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A Payroll Leap Year

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The last leap year took place in 2012. The world gets to experience February 29th every 4 years and will come again in 2016. However, not wanting to be outdone, 2015 features a quirk of its own and can be known as a ‘Payroll Leap Year’. If you are a salaried worker and get paid every 2 weeks, a ‘Payroll Leap Year’ holds 27 pay periods as opposed to the typical 26!

Confused still? We’ve got the top questions about this answered for you below.

When does a Payroll Leap Year happen?

This payroll event occurs approximately every 5 or 6 years and will apply to individuals depending on the day of the week that your pay period closes and how their employer deals with payday holidays

What happens during this time?

Employers that pay workers every week or every other week incur an additional payday at least once every decade. Only 364-day years — not 365-day years — are divisible by 14, therefore, an extra day gets added on to the pay cycle every year. During a leap year, an extra two days gets added. When these days add up to a week or two weeks, it creates an extra pay period in that year.

What are my options?

Employers have a couple of options when dealing with the 27th pay period. Some employers will be paying that 27th pay cheque on top of regular salary, resulting in about a 4 percent annual raise, while others will redistribute the set salary among 27 checks. It is important to remember that this 4% annual increase is not a pay rise, you’ll still only be paid for the hours you work, but if you fall into the correct criteria, you’ll experience an extra pay period in that year.

Are the any other conditions?

Benefits also need to be redistributed and employees need to pay attention to the tax and retirement consequences to getting an unplanned cash infusion, it is not really a bonus. Those who have any biweekly payments – on mortgages or car loans, for example – should check to see if they would owe an extra payment.

The income boost could have tax implications, pushing people close to a higher tax bracket over the edge. And some high-paid workers could be saddled with the Alternative Minimum Tax, which limits the deductions a person can take against income. Also, means-tested benefits – such as disability or health insurance – could be affected if you are suddenly making more.

But for workers with lagging retirement savings, the extra paycheck is a great opportunity to save more.

Got any more questions and queries about this? Feel free to call our specialist payroll team on 0845 3082288 or email enquiries@payrollsolutions.org.uk.


Key Contact: Lynne Auton
Tel: (0845) 308 2288
Email: payroll@payrollsolutions.org.uk
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