What are Pay Periods?
A pay period is essentially the amount of time in between paychecks. As an employee, you work for a certain amount of hours per week, month, and year, and the pay period will determine what allotted amount of time determines your pay.
For example, if your employer runs on a semi monthly pay period, that would mean that you’re paid twice per month or bi-weekly. So, you would work two weeks and then be compensated for the two weeks of completed work.
You should remember that the workweek is different from the pay period. Every employer will have different rules as to how they handle this but the federally-mandated 168 hours during the week is fair game. The employer will then determine when that work week begins and ends. For many companies, it begins on Monday and ends on Friday with the weekend counting as overtime.
Types of Pay Periods
Daily
Some businesses of the modern world can actually pay you daily through instant pay or instant wage access. There are apps that allow employees to access their money as soon as they make it. This makes things easier for the payroll team and also allows employees to access their funds immediately which can improve morale.
The downside is that daily pay can be difficult to manage as both an employer and employee. We get used to receiving a large chunk of money all at once and dispersing it across a period of time to prevent us from spending it all at once. This can be more difficult when you always have small amounts of money available to you.
Weekly
Bi-Weekly/Bi-Monthly Pay
Roughly 43 percent of private businesses pay their employees bi-weekly and most businesses that use the other pay periods generally switch to this after a certain period of growth. This is especially true for larger businesses because it’s best for the employee and it leaves the least amount of red tape to cut through for the employer.
Bi-weekly pay is consistent, employees know what to expect, and it also makes it easier to calculate with holiday and sick pay. The bookkeeping process will certainly be a bit more daunting because you’ll need to keep accurate records but you won’t have to process payroll every week.
