The Leap day: How does the 29th February affect you?

Do Salaried employees need to be paid more?

In general, most employers do not adjust employees' salaries specifically for a leap year. Compensation structures are typically based on annual, monthly, or hourly rates, and the extra day in February is usually considered as part of the standard employment terms.

For employees on a fixed annual salary, the additional day in a leap year generally doesn't result in a direct increase in pay. Salaried employees receive a fixed annual salary, which is typically intended to cover the entire year, regardless of the number of days in each month. This includes the extra day in February during a leap year.

The monthly salary for a salaried employee is usually calculated based on an annual figure divided by 12 months, regardless of whether February has 28 or 29 days. Therefore, each month's salary is a consistent amount, and the extra day in February does not lead to an additional payment.

Employment contracts and company policies outline the terms of employment, including salary details. Employers and employees should refer to these documents to understand how compensation is structured and whether any adjustments are made for the leap year. In most cases, salaried employees can expect their annual salary to remain consistent regardless of the number of days in February.

How does it affect hourly employees?

For employees paid on an hourly or monthly basis, their pay is often calculated based on the actual hours worked or the standard number of hours in a month, regardless of the specific number of days in February. Hourly employees are typically paid based on the number of hours they work, so any additional work hours due to the longer month can result in increased compensation.

Here are a few ways employers might manage the extra day for hourly employees during a leap year:

1. Overtime Pay: If the extra hours worked in February push hourly employees beyond the standard 40-hour workweek (or the maximum allowable hours according to employment legislation, employers may be required to pay overtime rates for those additional hours.

2. Employer Policies: Some employers may have specific policies in place regarding compensation during leap years. These policies could outline how additional hours worked in February are compensated and whether any special considerations or adjustments are made.

3. Time Off in Lieu: Alternatively, employers might choose to offer compensatory time off (comp time) to hourly employees who work extra hours during the leap year. This allows employees to take time off in the future as a form of compensation for the additional effort.

It's crucial for both employers and hourly employees to be aware of company policies, employment contracts, and relevant employment legislation governing compensation. Clear communication between employers and employees regarding expectations and compensation for the extra day in February helps ensure transparency and fairness.

The takeaway

The 29^th February is not considered a public holiday, consequently if the 29^th February falls on the employees normal working day, it should be treated as such.

Key things to consider:

1. Employers with salaried workers who are paid close to minimum wage do need to take care to ensure that working extra leap hours does not tip their salaried workers below minimum wage rates. If employers fail to do this, it may result in legal fines and non-compliance from the HMRC.
2. Employers should also be mindful of how the extra day impacts on payroll. If you generally pay on the last day of the month, and this will result in employees being paid a day later than they might expect, this should be communicated to staff in good time to enable them to make financial arrangements.