Biweekly Pay

Instead of having a monthly, semi-monthly, or weekly pay period, many organisations opt for biweekly pay because of its benefits for both the employer and employees. 

What is Biweekly Pay? 

Biweekly pay means employees get paid for their work (including overtime) on a specific day every two weeks, for example, every other Friday. As there are 52 weeks in a year, a biweekly payroll results in 26 paychecks annually. In most months, employees are paid twice a month, but there are two months in the year when they receive three paychecks. 

According to reports, bi-weekly payroll is the most common payment scheme. It is also the most common in the following industries:

• Information
• Education and healthcare
• Recreation and Hospitality 

How Does Biweekly Pay Work?

If you work hourly, you’ll be paid for the hours you worked in the 2-week pay period before your payday. 

• For example, an employee earning £2,000 for 2 work weeks equivalent to 80 hours has a rate of £25 an hour, since 80*25=2000. 

If you are salaried, you can take your annual salary and divide it by 26 (the number of biweekly periods in a year). 

• An employee earning £60,000 yearly will receive around £2,308 every pay period, since 60,000/26=2,308. 

Of course, to determine your take-home pay, you must subtract contributions and taxes from your paycheck for each pay period accordingly. 

Biweekly vs Semi-Monthly

It’s easy to confuse biweekly pay with semi-monthly payments, but these two are different. 

Where a bi-weekly payroll pays employees on the same day every two weeks (ie. every other Friday), a semi-monthly payment means employees are paid twice every month on the same dates (ie, 13th and 28th). 

Where biweekly pay sometimes has three pay periods in a month resulting in 26 paychecks annually, a semi-monthly pay consistently has two pay periods monthly, resulting in 24 paychecks annually. 

Benefits of Biweekly Pay For Employees And Employers

Below are the primary advantages of the biweekly pay scheme:

• Receiving their pay on the same day every two weeks can help employees better manage their finances, compared to semi-monthly where their payday varies. 
• Employees can also readily decide on what to do with their overtime pay since they receive it in their paychecks right away. 
• Having less time between paychecks can make employees happier compared to being paid only once a month.  
• As there are fewer entries between cycles, there is less room for errors and less work for the HR and finance departments. 

Disadvantages of Biweekly Pay For Employees And Employers

• Employees used to a weekly pay period may find it difficult to adjust to biweekly pay. 
• There’s still some level of unpredictability considering some months have three paychecks. 
• Bookkeeping can be a bit of a challenge in months where there are three paychecks, particularly in calculating the taxes and other deductions. 
• Depending on the platform or system used to pay, employers may incur charges twice or thrice monthly. 

What Determines Your Pay Scheme

As an employer, you need to consider various factors to determine your pay scheme. These include your company size, the capacity of your HR and finance departments, whether your employees are working hourly or salaried, your overtime policy, and the cost structure of payroll. 

The benefits and disadvantages of a certain payment scheme must also be taken into account. For example, if all or most of your employees work by the hour, you may want to opt for a biweekly payment scheme because it’s easier to divide hours in the week than monthly. However, if you have a small HR and finance department, you may opt for a monthly payroll - that way, the department only has to work out payments once every month instead of 2 or 3 times.