An employer’s guide to running December payroll

The holidays are a busy time of year bringing lots of unique HR and payroll challenges to your desk. That’s why we recommend having a good system in place in time for December if you want to have yourself a merry little payday! But what rules do you need to consider when running your December payroll?

From rules around working on Christmas Day and offering bonuses to questions around whether to pay staff early: We’ve gathered expert tips to save you from getting wrapped up in end-of-year payroll stress.

Let’s get into it. What steps can you take to make sure your December payroll runs smoothly?

Decide if you want to pay employees early for Christmas

First things first, it’s important to decide when you pay your employees over the festive period. There are no rules in place that force you to pay your employees early in December. But there are pros and cons to opting to pay staff early or sticking to your usual pay date.

Some employers may choose to pay staff a little early to help employees make sure all festive activities are paid upfront.

Others may recognize that while paying employees early can feel welcome in December, it can make the wait time between December and the January pay date feel extra-long…

Running payroll early can also increase the business risk of overpaying staff if they leave your business over the festive period. If you pay up to and including the last working day of the month, but pay before the next pay cycle, any late leavers not recorded on payroll may ultimately be overpaid and owe you back the money for the days not worked.

No matter when you decide to pay your employees, it’s essential you follow the right legislation.

Review tax rules around Christmas bonuses and gifts

As with paying your employees early, Christmas bonuses aren’t mandatory unless specified in your employees’ contract. But they are a nice touch should your budget allow for them.

When you give any bonus to an employee, it will need to be processed correctly in your payroll. Bonuses may be additional but they’re still taxable therefore the usual payroll deductions will apply.

It’s useful to note that gift vouchers with a fair market value of $500 or less per year (which can’t be exchanged for cash) don’t incur the same tax rules as a Christmas bonus if they’re given on special occasions or in recognition of an employees efforts.

You might want to consider a mix of financial and non-financial benefits to reward your team this festive season. Offering them access to a staff perks platform, or giving them praise through an employee recognition tool can be a cost-effective way to reward and celebrate team success.

Clearly communicate vacation entitlement rules with employees

If your vacation year runs from January to December, Christmas is likely to be a busy time as many employees rush to use their vacation time before the year ends. Having a fair system in place for [staff vacation planning] to deal with requests on a first come first serve basis can be a great way to avoid conflict and vacation clashes that can leave you understaffed.

It’s also important to make sure you communicate your vacation policy early on in the year. You can’t control when your staff choose to book a vacation time, but you can make sure you encourage employees to take their full vacation entitlements evenly throughout the year to save your team from a last-minute winter wipe-out!

If your work in an industry like retail where employees tend to work during statutory holidays like Christmas, it's important to explain how you’ll pay them for this time in their contracts. In Canada, employees are usually entitled to holiday pay for statutory holidays, even if they don’t work that day. If they do work, they may also get extra pay or another day off with holiday pay, depending on the rules in your province or territory.

Need support with your payroll this December?

Don’t get your tinsel in a tangle this December—handle pay the smart way!

Speak to one of our employment relations experts today if you need help understanding how to manage your payroll like a pro during the holiday season.

And if you’d like to see firsthand how our software makes employee management a breeze, book a FREE demo with one of our experts or call us on 1 888 220 4924 today!