Reasons to choose Wilson Browne
Every four years, we get an extra day in February thanks to the leap year. But what does this mean for employers and employees in terms of pay and annual leave? And how should we deal with any salary reviews in the new year?
Do I have to pay my employees more for the extra day?
The answer to this question depends on how your employees are paid. If they are paid on an hourly basis, then you will need pay them for any hours they work on the extra day, as you would for any other day. However, if they are paid an annual salary, then you do not need to pay them more for the extra day. In these cases, employees are usually paid 1/12th of their annual salary each month regardless of the number of days in that month.
Do my employees get more annual leave?
The statutory minimum annual leave entitlement for workers in the UK is 5.6 weeks, which includes eight bank holidays. For most workers who work fixed hours five days a week, this equates to 28 days. This does not change in a leap year, so there is no need to recalculate your employees’ holiday entitlements. However, for those who work irregular hours, you might need to account for the extra hours worked on the leap day.
Do we need to confirm salary increases in writing if we do an annual salary review?
Although employees are unlikely to complain about a salary increase, it’s best practice to confirm this in writing and keep a written record of any changes to their salary, including the reasons for those changes. This will hopefully avoid any dispute as to what an employee’s salary entitlement is, and it will stand you in good stead if such a dispute ever arises.
I’m thinking of starting a business in the new year – do I need to pay myself a salary?
If you are an owner/director of a company, you might be classed as a worker or employee. If so, you can’t avoid paying yourself at least the National Minimum Wage.
This could come back to haunt you when you decide to sell the business. This is because you as the worker or employee would have a claim for the shortfall between what you were paid and the National Minimum Wage. If you have been working for the company for a number of years, the value of this claim could be significant! HMRC may also take enforcement action against the company, which might not be affected by any settlement agreement you sign. As the buyer of the business would inherit responsibility for any claims, this could be a potential sticking point.