This article provides an overview of how to pay and schedule separate pays over the holiday period, or how to pay multiple whole pay periods in a single consolidated pay.
TIP: Mark a calendar with the annual leave and statutory public holidays to see how they fit your pay period schedule and use that when preparing your pay run.
If your business normally closes down over the Christmas/New Year period, its likely that you pay your Employees in advance for their last pay for the year as well as any statutory Public Holidays (stat days) and any Annual Leave they may be entitled to, so that your busy payroll people can have time off too.
For a traditional closedown period (in NZ and Australia at least) there would be 2 weeks of pay, or 1 fortnight, comprising 4 days of public holidays and 1.2 weeks of annual leave - though some staff may not be entitled to all stat days.
You may also want to include additional future pay periods in advance (each of which may contain leave, estimated work and so on). If you do this then the pays should be for WHOLE pay periods.
For example, do NOT pay 3 weeks of pay to a fortnightly employee as their tax will end up calculated incorrectly on the initial bulk pay as well as their partial pay on return to work (there's no such thing as tax for 1.5 pay periods).
Multiple Pays and Scheduled Direct Credits
If you pay your staff by direct credit (and there's no reason you shouldn't - SmoothPay provides outputs for most banks), you can:
- schedule payments at normal pay period intervals by processing a separate pay for each period (as you would do normally) and
- submit each direct credit batch to the Bank for processing on the appropriate day.
Please check that your Banking software supports this facility (unfortunately, not all banks are created equal).
This smooths out your cash flow and can be beneficial for employees that may need continuity of income to avoid the ravages and excesses that the holiday season often brings.
Note: NZ Legislation provides for the payment of Annual Leave before it is taken - even though that may not be in the best interests of the employee.
Single Pay covering Multiple Pay Periods
If you choose to, you can input all payments for as many whole pay periods as necessary in a single pay. This is a method commonly used in NZ.
This involves entering any ordinary period earnings in the normal manner, as well as additional entries for all stat days and any Annual Leave being taken - padded out to whole pay periods (e.g. whole fortnights etc.)
In order for the tax and pay period calculations to operate correctly, you may need to override the number of pay periods that this pay represents (manually set the number of pay periods if you need to using the Summary tool in the Pay run).
The tax calculations and pay period based Allowances and Deductions will be recalculated based on the number of pay periods entered.
*except Fiji: tax rules in Fiji prevent processing pays for multiple periods. Each pay must be processed independently of any other and there must be only one pay per period.