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What to do When Payday is on a Holiday or Weekend

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No matter if you pay your employees weekly, biweekly, semi-monthly, or monthly, the payroll frequency you choose needs to be consistent. But a wrench can be thrown into your payroll process if payday falls on a weekend, holiday, or bank holiday.

But fret not! We’ll examine the most important payroll holiday rules so your payroll process remains consistent and easy to understand.

Payday on Holiday or Weekend?

Why employers can’t pay employees on weekends and bank holidays

The simple answer to why employers can’t pay employees on weekends or holidays is that the banks are closed. If banks and credit unions are closed for the weekend or a holiday, they cannot transfer funds or process checks on that date.

Nearly all transactions are on pause for bank holidays. Bank holidays are business days banks and other financial institutions are closed to observe a holiday, such as Martin Luther King Jr. Day, Memorial Day, or Thanksgiving. These holidays are set well into the future and are recognized by the Federal Reserve.

When banks and credit unions are closed, they pause all types of payment processing. All payments, transfers, and transactions will stay on hold until the following business day.

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What to do if payday is on a bank holiday

As nearly all financial institutions are closed for holidays, your employees will not receive their direct deposit or be able to cash their checks until the following business day. If payday falls on a holiday or weekend, your payroll team has a few options to consider:

  • Run payroll early. Updating your check date to the first available date prior to a holiday or weekend. You may have to pay a fee for same-day processing 
  • Due to constructive receipt, an employee needs to be paid on the check date. With that said, a check date should always be updated to the actual date the employee will receive their funds. 
  • Delay payroll. If the bank holiday falls before Friday, pay employees the day after.

Employers select whichever policy they prefer for their company. It’s best to remain consistent to avoid confusion and so employees understand when they’ll receive their paychecks. Electing to process payroll earlier or later may affect processing deadlines. If you work with a payroll processing company, communicate with them to outline your payroll schedule. 

What to do if payday is on the weekend

Just as it’s important to have a policy in place for paying employees during a holiday, your company should have a consistent practice for when payday falls on a Saturday or Sunday. Typically, if payday falls on a Saturday, consider paying your employees the Friday beforehand. If payday is on Sunday, pay them the following Monday.

Direct deposits and checks won’t be accessible for employees during the weekend. By moving payday to a Friday or Monday, you ensure employees have access to their paychecks.

Weekend and Holiday payroll tips

It can be a hassle to work around paying employees on bank holidays and weekends. To mitigate these pitfalls, consider the following tips:

  • Plan ahead. Use a calendar or integrated payroll software to monitor and track approaching bank holidays or weekend paydays so you never miss a deadline.
  • Create a schedule. Create a payroll schedule at the start of the year and highlight bank holidays and other disruptions to normal payroll cycles. Distribute it to your employees.
  • Be aware of early or late payrolls. Running payroll earlier or later than normal can cause your team to miss details and make mistakes. Be sure to enter employee hours on time and submit payroll or printed checks to meet the deadline. An integrated payroll and HR software can ease dual entry and minimize payroll mistakes. 

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