What is a Pay Period? How are Pay Periods Determined?

Updated: September 2, 2022 - By Mark Mathews and Alyssa Goulet

Pay Period Type

What is a pay period?

What is a pay period? And why does it matter? Payroll impacts businesses and their employees alike. It shapes every financial aspect of the company, from cash flow prediction to expense reporting. That’s why it’s important to understand pay periods and how to choose the right one for you.

So what is a pay period, anyway?

A pay period is a recurring schedule that determines how often you’ll pay employees. Having a simple, predictable process ensures workers receive pay for their labor on a regular basis. It also simplifies monthly reporting requirements for expense accruals, tax deposits, and insurances.

Types of pay periods

Each pay period type has its advantages and disadvantages, especially when thinking about how to set up pay periods to work with pay dates.

In this article, we’ll cover the four most common types of pay periods: 

Weekly pay period

Bi-weekly pay period

Semi-monthly pay period

Monthly pay period

 

What Is a Weekly Pay Period?

A weekly pay period consists of seven days. For a full-time employee, each pay period generally consists of a 40-hour work week. State overtime rules vary based on your place of business.

Weekly is the preferred pay period cycle for most hourly workers. It makes cash flow and budgeting easier. From a payroll perspective, this is the most expensive to process because there are 52 payroll cycles in the year. Payroll processing fees add up.

Advantages

  • Employee gets paid very often (52 pay periods)
  • Budgeting and cashflow are simplified
  • Payday generally occurs on a Friday, 4-5 days after the period has been closed out.

Disadvantages

  • Payroll processing fees are generally higher due to more frequent payroll cycles
  • Employer accrual expense reporting happens more often
  • Pay periods can often extend into the next month

 

Bi-Weekly pay period explained

A bi-weekly schedule consists of 26 pay periods in a year. Each pay cycle generally consists of 80 hours for a full-time employee. This can vary for any other hourly employees.

Like the weekly pay period, a bi-weekly pay period will always begin and end on a specific day of the week, usually Friday. The employer will generally deliver payroll checks to the employee on the following Friday. Bi-weekly is common for both salaried employees and hourly workers.

Advantages

  • Employees get paid often (26 pay periods)
  • The payroll department has more time to review timecards
  • Payday generally occurs on a Friday, 4-5 days after the period closes

Disadvantages

  • Payroll processing fees are still higher than other less frequent payroll options
  • New employees may need to adjust to longer pay periods
  • Complicates bookkeeping when compared to weekly

 

Semi-Monthly pay period explained

A semi-monthly schedule has 24 pay periods in a year. Each month will always have two work periods. Generally, a company may have a pay period that runs from the 1st-15th and the second pay period from the 16th-last day of the month.

Since this pay cycle doesn’t always end on the same day of the week, it can create challenges. Employees get paid on the next possible business day after the work period ends.

Advantages

  • Employees get paid often (24 pay cycles)
  • Hours worked will always remain in the month for that work period
  • Simplifies employer accrual expense reporting requirements by reducing frequency

Disadvantages

  • May not be allowed under your jurisdiction
  • Can confuse employees
  • The pay period often ends on a different day of the week

 

 

Monthly pay period explained

A monthly pay period consists of 12 pay periods per year. Each month will represent the total hours for that month. This is the least costly from a payroll perspective. However, it can be challenging for employees to only get paid once a month and budget accordingly. Many consultants or freelance professionals use this method.

Advantages

  • Great for freelance business owners or contract employees
  • Simplifies accounting
  • Decreases processing time 

Disadvantages

  • Payroll processing fees are low due to less infrequent payroll cycles
  • Cash flow prediction can be more challenging
  • Some vendors or contractors may take issue with this payment schedule 

 

What type of pay period should I use?

It’s not easy to decide what the best pay period for your type of business is. This depends on if your employees are hourly or salaried, the kind of business you operate, and who handles your payroll. Our advice is to check with your accountant or CPA and see what they think is best for you. 

How often do companies perform payroll?

 

What is the most common pay period type?

We surveyed employers who actively use OnTheClock, and the results are in! These are the most common pay period types:

  • 44% of our customer base uses a weekly pay period
  • 38% of our customer base uses a bi-weekly pay period
  • 13% of our customer base uses a semi-monthly pay period
  • 5% of our customer base uses a monthly pay period

Based on our data, most employers believe more frequent pay periods are the best option.

Take the Stress Out of the Payroll

No matter what type of pay period you choose, the entire process is easier when you streamline time tracking. Learn more about what OnTheClock can do for your business and try it for free.

a thought From Daff on 9/19/2021 ...
If you have an employee that works 25 hours a week Mon-Fri 9-5 and gets paid on the 1st and the 15th . it seems like she is getting paid more for 5 weeks in almost every month verses counting every 14 days .I know some months have an extra day. Can this be explained to me better. r
reply from OTC - Hello Daff. Thanks for the question. Usually, an employee will see more on their paycheck for the extra day if the month is 31 days and if that extra day falls on a working day. It equates to be the same pay in a year and the employee is not being overpaid. We hope this information helps.
a thought From Bryan Echavarria on 8/16/2020 ...
Hi so my pay cycle is vi weekly and work starts on Monday, when can I expect my paycheck
reply from OTC - Hey Bryan! Great question! This would depend when your pay period and pay dates are set by your employer. Please reference our article How to Set Up Pay Periods to Work With Pay Dates. This can help you identify your pay date a little better. You can also download our OnTheClock app to use on your mobile device to setup your pay period to better help track your pay dates. We also recommend reaching out to your manager or HR department for further details. Have a great day.
a thought From Latoya on 8/11/2020 ...
If a pay period starts on a Sunday and ends on Saturday, when is pay day? Wednesday or Friday?
reply from OTC - Hello Latoya and thanks for the question regarding your pay period. Each company has their own pay period dates. Please reference our blog How to Set Up Pay Periods to Work With Pay Dates to gain a further understanding of your situation. We hope this helps.
a thought From Hauiti on 7/15/2020 ...
When I asked my employer when is payday I got this reply “ Part timers payroll cycle is 16 of the previous month to 15 of the current month. So for this cycle, your pay will be in next month end, whereby the cycle is from 16/06-15/07 “ does this mean I get paid on the 15th or they account for the hours worked between the dates and pay me at the end of the month?
reply from OTC - Hello Hauiti. Here is a great resource we created that will help your situation. Please look into our blog How to Set Up Pay Periods to Work With Pay Dates. This will provide you with a visual and a better understanding about how pay dates and pay periods are designed. We hope you find this information helpful.
a thought From SUE KHU on 6/12/2020 ...
How does work the semi-monthly with 4/10 work
reply from OTC - Hello Sue and thank you for the great question. To provide you a visual and a better understanding regarding an answer to your question, please check out our article How to Set Up Pay Periods to Work With Pay Dates. We hope this helps.
a thought From Shellie on 5/21/2020 ...
Hi! I'm new to the payroll system. We have empoyees that started work on 5/2/2020 and payday is biweekly on Friday's which will be 5/22/2020. Are they paid for one week or two
reply from OTC - Hello Shellie, thanks for the question. It appears that your employees would be for two weeks. For further information, please read our article on How to Set Up Pay Periods to Work With Pay Dates. This will provide great value to help with your bi-weekly payroll needs.
a thought From Denise Messenger on 3/25/2020 ...
My employer is changing the cut off date for bi weekly paychecks from a Friday to the Wednesday before. This will make my next paycheck be for only 8 days of work instead of ten. What happens to the other two days in the 10 day pay period? Does that ever get made up for me?
reply from OTC - Hi Denise and thank you for reaching out. If your employer is changing their pay date, then your remaining time should be added onto your following paycheck. We recommend tracking your hours worked for each day and seeing if they mirror your paycheck. You can signup for a free individual time tracking account with our time clock services to assist you with this. We hope this information is helpful.
a thought From Krys on 2/14/2020 ...
Really great article! I just started a job and I’m accustomed to semimonthly pay but my first full paycheck I was only compensated for 80 hours. I thought it’s suppose to always be @ 86.67. Is it because it’s February and there’s not not 20 working days this month?
reply from OTC - Hi Krys, thank you for reaching out. You may need to check with your payroll department for this situation. There is a possibility for an error or mistake. Perhaps it has something to do with you being a newly hired employee. We hope this helps. If you wouldn't mind commenting back once you speak with your payroll department to inform us on what the situation is, that would be great. Have a nice day.
a thought From Amanda on 1/2/2020 ...
So I would normally get paid on Thursday around 10 am every week. Now the first of the year was Tuesday. Will my pay b a day late
reply from OTC - Hello Amanda, thank you for the question. It depends on how your employer processes payroll, but generally your pay date would stay the same, especially if you have electronic deposit. We hope this provides you with some help. Have a great day.
a thought From Ronald Jones on 11/21/2019 ...
If I started work on the 1st and I’m payed semi monthly and the pay period ends on the 14th how am I getting payed on the 26th if semi monthly dates are the 10th and the 26th of each month
reply from OTC - Hi Ronald, great question. We think the best way for you to understand your situation better is by reading our blog How to Set Up Pay Periods to Work With Pay Dates. This blog gives great details on similar situations that you are in right now. We hope this helps.
a thought From Faith on 11/17/2019 ...
Howdy ,quick question. I am casual and I get paid weekly on a Friday. My question.is he their a certain time they should pay us on Friday's? I'm just getting really frustrated waiting until 11pm sometimes at night or sometimes not until Saturday. My boss gets really mad if we text asking when our pay will go in but I'm a single mum with two boys so come pay day I'm.needing my pay and also have money in there for direct debts
reply from OTC - Hello Faith, thank you for the question. Each company has their own way and system in place on how they operate their pay period. Unfortunately employees are left in confusion at times. Perhaps recommending your boss to implement our time clock system will improve his payroll operations by the convenience we offer for small businesses. Sorry we cannot provide additional feedback, but we do hope our information is helpful. Have a great day.
a thought From Tim on 8/18/2019 ...
My employer starts it's pay period at midnight on Saturday. I work night on a rotating schedule. I start my shift at 11:00pm. Due to the pay period ending at midnight on Saturday there are many times that I'm working overtime and then at midnight it switches to straight time. This does not affect first or second shift employees. Can my employer legally end the pay period in the middle of my shift? Or does it have to end at the end of my shift? I have never encountered anything like this anywhere I have worked in the past. The pay perid always ended at the end of my shift.
reply from OTC - Hi Tim, this is a somewhat tricky subject. Many employers practice this type of pay period that you are experiencing. We are not legal experts regarding this and laws very from state to state, but we can say that this seems to be a common pay period for companies. We hope this information helps. Thank you for reaching out.
a thought From Ewald on 7/17/2019 ...
When a business prepares payroll checks, in this case monthly cheques paid on last day of month, what is customary in order to allow time to prepare checks? E.G. Does one estimate the hours being worked in the last 2 or 3 days of the month, in order to cut a check on the last day of the month, or does one pick a cut off day 2 or 3 days before the end of month and pay from cut off date to cut off date?
reply from OTC - Hi, Generally preparation for payroll is started AFTER the pay period has ended and been approved. Typically you will never want to estimate hours for payroll, as this brings with it the possibility of other troubles such as miscalculated overtime, PTO overlaps, and paybacks for mis-estimated hours. We recommend your later suggestion of shifting your pay period to start on the 26th or each month and end on the 25th. This gives you 3-6 days(depending on the month) to prepare payroll. Please let us know if this helps!
a thought From Jess on 6/26/2019 ...
when getting paid semi monthly , how many working days are we supposed to be getting paid for ? 10 or 14 days? I dont think im getting paid for all the days that I am supposed to.
reply from OTC - Hello Jess, thanks for reaching out. Typically when an employee is being paid semi-monthly, he or she will usually collect 24 payments within a year (12 months). For more information and details regarding this, please reference our article How to Set Up Pay Periods to Work With Pay Dates. We hope this helps :) https://www.ontheclock.com/Blog/How-to-Set-Up-Pay-Periods-to-Work-With-Pay-Dates.aspx
a thought From Frederick on 4/10/2019 ...
I get paid every two weeks. Last pay period I worked 114 hours and I only got 18 hours over time is that right ? Thank you.red
reply from OTC - Hi Frederick, This all depends on the state in which you live in. Usually overtime is paid after 40 hours are worked in a single workweek and reset for the following workweek. For example, if an employee who is entitled to overtime pay worked 45 hours during a single workweek, then he or she would receive 40 hours of regular pay and 5 hours of overtime pay for the week. Please reference this article on how the Department of Labor describes a workweek: https://www.ontheclock.com/Blog/What-Is-a-Workweek-and-How-The-DOL-Describes-It.aspx
a thought From Ky on 3/7/2019 ...
This will be my first job so I'm curious about this. The job that will be interviewing me pays weekly every friday. Does that mean when I get hired I'll be paid next week?
reply from OTC - Hello Ky, Great question! In your situation of being paid weekly, usually the employee's pay is delayed by a week. For example: if the pay period was from March 4th through March 10th, then you would expect to be paid on March 15th. This may not be how the company does their payroll, but is a very common example. Here is an article that explains in more detail: https://www.ontheclock.com/Blog/How-to-Set-Up-Pay-Periods-to-Work-With-Pay-Dates.aspx
a thought From TELK on 1/7/2019 ...
If a pay period starts in one year but ends, and ultimately pays out, in another year; eg Dec 24th 2018 Dec 30th 2018; does the first weeks pay count towards the second year's taxes or the year it was worked in? Does it matter the year the date the the money was actually paid? Is it possible for you to give me a link to reference for this specific question (Via NYS or federal) ?
reply from OTC - Hello Telk, Thank you for the question. As we told Justin in a previous comment, it is our understanding that this particular situation would fall under your 2019 taxes since the wages would be paid and collected in 2019, although some of the work was performed in 2018. We recommend checking with your accountant and/or employer for further details, but we hopes this helps.
a thought From Justin on 12/30/2018 ...
If a pay period starts in one year but ends, and ultimately pays out, in another year; eg Dec 24th-Jan 6; does the first weeks pay count towards the second year's taxes or the year it was worked in?
reply from OTC - Hello Justin, Thank you for the question. It is our understanding that this particular situation would fall under your 2019 taxes since the wages would be paid and collected in 2019, although some of the work was performed in 2018. We recommend checking with your accountant for further details, but we hopes this helps. Have a great day, -OTC Team
a thought From Carol on 11/15/2018 ...
I have a question. This is for a weekly paid employee. If the company you are working for changes the vacation scheme from paying you your 8% when you take vacation to giving the 8% vacation pay on every pay cheque, are you going to have less vacation pay in the end. Or is it the same.
reply from OTC - This would depend on how many vacation days you take, also we would need a bit more info to calculate this. Can you explain what the 8% vacation pay consists of? Give a real world example

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