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06th December 2015

Pay day this Christmas – Is this an issue for your business?

pay-day-xmasWe have received a number of enquiries from care providers seeking advice on whether or not they can alter the pay date for their staff this Christmas due to when the normal pay date falls. As such we thought it would be helpful to outline our advice on this issue for the benefit of all other providers with a similar dilemma.

So what is the issue?

Well, Christmas Day and New Years day (both a public holiday) fall on a Friday. A number of care providers pay weekly on a Friday or on a Friday every 4 weeks or on the last Friday of every month –all of which fall either on Christmas Day or New Years day or both. The banks are closed so wages cannot be processed.

Whilst of course one solution (and perhaps the easiest) is to bring forward the pay date to Thursday 24th December and Thursday 31st December, some employers have expressed a preference to delay pay until the next working day i.e. Tuesday 29th December or Monday 4th January either for cash flow reasons or because there is a fear that some staff, having being paid a day early, may not attend work on Christmas Eve or New Years Eve.

Delay Payments or Advance of Wages?

When deciding whether to delay payment regard needs to be had to the financial needs of your staff, particularly for those who are paid weekly. To delay payment from the 25th December to 29th December is more than half a week delay and could cause immense pressure on some staff during this expensive period. Further, do any staff have financial commitments i.e. direct debits that may go out slightly early in light of the bank holidays and which, if they are not paid, won’t be met? Any staff who may suffer could be offered the chance to apply for an advance of wages subject to special circumstances, but it is important to consider the potential negative impact such a decision may have on staff morale etc.

Concerns about staff not turning into work on Christmas Eve or New Year’s Eve should be addressed through the usual absence reporting procedures/disciplinary process, though you may want to give notice to staff that anyone reporting any absences between 24th December and 2ndJanuary will need to provide a doctor Fit Note even if for only one day. This may make pulling a “sickie” more difficult for the employee as they will need to factor in a trip to the doctors.

Contractual Obligations

You also need to have regard to the contractual obligation to pay wages on a set date. What do your employment contracts say? Do they allow you to alter the pay date? Do they expressly set out what happens when a pay date falls on a public holiday or non banking day? If there are no express provisions has there been a custom and practice of paying staff early or late when pay day falls on a public holiday or weekend? These are all relevant factors to consider to ensure any decision you do make is not a breach of contract.

If you were in breach of contract then the business could be liable for any financial damage suffered by staff i.e. bank charges/fees for failed direct debit requests or overdraft charges etc.

Our advice would be balance the business needs with the needs of your staff and the importance of keeping them motivated during a busy and challenging period. If you chose to pay early, let staff know that you are doing this for them as a thank you!

Oliver McCann, Employment Partner, Napthens LLP – QCS Expert Employment Law Contributor

Topics: Human Resources

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