Thursday 13rd Dec 2018
Christmas can be one of the busiest times of the year for HR and payroll, with all manner of things to think about, from business closure, to concentrated holidays, to increased rates of sickness. One of the biggest questions many working in these departments is wondering when to pay staff. Christmas is usually the only time of year that the normal pay date changes, whether that’s the last working day of the month, the last Thursday of the month, or any other schedule. In this article, we’re going to consider the pros and cons of changing the pay date over the festive period.
It is now generally the standard that businesses will choose to pay their employees before Christmas, which helps give them a little extra cash to enjoy the few days in the run-up to Christmas day, whether that means buying new presents or enjoying festive activities. In 2018, this will most likely mean making payments on Thursday 20th or Friday 21st, and in 2019, it will be likely either the 21st or 22nd. Both small and large companies alike tend to stick with these dates rather than the last working day, which on many years is Christmas Eve. However, there are of course no set rules.
Some of our recent research has revealed that employees tend to feel less motivated to work during the Christmas period, which is down to many things, including dark mornings and nights, colder weather, and of course the distraction of the upcoming festivities. Encouraging them with the prospect of a slightly earlier pay date could really help keep up office morale and productivity in the last week and days of the year. This is especially true if your company pays a Christmas bonus that employees can use to make their Christmas even more special.
The flip side of an early pay day of course is that it does mean a much longer gap between paydays in January. Generally, there’ll be a six week period between Christmas pay and the resumption of normal schedule in January. This can be quite difficult for those who tend to live from payslip to payslip, which is why some employees do prefer that normal pay dates are maintained. January blues are a commonly referenced but very real phenomenon, which do often come about as the result of overspending over Christmas, which can be compounded by a longer month.
There’s also a potential for some business impact too. Those organisations that struggle with cash flow might find it quite difficult to pay their staff early, especially if their invoices aren’t likely to be settled until slightly later in the month. There are ways round this, including products like overdrafts, invoice finance and similar, but of course, it’s not always recommended to make significant business decisions on the basis of something like this.
Ultimately, the decision is entirely up to the business leaders, but if you feel that there’s no strong business case for any particular payment date, then it’s always worth checking with your employees. Ask them when they would prefer to be paid, and this will take much of the headache out of the decision. This of course is far easier in smaller organisations than larger ones, though larger businesses will most likely already have policies in place. Explain what you think the pros and cons are, and come to a consensus.