With the festive season on the horizon, it’s the perfect time to start planning for the impact of bank holidays and ensure payroll processes remain accurate and compliant. Early preparation helps avoid disruption, supports employees and ensures smooth operations over the holiday period.
Bank holidays
- Christmas Day – Thursday, 25 December 2025
- Boxing Day – Friday, 26 December 2025
- New Year’s Day – Thursday, 1 January 2026
As all three holidays fall on weekdays, no substitute days are required this year, making scheduling more straightforward for businesses.
Holiday pay – what employers and employees should know
Under the Working Time Regulations, employers are not legally required to provide paid leave specifically for bank holidays. However, these days may be included within the statutory 5.6 weeks (up to 28 days) of annual leave.
For irregular hours workers, holiday pay depends on the system used:
- Accrual-based: Holiday entitlement is based on hours worked. Taking time off over Christmas uses accrued leave.
- Rolled-up holiday pay: Holiday pay is included in regular wages, so no additional payment is due for bank holidays.
Some employers offer enhanced contractual terms, such as extra pay for working on Christmas Day or New Year’s Day. Employees should check their contracts and clarify arrangements with their employer well in advance.
Early payroll? RTI reporting is crucial
If your business plans to pay staff earlier in December due to festive closures, it’s essential to follow HMRC’s Real Time Information (RTI) guidance:
- Always report the contractual payment date, not the early payment date, on your Full Payment Submission (FPS). Example: If you pay on 20 December but the usual payday is 31 December, report 31 December as the payment date.
This is especially important for employees receiving Universal Credit, as benefit assessments are based on reported earnings. Incorrect reporting can lead to reduced or missed payments, causing financial hardship.
Key actions for employers – get ahead now
- Review payroll schedules and confirm payment dates.
- Communicate holiday pay policies clearly, especially for irregular hours workers.
- Ensure RTI submissions reflect the correct contractual payment dates.
- Consult HMRC guidance to stay compliant and avoid penalties.
Get in touch
Planning ahead ensures a smooth and stress-free festive period for everyone involved. If you wish to discuss any of the above in further detail, please get in touch with Julie Mason, director of payroll at PM+M using the button below.
