What is better, monthly pay or weekly pay?
Generally, most people in the UK are paid on a monthly basis. However, some jobs are better suited for payment on a weekly basis, such as those in hospitality, retail and customer service.
One way to bridge the gap between paydays in Earned Wage Access – where employees can access a percentage of their earned wages before payday – for free. Find out more about our Earned Wage Access offering here.
This blog looks at the advantages and disadvantages weekly and monthly pay has on both employers and employees.
What are the advantages of monthly pay
With monthly pay, employees know exactly how much they will be receiving each month and can budget accordingly.
Improved cash flow
Monthly pay allows employees to receive a regular and consistent income, allowing for better management of their cash flow.
Improved financial planning
With a regular monthly salary, employees can plan ahead and make financial decisions that are better suited to long-term goals.
Easier to save
With monthly pay, employees can set up regular transfers into a savings account, allowing them to save money each month without having to think about it.
Improved job satisfaction
Receiving a regular monthly salary can give employees the confidence to take on more responsibility and feel more secure in their role.
What are the disadvantages of monthly pay?
Another disadvantage of being paid monthly is that it can be more difficult to budget. Employees may have to wait a full month before receiving another wage payment, making it difficult to manage expenses that occur throughout the month.
With monthly pay, income can be unpredictable for hourly paid workers, depending on the number of working days in a given month. If there are five Fridays and five Saturdays in a month, employees will potentially receive a larger wage than if there are only four Fridays and four Saturdays. This can make it difficult to plan for the future.
What are the advantages of weekly pay?
With weekly pay, employees can plan their budget around the same, consistent weekly payment amount. This can be especially helpful for those who live payday to payday.
Improved cash flow
Because weekly pay is more frequent than bi-weekly or monthly pay, it can help improve cash flow for businesses and their employees.
Easier to track
Tracking expenses and budgeting can be easier when income is received on a weekly basis.
Quicker access to funds
With weekly pay, employees can access their wages more quickly than with other pay schedules. This can be beneficial if there are an unexpected expenses or they need quick access to cash.
What are the disadvantages of weekly pay?
Employees paid on a weekly basis generally receive less pay than those paid on a bi-weekly or monthly basis.
More administrative work
Paying employees on a weekly basis requires more administrative work and time for payroll processing.
Less financial security
Weekly pay does not provide employees with the same level of financial security as bi-weekly or monthly payments.
More difficult to budget
It can be more difficult for employees to budget when they are paid on a weekly basis as opposed to on a bi-weekly or monthly basis.
Payroll calculation considerations
Paying employees on a weekly basis may present additional or more regular payroll calculations considerations that need to be considered.
Is weekly or monthly pay more popular?
Weekly pay is more popular, as it gives employees more regular payments to plan their finances and budget around. Monthly pay can sometimes leave employees with a large amount of income to manage all at once.
Is monthly pay better than weekly pay?
It depends on the individual situation. Some people may prefer to receive their salary in weekly payments, while others may prefer to receive their salary in monthly payments. Ultimately, it is up to the individual to decide which payment frequency is best for them.
How do businesses calculate monthly salary payments
Businesses typically calculate monthly salary payments b dividing the annual salary by 12 for each month. This can then be multiplied by any overtime or commission the employee has earned to calculate their final salary payment.
How do businesses calculate weekly salary payments
Businesses typically calculate weekly salary payments by dividing the employee’s annual salary (or hourly rate) by the number of weeks in the year, including any vacation or holiday weeks. For example, if the employee’s annual salary is £52,000 and there are 52 weeks in the year, the weekly salary would be £1,000. Similarly, if the employee’s hourly rate is £15 and they are paid for 40 hours per week, the weekly salary would be £600.
What about On Demand Pay/Earned Wage Access?
On-demand pay or Earned Wage Access (EWA) is revolutionising the workforce. With the increase in demand for real-time pay, employers should consider action to ensure they are not left behind. On-demand pay is becoming more mainstream and quickly becoming a workplace expectation, especially for the younger generation. Learn more about Income Group’s Earned Wage Access service in our blog.
No matter how your employees are paid, ensure it reaches their account on time, every time with instant payments from IGsend.