Difference Between Bi-Weekly and Semi-Monthly

Payments paid to the 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.

Bi-Weekly vs Semi-Monthly

The main difference between bi-weekly and semi-monthly is that while the bi-weekly payment is done 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.

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Bi-weekly payment mode is usually adapted by minor companies or startups 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 Between Bi-Weekly and Semi-Monthly

Parameters of ComparisonBi-WeeklySemi-Monthly
Number of Paychecks26 per year24 per year
Working Hours Before Each Payday80 hours86.67 hours
Payroll ProcessingStraightforward, without hassleConfusing
Leap YearsExtra days add upNo extra days
Payments MadeAfter every two weeksTwice a month

What is Bi-Weekly?

Bi-weekly payment is one of the four types of payment frequency made to employees by the 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 payrolls processing as compared to semi-monthly and monthly.

Most states have payday law that is usually accepted in an international level of employment decree.

These payday laws mandate firms and employers how often 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, which all in all cover 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.

The holidays given to employees depend upon 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.

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 to calculate 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 which is usually 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.

Semi-monthly payment mode becomes confusing over a long course of time than doing the payroll processing of full time salaried.

Main Differences Between Bi-Weekly and Semi-Monthly

  1. While bi-weekly payment modes are easier to predict, semi-monthly can’t be as easy to predict because the days of a month keep changing every month.
  2. 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 would receive their pay.
  3. For 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.
  4. The payroll processing is more in the case of bi-weekly while less for semi-monthly. Bi-weekly has it 26 times a year where’s it is 24 for semi-monthly.
  5. Though the differs 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.

Conclusion

Payroll processing for bi-weekly and semi-monthly employees has a vast difference when compared to full salaried employees.

To calculate the salary for both the pay groups, one needs to only divide the annual salary by the number of annual pay periods per month.

Semi-monthly is usually the method accepted by major firms to reduce payroll processing but in the long run, without the use of a payroll calendar, it may become confusing, thus rendering firms to adapt to bi-weekly.

Bi-weekly requires a lesser hourly work time thus giving the employees a chance to choose it over the semi-monthly.

Holidays depend on the firms no matter what and this causes an issue for semi-monthly employees when any personal occasion comes in between workweek.

Both semi-monthly and bi-weekly have their own sets of pros and cons.

Choosing what’s best for the company depends on the employer and choosing what they are better made for depends on the employee.

References

  1. https://search.proquest.com/openview/a8708b86b5fff193e0fca3fa492b1c41/1?pq-origsite=gscholar&cbl=41797
  2. https://www.srwschool.cc/editoruploads/files/Tuition_Policies.pdf
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