Biweekly and bimonthly payroll schedules impact paycheck frequency, financial planning, and overtime calculations. Choosing the right schedule depends on company needs, industry norms, and legal requirements.
By Brad Nakase, Attorney
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There’s no need to feel bad if you’ve ever used “bi-weekly” and “bi-monthly” to mean the same thing: about twice every month, right? You may be surprised to hear that these words really indicate two distinct pay rates. And that moving from one to the other might be the key to making your payroll management run more smoothly and saving time on the tedious duties that come with it?
This article will compare and contrast bi-weekly and bi-monthly payroll in detail, including topics such as the effects on employees, the sectors that work well with each schedule, and how to pick the option best-suited to your company.
Employees will get their paychecks on the same day every other week if your company uses a bi-weekly payroll system. As a result, your employees will get their paychecks every two weeks and you will receive twenty-six pay runs annually. This translates to two payments per month for most of the year, but three paychecks per month for some workers.
As an example, Luke earns a total of $91,000 each year in his role as Vice President at Sunshine Corp. The payroll cycle at Sunshine Corp. is biweekly. Alex got three paychecks in August of 2024, with amounts of $3,500 in each. The dates were 2nd, 16th, and 30th.
Employees often find it easier to manage their own finances with a bi-weekly paycheck schedule. Paychecks are a reliable source of income for employees, and having them more frequently can help them weather financial crises.
Using a bi-weekly schedule to compute pay and overtime could be easier for organizations with a lot of hourly employees. Payroll that occurs every two weeks will always cover a total of two work weeks, or 80 hours. All you have to do to calculate your hourly workers’ compensation is multiply the fixed rate by eighty. Calculations of overtime for non-exempt workers follow the same reasoning.
In most countries, the calculation for overtime compensation is somewhat more complicated beyond a specific number of hours per day, but in most circumstances, all you have to do is subtract eighty from the total worked hours to get their overtime hours.
Employees on a bi-monthly pay plan (also known as a “semi-monthly” schedule) get their paychecks on two certain days every month, usually the 15th or the 30th, or both. That equates to two paychecks each month and twenty-four pay runs every year, irrespective of the exact number of weeks in any one month.
As an example, Keira earns a total of $91,000 a year from Smile, Inc. in her role as Senior Manager. There is a bimonthly payroll plan in place at Smile, Inc. On August 1st and August 16th, 2024, Keira got two paychecks worth $3,791.
With proper employer communication on policies and procedures, employees can experience the same level of predictability with a bi-monthly payroll schedule as with a bi-weekly schedule, even if a payday comes on the weekend or a bank holiday.
Companies with a large number of salaried workers may discover that a bimonthly schedule is more manageable, since it simplifies processes like payroll withholding and expenditure reconciliation. Additionally, in order to ease compliance and reporting, several jurisdictions mandate that companies deliver payroll on a bi-monthly basis.
When deciding between biweekly and bimonthly, think about your company’s needs.
It may seem that a certain pay schedule would be more suited to a given industry’s personnel than another.
Hourly workers in the retail and hospitality industries, for instance, factor overtime into their personal budgets to a significant extent. Workers benefit from more regular and predictable payments while companies benefit from simplified overtime calculations with a biweekly pay schedule.
A biweekly pay schedule simplifies withholdings in industries like technology or finance, where the majority of employees receive full benefits and are paid a salary.
Keep in mind that a certain payment frequency may be required by law in some areas. Some states in the US mandate bimonthly pay periods to align with state tax filings, however this is not the case nationwide. On a global level, nations like Germany, Canada, and France all require monthly payments, while some contracts, such those involving employment or unions, may stipulate bi-monthly or bi-weekly pay periods.
Different organizations have different ways of doing things, and strategies that work for one might not be appropriate for another due to factors like culture, size, and industry. In the absence of a state-mandated pay schedule, the following considerations might assist you in determining the most beneficial pay frequency for your workers and your company.
1. Paycheck stability and employee happiness
Regardless of the payment plan you pick, it is important to be clear and communicate well around paydays to avoid uncertainty and inconsistency, which can lower employee morale. Know the ins and outs of each pay plan and be transparent with your employees about when they might expect to get their paychecks.
2. Planning and controlling financial resources
Businesses who use a bi-weekly payroll model may need to prepare ahead of time to make sure they have enough money to pay their vendors and employees when the months are longer and there are three pay cycles.
Alternatively, a bi-monthly payroll schedule is better in line with the typical billing cycles, which also apply to employee benefits. It may be easier to calculate withholding if you pay your salaried personnel twice a month.
3. Guaranteeing adherence to payroll rules
You must adhere to federal and state rules, including the Fair Labor Standards Act (FLSA), which governs working hours, minimum wages, and overtime compensation, regardless of the payroll schedule you choose to use. You could discover that one method provides greater clarity or lessens your administrative load more than the other, depending on the makeup of your team.
Make sure your chosen pay plan conforms with local legislation because some states additionally need specified pay intervals. Iowa offers employers the option to choose between weekly, bi-monthly, bi-weekly, and monthly pay schedules, in contrast to Arizona’s solely bi-monthly pay plan.
4. Streamlining the payroll process
Think about accuracy and time when you consider payroll efficiency. Is the number of hourly workers rather high? Are mistakes in calculating overtime more or less frequent under your present pay schedule? Is there sufficient time for your HR staff to go through payroll paperwork and follow procedures? On the other hand, would they be better off with fewer pay cycles, which would give them more time to get approved?
Get a feel for the benefits and drawbacks of each payroll scheduling option before you commit to one. There may be obvious benefits to using one over the other, depending on your sector, the size of your firm, and where you’re located.
1. Streamlined payroll processes
A bi-monthly payroll system can free up more time for your HR staff by reducing the number of pay cycles compared to a bi-weekly schedule. The payroll administrator may have more time to double-check documents and reports if fewer pay runs are necessary.
2. Simplified process for determining benefit deductions
A bi-monthly payroll schedule is more suitable for benefit billing, such as retirement and healthcare contributions, which usually operate on monthly cycles.
Instead of spreading out the cost of benefits across 26 separate pay periods, you may just divide the cost by two and take the money out of each employee’s bi-monthly salary.
1. Increased frequency of employee paychecks
There are 26 pay periods in a year with a bi-weekly payroll schedule, which is two more than with a bi-monthly arrangement. If a month has five weeks, for example, your employees will get three paychecks.
2. Efficiently calculating overtime
A bi-weekly payroll system streamlines overtime computations by standardizing the quantity of working hours per pay period. The two-week pay cycle does not change during the year.
1. Paycheck delays caused by holidays and weekends
One major negative of bimonthly pay schedules? Workers may have to wait longer than expected to get their wages if paydays are on holidays or weekends. Despite employers’ best efforts to communicate and clarify payment regulations, employees may still have difficulty with personal budgeting and financial planning in some scenarios.
2. Difficulty in managing overtime
Accurately calculating overtime for hourly employees can be a challenge due to the fact that bi-monthly pay schedules don’t always line up with workweeks.
1. More time needed to process payroll
Particularly for smaller companies or those running with smaller teams, the two extra pay cycles on a bi-weekly schedule could be an extra administrative headache. There is a higher probability of mistakes with more frequent processing, especially when handling payroll manually instead of automating it with software.
2. Difficulty in managing funds during the three-paycheck period
People who work for you may appreciate those 3-paycheck months, but they can be hard for managers to manage their cash flow and budgets. In months with an additional pay period, firms employing this method must prepare ahead of time and set aside enough funds to cover payroll and other responsibilities.
1. Why do businesses like biweekly payments?
Because bi-weekly compensation might make it easier to calculate overtime and pay for hourly workers, some businesses prefer it. Some companies may also choose this pay plan so that workers get their paychecks more regularly.
2. What is the number of hours in a bi-monthly pay period?
A bi-monthly pay period usually consists of about 87 working hours, however this might vary based on when you pay your staff. (40 hours worked a week x 52 weeks in a year / 24 pay cycles) — Nevertheless, the exact amount of hours may vary depending on the state’s regulations regarding overtime or the organization’s unique schedule and shifts.
3. Which payroll frequency works best?
Finding a payroll frequency that both satisfies your employees’ needs for predictability and eases the workload of your human resources department is ideal. A biweekly payment schedule might be the best choice for a company that pays its employees by the hour. Bimonthly may be the better option for companies that mostly pay their employees a salary and have extra payroll reporting needs.
4. Can you explain how semi-monthly pay works?
As part of a semi-monthly or bi-monthly pay plan, employees will get their paychecks on two days of the month. Organizations typically choose dates that align with billing cycles, such as the first and the fifteenth or the fifteenth and the thirtieth. In the event that the planned payday occurs on a weekend or a bank holiday, paychecks will normally be issued on the next closest working day.
5. What are the pay periods if you receive your paycheck on the 15th and 30th?
If your paycheck is due twice a month, on the 15th and the 30th, your pay periods will most likely be from the 1st to the 15th and from the 16th to the 30th, respectively. In other words, you are paid on the 15th for work completed between the 1st and the 15th of the month, and again on the 30th for work completed between the 16th and the 30th.
6. In a year, how many biweekly pay periods are there?
A calendar year consists of 26 biweekly pay periods.
7. In a year, how many semi-monthly pay periods are there?
A calendar year consists of 24 biweekly pay periods.
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