Which is Better, Biweekly or Semimonthly Pay?

Employees are a crucial part of any company or business. Companies employ individuals to work for them and operate their resources. In exchange, those individuals receive funds through payroll payments. Depending on their rank and experience, their remuneration may differ. Usually, both parties set the payment rates through an employment contract.

The payroll function within a company falls under the Human Resources department’s scope. Every company that has employees also operates an HR department. Apart from the payroll process, this department also has several other responsibilities. Most of its functions relate to handling employees and their employment. Apart from the HR department, the finance department within a company may also deal with payroll functions.

The HR department also sets the frequency of payments that employees receive. However, a company’s management may also play a role in this decision. In most cases, employees receive their payments monthly. However, the biweekly and semimonthly structures are also prevalent in companies. Although they may sound similar, there are several differences between them.

What is Biweekly pay?

Biweekly pay is when companies pay their employees every other week on a specific day. Essentially, it implies that employees receive their salaries and wages twice every month. Sometimes, they may also get paid three times in a single month. With the biweekly payroll structure, companies reimburse their employees for their services 26 times a year.

The biweekly payroll payment structure is one of the most common types of pay periods that employers use. Usually, it starts from setting a specific day in a week for payroll payments. Once the company assigns the day, employees get paid every other week on the specified day. For example, a company may reimburse its employees every Monday on alternative weeks.

In some employment contracts, employers may offer an annual salary. This process may make calculating the weekly remuneration under the biweekly structure challenging. However, companies can measure those salaries by dividing the total by 26. For example, an employee with a $78,000 annual salary gets $3,000 every time under this structure. In practice, though, the calculations may be more complex.

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With biweekly pay, companies do not have specific dates for payroll payments. Instead, the date will depend on the days for the alternative weeks. Therefore, it may create a more irregular payment structure. Despite that, employees prefer it since it results in a higher frequency of payments annually than the other methods. Nonetheless, the payroll expenses remain the same regardless of the structure.

Overall, a biweekly payroll structure involves paying employees every other week. With this structure, companies pay their employees 26 times in a year (52 weeks/every two weeks). With biweekly pay, the date for payments is not set or fixed. Instead, it falls on a specific day every 23 weeks. Biweekly pays are prevalent in many industries. This structure results in a higher number of annual payments.

What is a Semimonthly pay?

A semimonthly pay may sound similar to biweekly pay. However, it does not have the same features. With a semimonthly payroll structure, companies pay their employees twice a month. This process occurs every month and results in 24 payroll payments each month. Despite a matching number of payments like the biweekly pay, the frequency is not similar.

The semimonthly payroll payment structure is also prevalent in many industries. This structure starts with companies setting specific dates for payments each month. On those dates, companies pay their employees their due payroll payments. In some cases, the dates may fall on weekends. Therefore, companies may postpone or prepone the remunerations to another date.

With the semimonthly pay, calculating periodic salaries is the same. Once companies get the annual salary for an employee, they must divide it by 24 payments. The resultant figure represents the amount the employee will get paid. For example, an employee with a $78,000 annual salary receives $3,250 twice a month. Like biweekly pay, these payments may be subject to other factors.

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With the semimonthly pay, companies do not set a day for payments. Instead, they specify the dates. These dates may fall on different days. In some cases, they may also change due to weekends. However, it creates a more stable payment structure compared to biweekly pay. Employees also prefer this structure due to the higher frequency of payments.

Overall, a semimonthly payroll structure is a prevalent form of paying employees. With this structure, companies set two dates each month. On these dates, employees receive their paychecks. Essentially, it results in 24 payments a year (12 months x 2 times a month). However, the total remuneration expense does not change under this structure either.

Which is better, Biweekly or Semimonthly pay?

The biweekly and semimonthly pay structures present a different approach to remunerating employees. Both result in a higher frequency of payments than traditional options. However, some employees may wonder whether the biweekly or semimonthly pay structure is better. The answer to that question lies in the differences between them.

Some of the primary differences between biweekly and semimonthly pays include the following.

Frequency

Both biweekly and semimonthly pay structures include a higher frequency of payments. With biweekly pays, employees receive their paychecks 26 times each year. This number relates to those paychecks occurring every two weeks. With semimonthly payments, employees get paid 24 times a year. These payments relate to the remuneration coming twice each month.

Time

With the biweekly payment structure, the time for payment occurs on days. As mentioned, companies specific those days when employees get their paychecks. These days include weekdays when employees can get their remuneration. However, with semimonthly pay, the dates are more crucial. Instead of specifying the day, employers set the payment date. Sometimes, these dates may also fall on weekends.

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Amount

The amount that employees receive will be lower in biweekly pays. As mentioned, the biweekly payroll structure involves 26 payments. Therefore, the total annual salary divided by that number will result in lower periodic payments. With semimonthly pays, the amount will be higher. However, the total amount paid annually will be equal.

Prevalence

Both biweekly and semimonthly pays are prevalent in various industries. However, the former option is more common among employers. The Bureau of Labor Statistics estimates that 36.5% of employees get paid biweekly. However, it suggests only 19.8% of employees get semimonthly pays. Therefore, the biweekly payment structure is almost twice more prevalent in comparison.

Efficiency

The biweekly payment structure is more efficient for companies. As mentioned, it requires companies to issue paychecks on the same day every other week. In contrast, semimonthly pays occur on specific dates. Sometimes, these dates may fall on weekends. Therefore, companies must adjust for those instances by postponing or preponing their payments. This process can lead to a loss of efficiency.

Preference

Although there is no data to suggest which system is better, employees prefer biweekly pay more. As mentioned, they still receive the same amount of salaries and wages under both structures. However, the frequency results in more satisfaction among employees. They perceive the additional two payments as “free” payments. However, the semimonthly payment structure is also preferable compared to monthly payments.

Conclusion

Companies pay their employees based on a payment schedule. Therefore, they may use different structures, including biweekly and semimonthly pay. Biweekly payments are when companies pay salaries every other week. In contrast, semimonthly remuneration occurs twice a month. Both systems provide a higher frequency of payment than traditional structures. However, employees may prefer biweekly pay more.