Get Ready to Mark Your Calendar! Here’s What Happens If Payday Falls on a Bank Holiday

Between 50% – 78% of workers live paycheck to paycheck. These employees (and likely all employees) count on receiving their wages on their scheduled pay date. But, bank holidays might pose a slight hiccup. What happens if payday falls on a bank holiday?

What happens if payday falls on a bank holiday—or around it? 

Although there are a number of ways to pay employees, most involve banks in some shape or form. As a result, a bank holiday can put a wrinkle in your payroll processing timeline and desired pay date. If a payday falls on a bank holiday, your employees have to wait until the next business day to access their wages—unless you take action.  

Say you typically pay employees on Friday. If there’s a bank holiday on a payday Friday, employees may not be able to access their funds until Monday, depending on their payment method.

Bank holidays can also impact your payroll if they’re around the same time as when you run payroll or pay employees. If there’s a bank holiday at any point between your normal payroll processing day and payday, you might need to make adjustments.  

Let’s say you run payroll on Monday for a Friday payroll, but there’s a holiday on Wednesday. The Wednesday holiday could pose a problem to your employees getting paid on Friday because of processing times. 

Payday falling on a bank holiday mostly influences direct deposit recipients. But, there are a few issues when you pay employees with checks. 

Paying with direct deposit 

Paying employees via direct deposit has a number of perks. Not to mention, a whopping 82% of workers receive wages via direct deposit. 

Direct deposit transfers money from your business payroll account and deposits it into the employee’s account. The Automated Clearing House (ACH) is the electronic network that handles direct deposit. 

So if you pay employees with direct deposit, you might be wondering, Will direct deposit go through on a holiday? In short, the answer is no. The ACH only processes direct deposit transfers Monday – Friday. This excludes weekends and holidays.

When payday falls on a bank holiday, employees’ direct deposits are delayed a day. Again, when there’s a bank holiday any time between when you run payroll and the pay date, there’s a direct deposit processing delay. 

Paying with paychecks 

In the past, bank closures meant workers couldn’t cash their paychecks. But now, many ATMs let bankers cash or deposit their checks. Not to mention, banking apps have mobile deposit options for paychecks. 

Even so, employees who receive paychecks might have some hurdles if payday falls on a bank holiday. First, some employees prefer cashing their checks in-person rather than through their phone or an ATM. 

Second, many businesses model their holiday schedule after the Federal Reserve System holiday schedule. As a result, your business might be closed on a bank holiday, preventing you from being able to hand the paycheck to your employee on payday. 

When are bank holidays? 

Financial institutions and the ACH follow the Federal Reserve System’s holiday schedule. Banks celebrate the following federal legal holidays:

New Year’s Day Martin Luther King, Jr. Day Presidents’ Day Memorial Day Independence Day Labor Day Columbus Day Veterans Day Thanksgiving Day Christmas Day 

Some holidays take place on the same numerical day while others

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