Pay periods are a crucial aspect of payroll management. Companies have several different options to decide how often to pay their employees. The decision often lies at the end of the human resource professionals but it affects every person in the organization.
Whether you are concerned about the breakdown of your pay or are in charge of this aspect of your company, understanding different types of pay periods can help you make the right choices and the following calculations.
Here are the most common types of pay periods that can help you ensure compliance with the labour laws and regulation and best advantages.
Weekly
As the name suggests, the weekly period ensures that all employees are paid at least once a week. It is usually the same day of the week to ensure that all employees get 52 paychecks every year. This system can work seamlessly in small organisations where overtime is a common option for employees.
A weekly pay period is liked by employees and management alike, especially in bigger organizations where overtime and bonuses may be a regular thing. This pay period takes the load off the human resource department and also lets the employees feel satisfied.
Biweekly
According to SoFI, a biweekly pay period means that companies will pay their employees once every two weeks. This leads to employees getting about 26-27 paychecks every year. Looking at the popularity of this payment style, you must learn how to calculate monthly income from biweekly paycheck.
Biweekly paychecks make budgeting easier for the employees and improve satisfaction rates. This system works the most efficiently in organizations that hire employees on a per-hour basis. It also takes less effort from the human resource department as they will need to put effort every other week.
Semimonthly
The semimonthly pay period gives companies the right to pay their employees only twice a month on the same day, such as the 1st and 16th of every month. This option is best suited for organizations with salaried employees instead of employees by hour.
Even the employees appreciate this payment option because they are happy with being paid on a regular basis in the form of two neatly divided checks every month. They can budget better and track their expenses, keeping the next payday in mind.
Monthly
Organizations with salaried employees want to ensure a consistent flow of paychecks instead of making it a bumpy ride for themselves or the employees. These employees usually work the same number of hours every day; hence, salary calculations are not that challenging for the human resource person.
According to the monthly pay period, employees are paid on the 30th of every month, meaning they will receive 12 paychecks a year.
This pay period is the only one that requires only 12 paychecks every year. In addition, human resources also find it easier to manage deductions and create end-of-month reports. Employees and employers are both satisfied with this because it ensures consistency and mental peace.
Fixed Length
A fixed length pay period allows employers to pay their employees by the period instead of on a specific date in the calendar. Since the period can be defined in different ways, there is no definite way of saying how many checks a person involved in this system receives every year.
This pay period works effectively for organizations that work with employees with unique schedules in comparison to normal employees. It keeps the employees striving for more. The fixed length pay period makes it easier to calculate the salaries of such employees without leaving anything to doubt.
