Holidays Act

Christmas Holiday 2021 Payroll FAQs

November 26, 2021
Christmas Holiday 2021 Payroll FAQs | Blog
Sam | FlexiTime Resource Author


Payroll Expert

The silly season is upon us once again! To keep your payroll running smoothly these holidays, we’ve pulled together some answers to the most common questions we get at this time of year.


Christmas Payroll Guide | Prepare

What do I need to prepare?

We would suggest taking some time to review your situation so you know exactly what to prepare for. Do you have any new employees? Will you have a close down period? When will pay days be processed? 

This background information will help you understand what elements you need to consider when running your Christmas payroll.


Christmas Payroll Guide | Leave

Our employees are taking time off. How do we pay for the holidays?

Technically, the law says that holidays should be paid in full before they are taken. But with the agreement of employees they can be paid out in the regular pay cycle. In practice, most companies and employees prefer to keep to their regular pay cycle as it's much easier to manage, particularly as many payroll systems have pre-configured pay cycles.

Whatever your approach, ensure that the period of the pay matches the period the employee is being paid for. Don’t manually add four weeks of leave to a single weekly pay period or it will get taxed incorrectly!

In PayHero, the best approach for managing employee time off is to use our Leave Requests feature


Christmas Payroll Guide | Out of Office

We’re closing the company down for some of the holiday period. What do we do?

Employees who have leave due can have their time off processed with leave requests as normal. When an employee has been employed by a company for less than 12 months, they won’t yet have any Current Leave Due. For the close down period, the employee should be paid out their Holiday Pay Due balance and their leave anniversary changed to the date the closedown began (or just before if this would avoid having a different date for annual leave entitlements each year).

While this special processing seems unnecessary and the Holidays Act Review has recommended it be removed, recent case law has confirmed it as still required.

PayHero has an in-built setting to easily handle this for you. Just use the Close Down setting in the draft pay to pay out their Holiday Pay and move their next leave anniversary.

Note that you have to give employees 14 days' notice of a closedown period, so don’t wait until the last minute to tell your staff!


Christmas Payroll Guide | Presents

Can I run multiple pays in advance?

Some companies like to get their Christmas pays set up ahead of time so all they need to do when payday rolls around is finalise the pay.

Employees can only be in a single open pay at a time in PayHero, so you can’t have three separate draft pays lined up.

If you are actually paying the employees early (i.e. you’re paying for the next three pay periods now rather than sticking to your usual pay cycle) then this isn’t a problem. Just run and finalise the three pays now, all with the same pay date.

If you’re wanting to generate the pays now, but pay them in the future, you could run and send the three pays in advance, using the actual future pay dates, and then just upload the bank file for each pay on the pay date (some banks also accept future dated bank files, allowing you to upload those now). Instead of using bank batch files, you can also take advantage of PayHero’s Pay Now feature. Note, however, that if you send pays in advance the payslips will get emailed to the employees as you finalise the pays, so they will be receiving their payslips in advance.

This all works fine if your employees are paid the same amount from week to week. If you have waged employees and don’t know what their future pays will be, you’re probably better to do the pays when they fall due. Luckily it’s so easy to run a pay in PayHero that it will only take you a few minutes!

Or better yet, you could turn on Payroll AutoPilot® and let PayHero do the work for you. Payroll AutoPilot® will automatically send you an email when it's time to pay your team. All you need to do is review the details and send the pay, which you can do from any device without logging in.

If you really want to pay employees estimated amounts in advance and adjust their pays later, then that’s fine. When you come to do the catch-up you’ll need to follow the steps in our Fixing a Mistake in a Sent Pay article to correct the original pays. Time Credits might also be of use when adjusting estimated amounts after the payment has been made.


Christmas Payroll Guide | Public Holidays

And what about the public holidays?

Processing public holidays in PayHero is a breeze – if Automated Public Holidays is enabled in your account, PayHero will practically handle it for you.

Once you’ve created the pay you should download the Public Holiday Audit Report, which will show you how PayHero has worked out the public holiday for each employee (you should always run this when there are public holidays to review how employees’ entitlements have been calculated).

For an overview of the different public holiday entitlements it’s definitely worth checking out our public holiday payroll guide if you haven’t already.

This year, there’s a bit more complexity than normal. The public holidays all fall on weekends, meaning they will be Mondayised and Tuesdayised. Christmas Day and New Years Day occur on Saturday, so they will be Mondayised. Boxing Day and the Day After New Year’s Day fall on Sunday and so are Tuesdayised.

This means that the public holidays will either be observed on the days they fall, or for employees who don’t normally work on weekends, the holidays may be transferred to Monday or Tuesday.

This is applied appropriately for each individual employee. If either of these days are not considered an Otherwise Working Day for the employee, then they will be Mondayised or Tuesdayised respectively. This is explained in our Mondayised Public Holidays article. To ensure these public holidays are calculated correctly in PayHero make sure you set up your employee’s work pattern correctly in their Settings.

Public Holiday Questions


Christmas Payroll Guide | Employee Questions

My employee wants to cash up some of their holiday entitlement as well. How does this work?

Employees can ask to cash-up up to one week of their four weeks’ minimum entitlement to annual holidays each year.

It’s important that employees have time off from work each year to recharge. After all, the purpose of annual leave is to provide employees with the opportunity for paid time off work for rest and recreation.

However, at this time of year some employees may prefer to “buy” some annual leave to get some extra cash in hand. Requests must be submitted in writing and employers must respond within a reasonable amount of time. It’s totally up to you whether you do this - employers can say no and don’t have to give a reason for the decision.

See our guide to Cashing up Annual Leave for more info and FAQs.

If you do agree to cash up annual holidays, you’ll need to pay it as soon as you can (normally the next pay day) and keep a record of the date and amount paid. The payment must be for at least the same amount as if the employee had taken the holidays. Here’s how you do this in PayHero.


Christmas Payroll Guide | Bonus

How do we pay out Christmas bonuses?

If you’re lucky enough to be in a position to pay out a Christmas bonus this year, it’s important to be aware of how this should be processed. Christmas bonuses are generally treated as a discretionary payment, not a gross earning, which means the employee does not accrue holiday pay on the payment and their leave rates remain unaffected. Our helpful guide provides more detail about bonus payments and how to do this in PayHero. Note that it is much easier to enter a gross amount and have the tax calculated on that than it is to start with a net amount (for example, if you hand an employee a cash bonus) and work backwards.


Christmas Payroll Guide | Support

Help! How can I get hold of PayHero Support over Christmas?

We’ll be providing email support over the Christmas period, but our response time will be a bit slower than normal. We appreciate your patience while we too enjoy some time with our friends and family.

Wishing you all a Merry Christmas and a very Happy New Year from the FlexiTime Team.

Sam | FlexiTime Resource Author


Payroll Expert

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