The four types of pay periods and which works best

Executive overview

Most companies inherit their payroll schedule rather than choose it intentionally. The four common pay period types differ in frequency, cost, and employee experience. Bi-weekly is the strongest default for most organisations, balancing predictability for employees with manageable admin overhead.

The four pay period types

• Monthly: one paycheck per month on a fixed date — 12 pay periods per year
• Semi-monthly: two paychecks per month, typically the 15th and 30th — exactly 24 per year
• Bi-weekly: every other week, usually Friday — 26 paychecks per year (two months have three)
• Weekly: once per week on a fixed day — 52 pay periods per year

Semi-monthly vs bi-weekly

• Semi-monthly always produces 24 pay periods; bi-weekly produces 26
• Semi-monthly dates shift to the preceding Friday when they fall on a weekend
• Benefit deductions on semi-monthly appear simpler, but bi-weekly methods are straightforward:
  • Divide annual premium by 26 and deduct from each paycheck, or
  • Divide monthly premium by 2 and deduct from each check, skipping the extra check in three-paycheck months

Choosing the right schedule

• Non-exempt employees struggle to budget on monthly or semi-monthly when hours vary
• Bi-weekly offers predictability and consistent cadence for hourly workers
• Running payroll every two weeks (not weekly) halves admin frequency at comparable employee benefit
• Payroll schedules should be chosen deliberately, not inherited from predecessors