Holidays throughout the year will affect your pay in a variety of ways. The most obvious effect of the holidays is that work is more expensive because of overtime. However, an important concern that most people forget is that holidays can affect whether employees receive wages on time. Some holidays are always on the same date as Christmas and New Year. Other holidays are on different dates depending on the year such as Thanksgiving and Memorial Day.
Whether you are on a bi-weekly, bi-monthly or monthly salary schedule, there is always a point in time during the year that holidays will affect your pay. Memorial Day this year is on Monday, May 28, 2018. Memorial Day may fall on May 31 or the last day of the month. Therefore, if you are a bi-monthly wages company, it may not be possible to get wages to your employees at the end of the month.
The reason that holidays affect wages is because of “bank holidays.” Bank holidays are dates when banks are not open to activity and cannot transfer funds on that date. Therefore, you must plan accordingly so as not to fall into a situation where you pay your employees late. Usually, the normal operating procedure is to pay the employee the closest possible date before the original pay date.
I have seen many employers deal with disgruntled workers because their payroll has not been properly entered in advance. This may seem like a minor issue, but many people have automatic payments linked to their bank accounts. Therefore, if the payroll is not properly handled, you may cause the employee to issue a “check or pop-up” because of your own negligence.
Also, your employees may not just pay late for failing to make the timely payment. If it comes to paying income tax under a payment plan or other government-run payment plans, this can lead to serious legal consequences. Late payments to the IRS under a payment plan automatically cancel the payment plan and repay any balance. Therefore, your negligence could lead to their potential bankruptcy under these circumstances and you will be liable as an employer for this issue.
Finally, the holidays will also affect general bank transfers. Therefore, if you need cash or immediate funds, you will not be able to access your funds just after the bank holiday. Therefore, it is essential to plan around all bank holidays to avoid a situation where you are unable to meet your obligations.