As the world anticipates the rare occurrence of a leap year, employers find themselves grappling with the perennial question: “Will I get paid extra?”
This quadrennial anomaly is sending shockwaves through HR departments globally as they strive to address the complex implications of the additional day on payroll.
For millions of employees, the answer is a resounding yes, as they are set to receive additional pay. However, for millions more, the news may not be as favourable.
To avoid any leap year payroll pandemonium, employers are gearing up to tackle the HR challenges associated with this rare event, ensuring they adhere to legal payment obligations.
Alan Price, CEO of HR software provider BrightHR, sheds light on the intricacies of the situation:
“With an extra day in the calendar this February, it’s no surprise that here at BrightHR, we’re getting more and more calls from employers who are navigating the question of whether they need to pay their staff more. And the answer is, as often is with HR matters, not completely clear cut…”
The key factor determining the impact on pay is the employee’s pay structure. For hourly workers paid on a weekly basis, there will be no change as a leap day does not extend the standard seven-day week.
Hourly workers with a monthly pay structure, on the other hand, will see an increase in pay due to the altered number of days in the pay reference period. Price explains, “They will have worked for 21 days in February rather than the usual 20 days.”
Explain what your employees should expect
However, for salaried workers paid with reference to the year, there will be no discernible change in pay, as their compensation is not tied to hours worked. Price advises employers to communicate these nuances to their workforce, ensuring clarity on what to expect.
While an inflated pay packet may seem like a cause for celebration, Price emphasises that it results from the extra time worked. Compliance checks are essential for staff on national minimum wage to avoid breaches and ensure that the extra day does not bring their pay below the mandated rates.
Beyond the financial aspect, employers must consider the implications for notice periods, deadlines, and even the day of the month on which staff are typically paid. Clear communication with employees is crucial to manage expectations and address any potential concerns.
As the leap year approaches, businesses are urged to proactively navigate these HR challenges, ensuring a seamless transition into the unique circumstances presented by the additional day in February.
