Kyle Eaton, money.co.uk business insurance expert,
Impact on businesses:
“Theoretically, an extra working day – with Leap Day falling on a Thursday this year – is an opportunity to earn an additional day’s worth of revenue. SMEs in the UK could benefit from increased sales or business activity on the extra working day this year, potentially resulting in earning more income.
“However, like all businesses, SMEs will also have an extra day’s worth of operational costs. Costs such as energy and gas usage and paying hourly workers will still need to be covered on this extra day. So these additional outgoings will likely counteract the potential increased revenue. Businesses that offer services based on pre-agreed annual contracts with set budgets could even be losing some of their profit, rather than earning more, as a result of the extra hours worked on Leap Day in addition to the increased outgoings associated with running a physical business premise, such as an office. That said, the impact is likely to be negligible.
“Many businesses may also see their operational expenses for the Leap Day come in cheaper than other trading days. A leap year only comes once every four years, so it’s unlikely that insurance providers, landlords, and other subscription services will charge you more on your agreed annual payments. However, it is always worth checking to be sure and, importantly, to avoid being left uninsured or missing services on the extra day.
Impact on employees:
“Whether or not you’ll be paid for Leap Day this year depends on your contract type. For those on fixed annual salaries, the vast majority will not receive additional compensation for working this extra day. Salaried employees receive the same yearly pay as any other year, meaning you effectively work the extra day for free.
“An extra day also technically means that your hourly pay for this year will be reduced. While it will only decline by mere pennies in most cases, it decreases nonetheless. You will still receive the full contracted annual salary you do every year despite having worked an extra day. This might not be the case for everyone, so speak to your employer to check.
“If you work on a variable hours contract, you may receive slightly more pay in a leap year than usual. This is because you’re working extra hours. However, it depends on your company’s payment structure and overtime policies, so check with your employer before banking on any extra pay.
“If you’re only contracted to complete a limited number of hours each month, your employer may offer Time-Off-In-Lieu (or TOIL), so you avoid working the extra day. So, those fortunate enough to receive TOIL will benefit from an extra day off work this year.
“If you’re paid hourly, you’ll very likely receive extra pay if you work the extra day in a leap year. Your income is based on the hours you work. So, the more hours you work, the more you get paid, unlike staff on fixed salaries.
“If you’re self-employed, you also have an extra day in the month to earn income and could earn more this year than usual. However, like any business, if you operate from a physical premises you will have increased outgoings to take into consideration. It’s also worth double-checking that your business insurance covers you for the additional day of trading.
