5 Payroll Mistakes to Avoid This Christmas

Get to know some of the common Christmas payroll mistakes so that you can get some well-deserved R&R this holiday season.

Download our Holiday Season Payroll Guide

Christmas payroll can be tough.

We get it; with 100000 things to do before Santa comes, it’s easy for payroll to fall far down your list of to do’s.

However, running payroll over the holiday season is not something you organise at the last minute. If you want a smooth-sailing ride, you have to plan ahead. That way, you can jump all the hurdles before it’s too late.

What hurdles? To keep you in check, we thought we’d give you the low down on the most common payroll mistakes people make at this time of year. Avoid these slip ups and your hard-earned holiday will go undisturbed – guaranteed.

1. Annual leave or public holiday off?

“My employee is taking annual leave over Christmas and New Years. Does this mean I don’t have to pay them for the public holidays?” 

The Christmas/New Years period is called the holiday season for a reason. Not only is it FULL of public holidays (four to be exact), but it’s also the most popular time of year for people to go on annual leave.

This can make payroll a bit confusing – especially if your employees are taking annual leave over the course of the public holidays.

But it’s not all that confusing if you remember the golden rule; public holiday pay over annual leave. Whether your employee is on annual leave or not, they’re always entitled to public holiday pay if the public holiday is an otherwise working day for them.

This is helpful to remember when you’re filling out your timesheets!

2. Getting your public holiday dates mixed up

“Are there any Mondayised public holidays to be aware of this year? Things were quite hectic last Christmas.”

While we’re on the topic of public holidays, that brings us to our next slip up.

Ever heard of Mondayisation? Mondayisation is when a public holiday is pushed to a Monday after falling on a weekend. 

Last year, things got interesting because both Christmas and New Years both fell on a weekend. This year you’re off the hook because the calendar dates are exactly the same as the observed dates – no calendar jigging involved!

This makes your holiday pay nice and easy. Simply pay your employees at the normal rate if they are taking the public holiday off and pay them time and a half if they work the public holiday. Remember, you only need to pay your employees for public holidays if it is an otherwise working day for them.

Calendar displaying the dates for the 2023/2024 Holiday Season. Christmas Day and New Years Day fall on Monday and Boxing Day and Day After New Years Day fall on Tuesday this year.


Public holidays don’t just affect the type of pay you give out, they also affect the timing of your pays due to holiday operating hours of your bank and/or payroll provider. 

You should consult with your payroll provider if you are at all unsure about whether you need to make changes to your pay to fit around the public holiday.

If you’re with Thankyou Payroll, you can find everything you need to know in our Help Article.

3. Leaving annual leave to the last minute

Help! I only just realised that my employee doesn’t have enough annual leave to cover our close down period. 

Are your employees taking time off over Christmas and New Years? Whether you’re having a close down period or not, it’s likely you’ll have a bit of organising to do in terms of annual leave and the time to start preparing is now.

Take it from us – the last thing you want is to be on the phone to your payroll provider on Christmas Eve because your employee’s annual leave balance doesn’t add up.

These questions are a good place to start when it comes to checking leave balances…

  • Does my employee’s annual leave balance look correct? If not, there may be an issue in their pay settings that you need to fix.
  • Does my employee have enough annual leave in their balance to cover the time off they’re asking for? If not, they may have to take leave without pay OR you can pay them leave in advance at your own discretion.

If you’re with Thankyou Payroll, check out our Annual Leave Cheatsheet to find out how to check your employees’ leave balances in our system.

4. Miscalculating annual leave payouts for terminated employees

My ex-employee is complaining that they didn’t get paid enough in their final pay but I checked their allocated annual leave balance and there’s nothing suspicious as far as I’m concerned.”

Remember our golden rule? Public holiday pay over annual leave.

If an employee finishes employment with you and still has allocated annual leave in their balance, you’re required to pay this out to them. What many employers don’t realise is that if this leave balance stretches over any of the public holidays from their last day of employment, you’re required to pay them for the public holidays too – just like our golden rule says.

Since there are so many public holidays over the holiday season, it’s extra important that you check the leave balances of any terminated employees over this period – before you do their final pay.

Digram showing that if an employee's leave balance extends over the public holidays, they are owed public holiday pay too.

5. Forgetting to budget for Christmas and New Years

I didn’t realise how much extra it would cost me to close down and now I don’t have enough funds to pay my employees.”

Anyone can agree, this is not a situation you want to find yourself in. But thankfully, it’s entirely avoidable. As is the case with many of these slip ups, it’s all about planning ahead.

If you’re closing down, you might want to run a dummy pay to see how much your payroll is going to cost while there’s no cash coming in. Or, if you’ve got lots of employees working the public holidays, you might want to test run this scenario too.

Whatever your situation is, start budgeting now so that you can get some much needed R&R over the Christmas break.

Download our Holiday Season Payroll Guide

Now that you know what to avoid, you might be wondering what to prepare. Lucky for you, we’ve got just the antidote.

Get your Christmas payroll locked away in three simple tasks with Our Holiday Season Payroll Guide!

This guide is the early Christmas present you didn’t know you needed…