Does your business shut down over the Christmas period? If so, like many other employers across the UK you may choose to move your pay day and pay employees earlier than normal.

Further, many businesses pay their staff earlier than normal in December to enable some last minute Christmas shopping. So if your employees normally get paid on the last working day of the month, you may decide to move pay day to earlier on in December.

What does this mean for employees?

  • Monthly paid employees could be paid early. Instead of the last day of the month, you may decide to pay them on the 23rd or 24th December – which a kind gesture to do some extra christmas shopping before the man in red arrives it can also mean an extra long wait until their next pay day in January!
  • Fortnightly paid employees will be paid as normal, on the usual dates.

And what does this mean for payroll?

Timing – Your payroll processing timetable will be brought forward. Meaning you’ll need to process your payroll sooner or you won’t hit that earlier pay day deadline. And if you run weekly or fortnightly payrolls, you’ll need to process everything in advance.

Communication – You’ll need to communicate to your employees their pay day will be different. Plus, the date they have to submit things to you such as expenses, will be brought forward as part of an earlier payroll cut off.

FPS & EPS Submissions To HMRC –  Normal rules apply in terms of the FPS submission. Whilst the pay date will be different, the pay date on your FPS submission should still show the regular, contractual pay date. However bear in mind your EPS
submission will need to be as per the standard timetable for this – i.e. sent between the 29th of the current month and the 19th of the month following. HMRC may impose penalties for late or inaccurate returns.

The impact on SMP

If you have employees going on maternity leave next year and you change the December pay date, this may affect their Statutory Maternity Pay (SMP).
Their SMP rate is determined by calculating their average earnings over a period of at least eight weeks up to and including the last pay day before the end of their qualifying week (that’s the 15th week before thier baby is due).

Let’s say those eight weeks include October, November and December’s pay (because you moved the pay date forward) this will inflate their SMP rate.
Some payroll software will account for this, if yours doesn’t, you’ll need to make sure you adjust the calculation so they get paid correctly when they go on
maternity leave.

The affects on financial well-being

The extra-long gap between pay dates from December to January can have a significant financial effect on employees. Especially during the most expensive time of the year. As an employer, there are ways you can help. Have you considered providing financial well-being support? Many employee benefits platforms include access to free financial advice. Alternatively you can point your employees to the Government’s Money Advice Service.

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