Understanding Bi-Weekly Payroll: A Guide For HR Professionals
When it comes to payroll cadence, bi-weekly payroll is a popular choice among businesses. It offers some important benefits for scheduling and structure of pay and is one of the easiest ways to calculate payroll.
In this article, we’ll dig into some of the benefits of bi-weekly payroll as well as best practices.
What Is Bi-Weekly Payroll?
Bi-weekly payroll refers to the process of paying employees every two weeks, typically resulting in 26 pay periods per year.
This system contrasts with other payroll schedules, such as weekly, semi-monthly, or monthly. The bi-weekly approach has a rich history and is widely adopted across various industries due to its balance of frequency and manageability.
According to the Department of Labor, the three most common industries which use bi-weekly pay are information services and technology, leisure and hospitality and education and health services.
Difference between bi-weekly and semi-monthly pay
Bi-weekly, as mentioned before, means that employees are paid every two weeks. This can happen on a day of the week of the companies choosing. It’s possible that employees can be paid three times in a month depending on when the how early in a month the first pay day occurs.
Semi-monthly pay simply means twice per month. This sort of pay usually occurs on the first and the fifteenth of each month, meaning pay periods may vary in length depending on the month.
What Is Bi-Weekly Payroll Used For?
Primarily, bi-weekly payroll is used to streamline the process of managing employee salaries and wages.
It plays a vital role in ensuring compliance with labor laws and tax regulations while also aiding in employee satisfaction and financial planning.
Regular and predictable paychecks help employees manage their finances more effectively. For this reason, it's one of the more popular choices for a payroll cadence, even if the business has just one employee.
What Are The Benefits Of Bi-Weekly Payroll?
The consistency of bi-weekly payroll makes it easy for employees to understand and predict what they’ll receive in terms of funds. For hourly workers, calculating overtime is somewhat simplified. This also makes payroll initiatives such as on-demand pay much simpler to manage.
Some primary benefits of biweekly payroll include:
- Predictability: Offers consistent pay schedules for employees and employers, making any budgeting process simpler.
- Simplified Time Tracking: Easier calculation of regular and overtime hours.
- Enhanced Cash Flow Management: Allows businesses to better manage financial resources.
- Cost Efficiency: Potential reduction in payroll processing costs due to fewer pay periods compared to weekly payroll.
What Are The Challenges With Bi-Weekly Payroll?
Managing a bi-weekly payroll system is not without its challenges. These include:
- Complexity for Different Employee Types: Varying needs of full-time, part-time, and freelance staff.
- Regulatory Adherence: Compliance with state and federal payroll laws.
- Risk of Payroll Errors: Requires accurate record-keeping to prevent mistakes.
- Holiday and Closure Adjustments: Managing pay during holidays and business closures.
Best Practices For Implementing Bi-Weekly Payroll
As you put a bi-weekly payroll in place, there are few practices that will ensure a smooth transition and help your organization meet any compliance requirements as you scale.
- Software Selection: Choose a payroll software solution that fits the business size and needs.
- Training and Education: Educate HR staff and employees about the payroll system.
- Regular Audits: Conduct audits to ensure accuracy and compliance.
Bi-weekly Payroll Calendar For 2024
Assuming that the bi-weekly pay period started on the first Friday of the year and continues every two weeks thereafter, the following is a bi-weekly payroll calendar for the year 2024.
