Your employee compensation package deserves careful consideration. The pay and benefits you offer can significantly impact the talent you attract. And how much you offer is only one part of the equation—how often you pay is also important.
If the difference between a biweekly and semimonthly pay schedule has left you scratching your head, you’re not alone. Considering the pay periods in a year—whether weekly, biweekly, semimonthly, or monthly—can help you better budget your expenses and improve employee satisfaction. It’s a win-win.
In this guide, we’ll explore the various payroll frequencies, highlighting their pros and cons so you can determine the best pay schedule for your business needs.
What is a pay period?
A pay period is the designated time during which an employer monitors an employee’s worked hours and issues payment. These periods are consistent and recurring, each starting the day after the previous pay period ends to account for all working time.
Pay periods determine:
- Payment schedules
- The number of paychecks employees receive annually
- The deductions from each paycheck for employee benefits and payroll taxes
How long is a pay period? That decision is up to you. Regardless of the pay schedule you’ve decided on, consistency is vital to ensure employees needn’t worry about when their next paycheck will arrive.
If a company in the United States misses payment dates, even by a few days, it may receive complaints under the Fair Labor Standards Act (FLSA). This can result in legal penalties for wage violations. To avoid legal headaches, choose a pay period and stick to it. Doing so makes life easier for everyone—including your organization’s legal team.
Types of pay periods
You’ll decide how often to pay your employees when setting up your payroll calendar. Generally, you have four options for pay periods: weekly, biweekly, semimonthly (bimonthly), and monthly.
- Weekly: Employees are paid each week.
- Biweekly: Employees are paid every two weeks.
- Semimonthly: Employees are paid twice a month.
- Monthly: Employees receive one paycheck at the end of each month.
Each pay frequency has benefits and drawbacks. When deciding on the number of pay periods, consider factors like:
- Enhancing payroll accuracy
- Coordinating payments for international employees
- Streamlining payroll services and the payroll system
- Balancing cash flow management
- Managing retroactive pay and back pay adjustments
- Ensuring timely compliance with tax obligations
How many pay periods are in a year?
The number of pay periods in a year varies depending on your payroll schedule:
Weekly
When you institute a weekly pay period, employees are paid 52 times most years. Some years have 53 numbered weeks.
Biweekly
Employees on a biweekly pay schedule receive paychecks every other week, resulting in 26 paychecks annually. Occasionally, a year may have 27 pay periods, depending on the day of the week the year starts and whether it’s a leap year.
Semimonthly
This pay period results in 24 paychecks per year, typically on the 15th and the last day of the month. Leap years do not affect this schedule.
Monthly
Employees receive 12 paychecks per year on a monthly pay schedule—one payment at the end of each month. Leap years do not impact this schedule, either.
Pros and cons of pay period types
The frequency of pay periods is a big deal—it affects both employers and employees. The right choice can lead to happy employees and improved financial planning—and who doesn’t want that?
Understanding the pros and cons of different pay period types will help you make the best choice for your payroll system.
Pros and cons of a weekly pay schedule
Pros:
- Employees get more frequent paychecks, which can help with budgeting and managing expenses.
- Weekly paydays can increase employee satisfaction and morale.
- You can more easily track and manage overtime pay.
Cons:
- Frequent payroll processing means more work and costs for employers with higher processing fees.
- Employers must manage cash flow carefully to ensure funds are available for weekly payroll runs.
- Employers must account for variable pay periods depending on the year.
Businesses with hourly employees and employees working a lot of overtime will benefit most from weekly payroll.
Pros and cons of a biweekly pay schedule
Pros:
- Employees still receive paychecks frequently enough to manage expenses and plan their finances.
- Employers enjoy less frequent payroll processing compared to weekly payroll, reducing the administrative burden.
Cons:
- Overtime calculations can be more complex after a 14-day period.
- Employers must manage cash flow to accommodate payroll every two weeks, adding to administrative costs.
- Some years may have an extra pay period (27 instead of 26), complicating overtime and annual budget calculation.
Businesses should consider biweekly payroll to balance payroll frequency and administrative workload or accommodate moderate payroll complexities.
Pros and cons of a semimonthly pay schedule
Pros:
- Employees get paid on set dates, which aligns nicely with recurring expenses, such as rent and bills.
- Payment is less frequent than weekly or biweekly payroll, reducing the administrative burden.
- Calculating taxes and deductions is easier when using consistent dates each month (usually the 15th and last day of the month).
Cons:
- Pay periods are not always the same length, which can complicate payroll processing.
- Employees might find it harder to budget daily expenses due to varying payroll period lengths.
- Time tracking and overtime calculations can be more complex due to the non-standard periods—especially without a user-friendly payroll software system.
Employees with regular monthly expenses and businesses seeking consistent pay dates gain the most from a semimonthly pay schedule.
Pros and cons of a monthly pay schedule
Pros:
- Less frequent payroll processing cycles reduce administrative costs and workload.
- Employers can more easily manage cash flow and financial planning.
Cons:
- Employees must budget each month carefully, as they receive only one paycheck.
- Employees may have to wait longer for overtime payments.
A monthly pay schedule suits budget-conscious employees and employers managing steady cash flow.
Pay period FAQs
What’s the difference between pay periods and pay dates?
Pay periods are the recurring timeframe during which an employee’s work hours are tracked and paid out. Conversely, pay dates are the specific days when employees receive their paychecks and payslips. For example, if you have a semimonthly pay period, your pay dates may be the 15th and the final day of each month.
How can I manage pay periods for employees in other countries?
Managing pay periods for a global workforce can be complicated because of differing regulations and tax laws. Using a global compensation tool streamlines payments to international employees, ensuring compliance and consistency across different regions.
A comprehensive solution like Oyster’s global payroll handles international payment easily. It streamlines payroll processes across different regions so you can focus on essential work tasks and keep your team happy.
Can pay periods be adjusted? Are there any associated legal implications?
Yes, pay periods can fluctuate, but you must account for legal implications. In the U.S., changes must comply with the FLSA, but laws vary globally. Tell your team about any change well in advance, as adjustments can disrupt their financial plans.
How do you calculate the number of pay periods in a year?
The number of annual pay periods depends on the frequency of your pay schedule:
- Weekly: 52 pay periods (53 in some years)
- Biweekly: 26 pay periods (27 in some years)
- Semimonthly: 24 pay periods
- Monthly: 12 pay periods
Is weekly pay better?
The appeal of weekly pay depends on your specific needs and circumstances.
The best pay schedule balances the needs of both employees and the organization. For employees, weekly pay provides more frequent access to funds, which can be helpful for budgeting purposes. For employers, it means more frequent payroll processing, which can increase administrative costs.
How are overtime calculations affected by different pay periods?
Overtime calculations depend on the pay period. Usually, overtime is calculated weekly for weekly pay periods, making it straightforward to manage.
Overtime calculations can become more complicated for biweekly, semimonthly, and monthly pay periods. Employers must follow local labor laws regarding overtime pay.
Let Oyster help streamline your payroll calendar
Ready to optimize your payroll strategy? The next step is implementing a comprehensive payroll solution like Oyster’s global employment platform.
Payroll and workforce management should be seamless, regardless of your team’s location. Oyster’s user-friendly platform and expert support ensure you’re covering all the bases. It’s the all-in-one solution for dependable and effective global payroll management.
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About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.