Navigating Leap Year Payroll: What UK Employers Should Know

What A Leap Year Means For Payroll

As we leap into the new year, it’s important for UK employers to be aware of how the extra day in February affects payroll. With a friendly reminder of this quirky calendar event, let’s explore how it may impact your payroll process and what steps you can take to ensure everything runs smoothly and to avoid fines for incorrect pay.

Whether employees are entitled to an extra day’s pay this leap year will be determined by how they are paid. Firstly, you’ll need to review each employees pay structure through the relevant employee documents i.e. what’s stated in their contract and even what’s in your company’s handbook.

While it might seem like a simple task, it’s easy to overlook details, especially if you’re still using manual payroll systems. No worries though – with a bit of planning and maybe a cup of tea, you can make sure everyone gets paid what they’re owed, taking into account any agreements about pay periods and monthly wages.

Here are a few examples of how your employees pay structure could affect leap year pay:

Shift or contract employees

Hourly workers with a weekly pay reference won’t have their pay affected by the leap day, as adding an extra day to February does not change how many days there are in a working week.

Hourly workers who are paid monthly will see an increase in their pay as a result of the leap day, as they will have worked for 21 days in February instead of the usual 20 days. 

Monthly salaried employees

Salaried workers who are paid at very close to minimum wage may need extra pay to ensure that working extra leap hours does not tip them below national minimum wage (NMW). Employers could face penalties for being non-compliant with NMW.

Annual salaried workers who are usually paid at 1/12 per month, regardless of the length of the month will not require additional pay as the leap year day does not affect the 1/12 monthly pay split.

Leap Year Pay Goes Beyond Employee Salary

Irrespective of contractual terms, you’ll need to make sure that employees are paid at least the relevant NMW/NLW rate of pay across all reference periods, including the hours worked on the leap year day.

And, it’s not just about salaries! The leap year might also throw a curveball into other payroll calculations, like statutory payments and pension contributions. So if you’re still doing manual calculations make sure you set enough time aside to make the right calculations, or better yet, try an automated pay software like paiyroll®.

paiyroll® Takes Care of Leap Year Payroll For You

Luckily, there’s no need to stress too much about leap year payroll quirks when you’re using paiyroll®.

Our user-friendly automated system takes care of all the nitty-gritty calculations for you, instantly, ensuring that everyone gets paid accurately and on time, no matter how many days are in February. Simply select the number of days and weeks per year.

Plus, with handy features like employee self-service portals, managing payroll becomes a breeze – even during the leap year madness.

For more information check out other benefits here or visit our pricing page.

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