Christmas Holiday Payroll FAQs

Christmas Holiday Payroll Q&A | FlexiTime

Christmas Holiday Payroll FAQs

The silly season is upon us once again! To keep your payroll running smoothly these holidays, we’ve pulled together some answers to the most common questions we get at this time of year.

We’re closing down for two weeks. How do we pay for the holidays?

Technically, the law says that holidays should be paid in full before they are taken, but with the agreement of employees they can be paid out in the regular pay cycle. In practice, most companies and employees prefer to keep to their regular pay cycle. After all, having employees taking all sorts of different periods of leave could be a nightmare to maintain if not paying on a regular cycle.

Whatever your approach, ensure that the period of the pay matches the period the employee is being paid for. Don’t manually add four weeks of leave to a single weekly pay period or it will get taxed incorrectly!

In FlexiTime, the best approach is to use timesheets to record when employees are taking time off. This can be done using regular timesheet entries for ‘Employee Leave’. Alternatively you can use the brand new Leave Requests feature.

Note that you have to give employees 14 days notice of a closedown period, so don’t wait until the last minute to tell your staff!


What if an employee has been working with us for less than a year and doesn’t have any annual leave due?

The Holidays Act allows you to pay out 8% Holiday Pay for employees who haven’t yet worked a year, then reset their next leave anniversary to the end date of the pay. In this case, the holiday pay amount will get taxed as an extra pay.

However, we recommend recording it as annual leave taken rather than paying out all of an employee’s holiday pay, because it provides a better record of what really happened. In this case, the employee is taking annual leave in advance. Provided they don’t exceed their annual leave available balance this is essentially the same as paying out holiday pay.


And if an employee doesn’t have enough leave available?

If an employee hasn’t accrued enough leave to cover the closedown period, you can enter what you can as annual leave taken, and record the remainder as unpaid leave. Of course, if you and the employee agree, you can always let them take more annual leave than they have accrued leaving them with a negative annual leave available balance.


Can I run multiple pays in advance?

Some companies like to get their Christmas pays set up ahead of time so all they need to do when payday rolls around is finalise the pay. Or, you may be wanting to pay out an employee’s annual leave in advance.

Employees can only be in a single open pay at a time in FlexiTime. So you can’t have three separate pays open. The reason for this is that as a pay is finalised the various balances are updated for each employee, then when the next pay is created these new balances are transferred into that pay, and so on.

If you are actually paying the employees early (i.e. you’re paying for the next three pay periods now rather than sticking to your usual pay cycle) then this isn’t a problem. Just run and finalise the three pays now, all with the same pay date. They will be consolidated into a single bank batch file.

If you’re wanting to generate the pays now, but pay them in the future, you could run and finalise the three pays in advance, using the actual future pay dates, and then just upload the bank file for each pay on the pay date. Note however that the payslips will get emailed to the employees as you finalise the pays, so they will be receiving their payslips in advance.

This all works fine if your employees are paid the same amount from week to week. If you have waged employees and don’t know what their future pays are, you’re probably better to do the pays when they fall due. Luckily it’s so easy to run a pay in FlexiTime that it will only take you a few minutes!

If you really want to pay employees estimated amounts in advance and adjust their pays later, then that’s fine. When you come to do the catch-up you should create a new pay code called something like ‘Advance Pay Correction’ as gross earnings, and add this to the employee’s subsequent pay with the positive or negative adjustment hours to adjust for any difference between the hours you paid them for and what they actually worked.


Another Mondayised Holiday, but Monday is also a holiday. How do we handle that?

Actually, this year we have two Tuesdayised holidays over the Christmas period, with Christmas Day and New Year’s Day being observed on the Tuesday. Amusingly that means that the New Year’s Day holiday is observed on the day after the Day After New Year’s Day.

While that seems like a bit of a brain twister, don’t worry – it’s not too bad, and if you’ve got public holidays set up correctly, FlexiTime will handle all this for you. For consistency we’ll just refer to this as Mondayised, even though it is a Tuesday involved. The rules are still the same.

If an employee normally works on Sunday, then they’ll get the Sunday as their public holiday and Tuesday will be a normal day. If they don’t usually work on Sundays then Tuesday becomes a public holiday for them.

This can get a little confusing for employees when your pay week starts on, say, a Monday. You might find employees are confused as to why they’re not getting paid for the Sunday public holiday in the pay that finishes on that Sunday.

Similarly the Pay Leave report (that you should always run when there are public holidays to confirm how employees’ entitlements have been calculated) will not show any details for employees where the holiday has been Mondayised until the pay containing that Monday / Tuesday has been run.

For a general overview of Public Holidays in FlexiTime it’s definitely worth checking out our public holiday payroll guide or public holidays webinar if you haven’t already.

The good news is that you’ve now got several years of grace before we have another Mondayised holiday!


Help! How can I get hold of FlexiTime Support over Christmas?

We’ll be turning off the phones at midday on the 23rd, and you’ll be able to call us again on Wednesday 4 January. Between those dates we will be monitoring emailed support requests, so if you have an issue please contact Replies will be a little slower than usual, so we appreciate your patience while we enjoy our eggnog!

Wishing you all a Merry Christmas and a very Happy New Year from the FlexiTime Team.


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FlexiTime is flexible payroll software for New Zealand businesses. With online timesheets, FlexiTime makes it easy to track the hours your employees work and pay them accurately.

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Sam Newton

Payroll Nerd. Likes the thought of a round of golf or game of tennis, just doesn't get enough chances to put the thought into action. Enjoys a game of cards or a board game with the kids. Can often be spotted running between Island Bay and the Wellington CBD. Catch phrase "&*%##$ Holidays Act".

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