Payments paid to employees in firms and companies as salary can be done based on the frequency of pay, that is, the number of times a payment is made in return for the work done by the employee.
Four ways are considered standard payment frequency worldwide. These are weekly, bi-weekly, semi-monthly, and monthly.
Key Takeaways
- Bi-weekly refers to an event that occurs every two weeks or twice a week, while semi-monthly means an event that occurs twice a month.
- Bi-weekly results in 26 occurrences per year, while semi-monthly leads to 24 occurrences yearly.
- Bi-weekly schedules can create inconsistencies in monthly budgeting, whereas semi-monthly schedules align more closely with monthly expenses.
Bi-Weekly vs Semi-Monthly
The difference between bi-weekly and semi-monthly is that while the bi-weekly payment is made once every two weeks to the employees, semi-monthly payments happen twice every month. In the case of one, the paydays may remain constant, whereas for another, the paydays might differ.
Minor companies or startups adopt the bi-weekly payment mode based on the small amount of income that the company attains, of which some have to be paid to the employees.
But at times, depending on the overtime worked by the employee, this method is not a great choice for small firms.
The semi-monthly payment mode seems more acceptable and easier. But it is otherwise.
This kind of payment causes a lot of confusion and disruption in the company payroll processing units as the payment is made twice a month, and the paydays might differ with each month.
Comparison Table
| Parameters of Comparison | Bi-Weekly | Semi-Monthly |
|---|---|---|
| Number of Paychecks | 26 per year | 24 per year |
| Working Hours Before Each Payday | 80 hours | 86.67 hours |
| Payroll Processing | Straightforward, without hassle | Confusing |
| Leap Years | Extra days add up | No extra days |
| Payments Made | After every two weeks | Twice a month |
What is Bi-Weekly?
Bi-weekly payment is one of the four types of payment frequency made to employees by business firms and companies.
In this payment mode, the payroll is processed every two weeks. So, for example, once an employee starts working for a firm, two weeks from then, he could get his paycheck.
For a full-time salaried employee, a payday includes the paycheck of 80 hours, that is, for an entire year, the employer needs to pay for 2080 hours to the employee.
Now compared to this, a bi-weekly employee needs only be paid for the following hours.
Bi-weekly payment includes more payroll processing as compared to semi-monthly and monthly.
Most states have payday law that is accepted in an international level of employment decree.
These payday laws mandate firms and employers how the employees need to be paid based on their payment frequency.
If the state requires that the bi-weekly payment be paid in the right manner, it also states that the employee cannot be paid less than what his/her/their hourly salary demands.
A normal year has 365 days, while a leap year has 366 days. A bi-weekly payment includes 14 days between each payday and 26 pay periods per year, all covering only 364 days.
This inconsistency in the days worked by a matter of one or two days could be covered by a period of several years why, which the employer can make up by adding the 27th paycheck.
Employees’ holidays depend on the business firms as they can choose the weekly one-day holiday.
There are exceptions for holidays that might fall on paydays.
What is Semi-Monthly?
Semi-monthly is a more common form of payment frequency accepted by companies and firms worldwide.
It includes the employee being paid twice every month.
The semi-monthly payment mode is hard to predict as the pay on each month might differ by a day or two.
For a full-time salaried employee, a payday includes the paycheck of 86.67 hours, that is for an entire year, the employer needs to pay for 2080 hours to the employee.
Therefore, calculating what an employer needs to pay an employee by payday can be calculated by dividing 2080 hours by the total number of pay periods for a semi-monthly employee, 24.
This payroll calendar shows when semi-monthly time cards should be submitted.
Since some months have 30 days and others have 31 days, employees receive their second monthly payment on a different day each month.
Semi-monthly when compared to other pay frequencies, require less payroll processing as the pay periods are only 24 per year.
This method helps prevent the additional one paycheck paid bi-weekly as it has only 24 pay periods a year.
In semi-monthly payment frequency, there are chances that the employee might have a grander paycheck at the time of payroll processing due to the time gap between paydays.
The semi-monthly payment mode becomes more confusing over a long course of time than doing the payroll processing of full-time salaried.
Main Differences Between Bi-Weekly and Semi-Monthly
- While bi-weekly payment modes are easier to predict, semi-monthly can’t be as easy to predict because the days of the month keep changing every month.
- In the case of semi-monthly payments, the employees receive their paycheck another day every other month, whereas, in the case of bi-weekly, the employees know when they will receive their pay.
- For the bi-weekly payment mode, there are chances to have an additional paycheck to cover the days that are missed due to leap years. But in semi-monthly payment mode, there are no additional paychecks.
- The payroll processing is more in the case of bi-weekly while less for semi-monthly. Bi-weekly has it 26 times a year, whereas it is 24 for semi-monthly.
- Though the difference in pay periods is only 2, work hours greatly increase for semi-monthly employees, giving them a strain in work to complete deadlines, whereas this is absent for bi-weekly.
- https://search.proquest.com/openview/a8708b86b5fff193e0fca3fa492b1c41/1?pq-origsite=gscholar&cbl=41797
- https://www.srwschool.cc/editoruploads/files/Tuition_Policies.pdf
I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️
This was a very informative article. It’s great to understand the pros and cons of each type of payment frequency.
The differences between bi-weekly and semi-monthly payments were very well described. This helped to clear many misconceptions I had about these payment modes.
Yes, I learned a lot from this article.
This article has given a good insight on the two types of pay frequency, helping companies understand which one best suits them.
I agree with you, it makes the decision making process easier for companies.
This article is very interesting, I would recommend a deeper explanation about special cases for easier understanding.
I didn’t find any valuable information in this article. It’s all just common sense.
Why did I have to read all this? It’s just about two different payment methods.