When Payroll Processing Has to Accommodate Holidays

The average employer has a system in place for processing payroll on a regular schedule. Under normal circumstances, everything goes fine from one payroll period to the next. But come the end of the year, payroll schedules can be thrown into disarray as a result of the Thanksgiving, Christmas, and New Year’s holidays.

Employers who pay weekly are affected least by seasonal holidays. Those who pay biweekly or semi-monthly experience the worst headaches. The key to avoiding payroll chaos is to put scheduling policies in place before the holidays ever arrive.

Below are the three most common headaches associated with payroll processing during the holiday season. Coming up with strategies to accommodate the holidays now will save the payroll department a lot of time and trouble in the coming months.

1. Adjusting Your Payroll Run

First and foremost is determining how your payroll schedule falls around the holidays. This includes both the day of the week your payroll is processed and the specific days of the month your employees are actually paid. If any of those dates fall on bank holidays or days when your office will be closed, you have to make accommodations.

Let’s say you normally run payroll on Monday and pay your employees on Thursday. The Thursday payday isn’t going to work for weekly payers during the week of Thanksgiving. Why? Because Thanksgiving is both a federal and bank holiday. Most companies will not even be open that day. If this affects you, adjust the payroll run to ensure employees are paid on Wednesday of that week.

2. Adjusting Direct Deposits

The second thing to think about is adjusting direct deposits. Employers must remember that banks are sometimes open even on days when the federal reserve is closed. If there is a discrepancy between bank operating hours and federal holidays, it’s up to employers to make accommodations. No money moves between banks on days when the Federal Reserve isn’t open.

This may mean your company has to initiate direct deposits either before or after a given holiday. Both Christmas and New Year’s fall on Tuesday this year. That means you will not be able to make direct deposits on those two days. This shouldn’t be a problem inasmuch as most weekly and biweekly payers pay later in the week. However, it could be a problem for semi-monthly payers. They may have to adjust their direct deposit schedules to make payments on either Monday or Wednesday of one of those weeks.

3. Keeping Employees Informed

If the holidays disrupt payroll in any way, shape or form, employers are legally and ethically responsible for keeping employees informed. This is one area in which there is no compromise. Employees are entitled to know when they are getting paid if holidays interrupt the normal schedule.

BenefitMall, a nationally recognized payroll and benefits administration provider, says that honesty is always the best policy. They recommend being upfront and open about all payroll scheduling changes. Do not try to hide anything in an attempt to keep employees happy. Tell them exactly what is going on and then address any issues as needed.

BenefitMall suggests distributing a written schedule to all employees affected by scheduling changes. Putting things in writing eliminates any “he said, she said” arguments arising from payroll changes. A written schedule could also serve as evidence should an employee decide to file a complaint.

The holiday season is now upon us. Is your company ready to make payroll based on an adjusted schedule? If not, it is time to put plans in place. Thanksgiving will be here soon enough.

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