What Are Bank Holidays and How Do They Affect Payroll?
When running a small business, it’s important to understand what bank holiday and how it can affect your business.
A bank holiday is “a business day during which financial institutions close their doors to the public, and their employees take a day off.” In short, this means that brick-and-mortar banks are closed, and direct deposits will not be transferred to employee's bank accounts. Most of the time, a bank holiday shouldn’t be cause for concern, but if your payroll schedule falls on a bank holiday, employees are going to be upset when they don’t receive their paycheck as planned. Below you’ll learn more about what to do if you encounter a bank holiday and the important dates for 2020.
Bank Holidays for 2020
The best way to handle a bank holiday is to be prepared ahead of time. For a calendar you can hang up, download our PDF version of the 2020 bank holiday schedule.
How to Handle Bank Holidays and Payroll
If you pay your employees cash, you don’t need to worry about how a bank holiday affects payroll, but the majority of small business owners are paying employees via direct deposit, and that’s when things can get confusing. When payday falls on one of these bank holidays, you have three choices to make:
- Pay your employees as planned even with the holiday. If you go this route know that your employees will be paid a day later than normal. Because of this, plan on letting your employees know so they can plan accordingly and not be worried about missing a paycheck.
- Run payroll earlier. To ensure employees are paid before a bank holiday, you will need to run your payroll one business day earlier.
- Expedite the process. If you forget to run payroll earlier but still want your employees to get paid before the holiday, some payroll providers offer flexible payroll options so you can pay to expedite paying your employees. For example, at SurePayroll, we offer same-day and next-day payroll options so you can speed the process up.
While your business may not be affected by all bank holidays during the year due to your payroll schedule, there are some things you’ll want to consider to be better prepared throughout the year.
- Be consistent. If you go the route of paying your employees before the bank holiday, continue to follow that throughout the year. It will make things easier for both you and your employees so they know what to expect.
- Share your payroll schedule. It’s common practice for employers to share the payroll schedule with employees at the beginning of the calendar year so they will know when to expect paychecks. This calendar should note bank holidays and anything else that could affect when your employees get paid.
- Stay organized. If you decide you’re going to pay employees before the holiday, that means you’ll be collecting and inputting timesheets earlier. Make reminders for yourself to ensure that you are doing everything you should ahead of time.
There’s a good chance that your small business will run into a bank holiday situation at least once during the year. If you use an online payroll service provider, you can get help with bank holidays and look for the expedited options we mention above. If you go the DIY payroll route, the best thing you can do is stay organized and keep payroll processing deadlines in mind.