Outsourced Payroll Specialists

How do bank holidays affect payroll?

Bank holidays can often complicate running your payroll. Some employees work during the bank holidays, especially if you’re in the retail industry, in which case, do you pay them any extra for their work? Then there are the times of the year that they fall typically around the end of the month, when most businesses pay their staff. But they don’t need to cause havoc with your payroll if you support yourself with forward planning.

Time off and getting paid


It is worth pointing out that there is no statutory right for an employee to take bank holidays off work. Whether this is a day off or not, and how it is paid, is down to the employee’s contract so employers do have some leeway.

There is also no statutory right to pay employees extra if they work bank holidays – the ‘time and a half’ idea is a myth. Again, how much they get paid is entirely down to the terms in their contract.

Employers can require that employees take their annual leave on bank holidays. As part of Working Time Regulations, employers can give notice for employees to take annual leave on specific dates, such as Christmas if the business is closed. As long as they give twice the length of the holiday period as a notice, this is acceptable.

If their contract requires that they work bank holidays, the employee is not allowed to refuse this, even for religious reasons. But the complexity with this is that if you don’t allow people time off for holidays of religious significance to the religion they follow, then you can be accused of religious discrimination. So a compromise is always the best option.

Part-time workers and contracts


Employers need to be aware that part-time workers have a right not to be ‘treated less favourably’ than full-time workers with regards to bank holidays. The common solution to this potentially complex problem is to give them a pro-rata allowance of paid bank holidays, whether they would normally work these days or not. So if a part-time worker works 50% of a full-time member of staff, they would be entitled to half the number of bank holiday days.

Many contracts will include the wording around holidays ‘statutory entitlement plus bank holidays’. If the contract pre-dates 2009, employers need to be aware that this now means that the original 20 days plus eight bank holidays are now 28 days plus eight bank holidays. Therefore, it is worth checking that you are still keeping up with current requirements.

Payroll and Bank Holidays


If your business pays staff at the end of the month, then bank holidays such as Christmas and New Year can make things complicated, especially if they fall on a weekend and the days afterwards are then the bank holidays. Generally, the best practice is to either pay them on the last working day before the holidays or to choose a designated date a few days early and pay them then. For example, a 25th payday is often paid on either 23rd or 18th to ensure staff have access to their funds before Christmas.

If bank holidays are complicating your payroll, why not use Trace Payroll and outsource to a payroll provider? If you would like to find out more, get in touch with us using the details below to realise how you could benefit from hassle-free payroll processing.

Get in touch

To find out more about fully managed payroll outsourcing with a personal touch, contact Trace Payroll Services today.

Call Trace Payroll Services on 0845 873 5619