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    SemiMonthly Vs Biweekly Payment Schedules

    payment schedules

    SemiMonthly Vs Biweekly Payment Schedules

    April 1, 2022

    There's always a tug of war between what suits the bottom line best and what will best suit your employees. Sometimes you go one way and satisfy the employees and other times you have to do something that will frustrate them.

    Payroll scheduling is one of those situations where you have to debate weigh the pros and cons. You could go for a biweekly payment schedule or semimonthly. But how do you decide between the two?

    Let's read on to see the advantages of both sides, so you can make the best decision for your business




    SemiMonthly Payment Schedule

    In a semi-monthly pay schedule, your employees get paid twice a month. You can choose between paying them on the 1st and 15th, or the 15th and the last day of the month. That last day of the month could be the 30th, 31st, or 28th (29th on leap years). 

    With a semi-monthly payment schedule, your employees will receive 24 paychecks in the year. Interestingly enough, if you pay your employees hourly or by the day, then some of the paychecks will be bigger than the others.

    For example, paychecks in February will only cover 13 or 14 days, so they will be smaller. Most other paychecks will cover 15 or 16 days. Of course, if your employee is salaried or has an annual salary, you can divide their pay equally between the 24 payments, so they get the same payment every single time. 

    Advantages

    Some solid advantages of this payment schedule are listed below. Let's take a look.

    Easier for Employees to Budget

    Semi-monthly payments come on the same dates every single month. That makes it so both your payroll department and your employees can plan their lives much better. 

    HR processes can be streamlined as pay dates are the same every single month. Your payroll team can plan their work schedule around it. And your employees know that they get paid on the same dates every month, so they can budget their household and other expenses around these dates.

    Cost-Effective

    You only have to run payroll twice a month (instead of three times two months out of the year), which means that you will save money on payroll processing fees.

    Easier to Calculate Deductions

    Since your payroll team knows there are exactly 24 payments in the year, they can divide up the deductions among these payments quite satisfactorily. This means that the deductions are the same every month since there are only two paychecks a month (never three). 

    Bi-weekly Payment Schedule

    This is the most common payment schedule in the United States. In the bi-weekly payment schedule, employees are paid every two weeks. 

    This means that the payment dates are not consistent every month. They will change from month to month. 

    Also, this means that your employees will get 2 EXTRA paychecks every year, that is, 26 paychecks a year. In two months of the year, the employees will get three payments, instead of two.

    If your employees are salaried, then their paychecks amounts will remain the same every single time.

    But if your employees are paid hourly, then their paychecks will reflect the number of hours they worked those weeks and could differ from pay period to pay period.

    Advantages

    There are also advantages to using a biweekly payment schedule in your business. Let's see what they are.

    Comes on the Same Day (Not Date)

    The main advantage of a bi-weekly pay schedule for your payroll team is that they have a lot more predictability in their schedule, since the day of the week that the payment schedule falls on, remains the same every time. 

    In a semi-monthly payment schedule, the day is always different, even though it falls on the same dates every month.

    Overtime Pay Is Never Split

    If your employees are paid overtime, then you will appreciate having a bi-weekly payment schedule, as overtime shifts will never be split over two pay cycles. It makes it much easier to calculate overtime pay. Your payroll team will save much time on this.

    Extra Paychecks

    Of course, this is the main advantage for employees when it comes to biweekly pay schedules. Who wouldn't want two extra paycheques in the year? 

    A lot of employees end up putting these extra paycheques into savings, investments, or even into their mortgages because it's kind of a bonus. Or they can use it to pay for Christmas shopping or a vacation.

    Maybe you don't consider this a huge advantage, but it can be a big boost to your employee morale and something you can use to your advantage. 

    Semi-monthly vs. Biweekly Pay Schedule

    With this, you are ready to decide between the two kinds of payment schedules for your business. Every business is going to be different in this regard. 

    You will have to consider all the advantages mentioned above, and then have a serious conversation with your HR team to see what they prefer. Also, have a look around your industry to see what most businesses are leaning towards. 

    Every side will have a preference one way or another, but in the end, you have to use the strategy that works best for your business's bottom line.

    Get Some Help!

    If you would like to discuss the differences between a semi-monthly and bi-weekly payment schedule and how to switch from one to the other, Ignite HCM is a great option. We've payroll experts and work with businesses of all sizes, and industries.

    Contact us today

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