December and January Are Tough for Payroll – Here’s How to Make It Easier
The end of one year and the start of another can be a stressful period for everyone but for payroll professionals, it’s often the busiest and most complex time of year. December and January bring shorter working months, disrupted schedules, and an array of compliance and reporting challenges. Balancing employee expectations with accuracy, timeliness, and statutory requirements can quickly become overwhelming. Yet, with the right planning, a regular review of operational procedures, clear communication, and perhaps some external support, organisations can ease the pressure and maintain smooth payroll operations throughout this difficult season.
December Challenges
December compresses timelines just when activity spikes. Some of the most common challenges include:
Shorter Processing Month
Bank holidays and business closures mean fewer days to process payroll, approve timesheets, and handle payments.
Early Pay Dates
Many employers choose to pay staff earlier to help with holiday spending. While thoughtful, this reduces the already limited processing time.
Increased Workload
Payroll teams must account for bonuses, overtime, and the tax implications of gifts or events. These extras create more complexity and admin work than usual.
Staff Absences
With managers and colleagues on annual leave, payroll teams often struggle to obtain timely and accurate data, such as bonus or overtime details.
HMRC Reporting Rules
Employers paying early must still report the regular contractual pay date on their Full Payment Submission (FPS). Reporting the early date instead can lead to confusion and affect employees’ benefits, such as Universal Credit.
January Challenges
Once December’s rush is over, January often begins with a wave of corrections and carryover issues. Payroll professionals face:
December ‘Clean Up’
Fixing errors from the previous month - incorrect hours, bonus tax treatment, or overpayments - adds to the new month’s workload.
Long Gap Between Paydays
Employees paid early in December face an extended wait for their next salary, often prompting queries and additional communication for payroll teams.
Cash Flow Strain
Paying staff early can place pressure on company finances, especially when January income is slowed by client delays or holiday shutdowns.
Year-End Reporting Overlap
Payroll departments must also juggle new compliance requirements and year-end tax preparation during this same period, further stretching capacity.
How to Make Things Easier
Consider Intermittent Outsourcing
Partnering with an external payroll provider or interim specialists is one of the most effective ways to manage the December–January crunch. Expert external teams can maintain compliance, apply additional resources, handle irregular pay schedules, and manage reporting, freeing in-house teams to focus on planning, communication and volume control.
Plan Ahead
Preparation is key. Set clear processing timelines early, anticipate bank holidays, and ensure all departments know submission deadlines for bonuses and timesheets. Scheduling of workforce to manage pay exceptions and forecast volumes is also key.
Communicate Clearly
Regular communication within the organisation between payroll and employees - helps prevent last-minute confusion. Clear messaging about pay dates, workflow approvals, team availability, reporting requirements, and expected turnaround times keeps everyone aligned.
Conduct a “drains up”
Working with an independent consultancy to review those critical periods can often lead to identifying and improving a majority of those ‘seasonal’ payroll issues. An independent consultancy has the advantage of working with numerous organisations and typically possess a wider range of experience across the industry. Equally, an independent consultancies time is devoted to investigating these particular issues whereas internal teams are often too busy to focus on such initiatives or at worst, possess a “if it ain’t broke, don’t fix it” or “it's always been like this” attitude.
Conclusion
December and January stand out as the toughest months in the payroll calendar. Between holidays, financial pressures, and compliance demands, even the most organised teams can feel the strain. By adopting proactive planning, open communication, and possibly engaging outsourced support, businesses can stay compliant, reduce stress, and keep their employees paid accurately and on time.
If your organisation feels the year-end payroll pressure, it might be time to get in touch and see if our solution could make a lasting difference.
Why You Should Contact Us
The Leppington Group Limited (TLG) is a UK headquartered company specialising in payroll advisory, audit and consulting services. Originally founded in 2011, TLG has established itself as a reputable, independent and trusted partner for organisations seeking expert guidance for any aspect of payroll requirements.
TLG's core services include payroll audit & health checks, issue navigation, procurement, vendor selection, implementation guidance, project mediation, payroll administration, and cyber & privacy services.
TLG's commitment to excellence, and a customer-centric approach, has elevated the organisation as a valuable resource for businesses seeking to optimise their payroll processes without the ‘Big Four’ price tag.
TLG exists to make payroll simpler, businesses better and results clearer.