Leap day pay change: what you need to know

As the saying goes, February can be a short month but a long winter. This leap year, it will be even longer, raising questions about how it might impact employee pay.

For 2024, February 29 falls on a Thursday. For many of us, that means it’s an additional day of work. But is that extra day an extra payday? Or a salary cut? The answer depends on how your salary is worked out, and whether you earn the national minimum wage.

We dive into the legal technicalities of leap year working, to ensure both employees and employers steer clear of calendar confusion this month.

Will I be paid extra for a leap day?

In some cases, yes. All employees deserve to be fairly compensated for time spent on the daily grind. Depending your contract type, you might be entitled to an extra day’s wage.

Not every worker will be jumping for joy this leap year, however. Because of how leap year pay is worked out, some staff may actually see a negative impact on their pay packet in the short-term. Here’s a breakdown of how you might be affected:

I’m a salaried employee

If you’re on a fixed annual salary, you’ll be thrown a bit of a curveball because your pay is usually calculated by dividing the usual number of workweeks (around 52.14). Of course in a leap year, the workweek is longer by a fraction.

In the vast majority of cases, the extra amount added to the workweek means the hourly rate will decrease by a marginal amount (we’re talking pennies, here). You will still receive your full contracted annual salary, the total amount will just be spread across the year.

However, businesses do need to be careful because if a low-income worker’s pay is divided by the usual number of workweeks in a year (around 52.14), their hourly wage can fall below the minimum wage if an extra day is added.

It might seem like a small difference. But employers must adjust their pay accordingly to ensure they are not breaking minimum wage laws.

I work variable hours

Workers whose hours fluctuate may receive slightly more pay in a leap year due to the extra work day, depending on their specific payment structure and company overtime policies.

Some employers will offer you Time-Off-In-Lieu (or TOIL) in a leap year to avoid the extra day of work if you are only contracted to complete a set number of hours each month.

Employers who extend this offer to workers must ensure that they keep clear records of the TOIL and, ideally, deduct the TOIL within the same pay reference period.

I’m paid hourly

Those who are paid hourly, such as in sectors like retail or hospitality, are at the least risk of pay being disrupted. Unlike staff on fixed salaries, your income is based on the hours you’ve clocked in and likely already fluctuates monthly, so no hidden deductions here.

How can employers prepare for the leap day?

For employees who work on a leap day, the extra hours added to payslips – many of which are produced automatically by payroll software – can complicate calculations and require an extra layer of checks by employers.

Business owners must take steps to ensure their payroll system accounts for the extra day to avoid accidentally underpaying staff below the legal minimum wage requirements.

If you currently use payroll software to calculate staff wages, your system will likely make the adjustment for leap year pay automatically (usually moving up to 52.29 weeks).

But even with automated systems, it’s important to manually verify that the payroll system is configured correctly for the leap year, especially if you use customised settings.

Test out automating complicated wage calculations using free small business payroll software.