There are 4 main ways that an employee receives their payroll. Either monthly, semi-monthly, weekly, or biweekly.
Many employers issue payroll biweekly, meaning payroll payments are carried out on the same day every fortnight. Biweekly paid employees receive 26 pay checks a year.
Biweekly pay works by having an employer choose a specific day to pay employees. Salaried employees receive the same amount per pay cheque, whereas the amount hourly employees get per pay cheque varies.
Biweekly vs Semi Monthly
Biweekly and semi-monthly pay differ because biweekly pay means you receive payment every fortnight, whereas semi-monthly pay means you receive payment twice a month. If you are on semi-monthly pay then your business will pay you on the same two dates every month, however biweekly means you will get paid on the same day every two weeks.
Semi-monthly employees receive 24 pay checks a year which is less than biweekly, however they earn more in each pay cheque.
Advantages of Biweekly Pay
Biweekly is a consistent pay cycle as it occurs on the same day every two weeks, this can improve budgeting skills as it allows employees to plan their expenses better. It also allows employees who do overtime to get paid for that sooner.
An advantage to employers paying staff hourly is that biweekly pay makes it easier to work out payments when dividing by hours in the week, it also leads to less errors as there’s less work to be done at once.
Biweekly pay also allows employers to budget. Since biweekly pay is typically more consistent than semi-monthly pay, they may be more likely to use it to help their organizational budget. This can also help a company better plan for which days of the week may include payment.
Disadvantages of Biweekly Pay
Biweekly pay can make it more challenging to calculate your take home pay, as there will be 2 months where you will receive 3 pay checks.
Biweekly pay can also make it harder for those used to weekly pay, to meet budgeting requirement and pay any weekly bills.
Some disadvantages of biweekly pay to employers are that smaller businesses might control their own payroll, and monthly payroll may be the quickest and easiest way. Another potential issue is that the software program used for certain payroll systems charge per cycle, making biweekly pay more expensive than monthly.
What Determines Your Pay Scheme
A business will take factors into consideration like their number of employees, if their employees are on a salary or not, if payroll costs them and whether overtime exists.
Some employees may prefer biweekly or weekly pay since it’s easier to budget around a more consistent pay cycle.
The industry also plays a role in determining an employee’s pays scheme. Certain industries tend to have certain pay schemes, for example the hospitality industry commonly pays by the hour and pay checks are weekly, whereas salaried hospital workers are likely to be paid monthly.