact our team today and we’ll be happy to help.
