4 Types of Payroll Schedules and How to Choose Between Them (2024)

Payroll administrators have to make many considerations when selecting a payroll schedule for their team. The pay schedule must be easy to manage, comply with local payroll laws, and suit the needs of employees.

This article walks you through the most common payroll schedule options and the pros and cons of each. We’ll also explore key payroll schedule dates for 2023 and highlight important factors to consider when choosing a payroll schedule.

Disclaimer: This information is based on USpayroll processingbest practices and does not constitute financial advice. Always refer to your local payroll laws to ensure compliance.

What is a pay schedule?

Apayrollschedule is the frequency with which employees are paid. The correct schedule depends on your cash flow rhythm, labor market expectations, and state and national regulations. Finding a consistent payroll schedule creates a predictable income and makes it easier to manage business finances.

Your payroll schedule is different than the type ofpay periodyou follow, which describes the time frame of a payment, or the length of time employees accrue hours on a single paycheck before counting toward the next paycheck.

Most common payroll schedules

Your payroll schedule determines how often and when employees can expect to get paid. It’s important to get it right from the beginning to avoid disruption. Even if you are the only employee, get into a payroll routine from the start, picking from the following types of pay schedules:

Weekly payroll

Under a weekly payroll schedule, employees are paid on a specific day of the week, every week, throughout the year. For example, your employees get paid every Friday of the year, totaling 52 paychecks per year.

Pros of weekly payroll

Weekly payroll is an efficient option for hourly employees who accumulate several hours of overtime or workers with irregular schedules. Employees get paid on time for their work and don’t need to wait for long periods to receive overtime compensation.

Cons of weekly payroll

Weekly payroll schedules have the most pay periods and therefore have a high processing cost, increasing the company’s time and money spent on payroll. Calculating the number of hours on timesheets and including all necessary information on thepay stubevery week requires time and effort from your human resources or payroll administrators.

Bi-weekly payroll

Abi-weekly payroll scheduleinvolves paying employees on the same day of the week every two weeks. For example, employees get paid every other Friday, totaling 26 paychecks per year. With36.5% of private businesses in the USpaying their employees every two weeks, the most common pay schedule used by businesses are bi-weekly pay periods.

Biweekly pay schedules are a common option for hourly and salaried employees, helping employees regulate their cash flow and have consistent accessibility to funds.

Pros of bi-weekly payroll

A bi-weekly payroll schedule makes calculating overtime for hourly employees easier for payroll administrators. This schedule also helps hourly employees manage their cash flow. For example, an employee who loses one week’s worth of wages due to sick leave can make up the hours in the following week.

Cons of bi-weekly payroll

The bi-weekly payroll calendar makes calculating benefit deductions more difficult, as they normally occur on a monthly basis.

Following a bi-weekly pay schedule results in two out of the 12 months of the year havingthreepay periods. This is the major differentiator between bi-weekly and semi-monthly pay schedules. This might be a pro for employees, as an “extra” pay period twice a year feels like a bonus, but it means additional irregular work for your payroll administrator.

Semi-monthly payroll

Running payroll semi-monthly involves sending payouts twice a month, totaling 24 paychecks a year. In most instances, a business will make payments at the beginning or end of the month, with the second paycheck going out on the 15th of the month.

Pros of semi-monthly payroll

These payroll schedules are effective for managing benefit deductions as many benefits, such as insurance, are charged on a monthly basis.

Semi-monthly payroll requires less time (and cost) per pay period, and the regularity of the schedule makes it easy for accounting teams to manage.

Salaried employees also benefit from a semi-monthly payroll schedule as it helps them align their largest expenses with their pay dates.

Cons of semi-monthly payroll

Semi-monthly payroll is not as effective for hourly employees as it complicates time tracking for overtime. It can also be challenging to align cash requirements when paying hourly employees on a semi-monthly basis since you’ll have to process multiple large payouts on the same day.

Monthly payroll

You make payouts once a month on a monthly payroll schedule, usually on the last day of the month. Due to state regulations, monthly payroll schedules usually only apply when you’re the only employee (or one of the business owners) and runningsmall business payroll. Or, if you pay employees on a commission-based model.

Pros of monthly payroll

The biggest advantage of monthly payroll is the low processing costs. With the fewest pay periods (12 per year), monthly payroll schedules demand the least amount of time and cost involved inpayroll processing.

Managing payrollon a monthly basis is typically easier for administrators, especially when it comes to benefit deductions, which are typically charged every month. Issuing a13th-month paymentis easier to manage as well.

Cons ofmonthly pay schedules

Only4.7% of businesseschoose monthly payroll schedules. They’re theleast preferred optionfor employees and businesses, as managing personal expenses with only 12 monthly paychecks can be challenging.

New employees may become frustrated by monthly payroll, especially during their first month of employment, as they must wait longer than usual for their first paycheck.

Some states in the US, such as Vermont, mandate more frequent payroll schedules and virtually eliminate the option of monthly payroll.

2023 pay periods

Pay period, also known as the payroll period or payroll frequency, refers to the time period when an employee’s hours get tracked and paid. Pay periods are typically fixed and recur on a weekly, bi-weekly, semi-monthly, or monthly basis.

How many periods are in a year depends on if it’s a leap year and if your employee lives in a country with 13th-month pay. Here’s how many different types of pay periods are in 2023 (not including 13th-month pay):

• Weekly payroll:52 pay periods
• Bi-weekly payroll:26 pay periods
• Semi-monthly payroll: 24 pay periods
• Monthlypay period:12 pay periods

2023 payroll schedules

This month-by-month guide identifies the pay dates for weekly, bi-weekly, semi-monthly, and monthly payroll schedules in 2023. In this payroll schedule, employees are paid on Fridays. Consider local bank holidays, employment laws, and payroll processing deadlines when determining your team’s payroll calendar.

How to choose a payroll schedule

Payroll schedules aren’t one size fits all. Employee preferences, payroll costs, and payroll laws are all important factors to consider when choosing different payroll schedules for your business.

Employee preferences

Preferences and industry norms impact the payroll schedule. Employees may be resistant to accepting an irregular pay schedule if it goes against market standards or their previous employer’s schedule.

For example, a weekly payroll schedule is popular in retail stores, restaurants, and businesses that rely on manual labor. Wages are typically calculated at an hourly rate and paid on a weekly basis. Employees may be disgruntled—or scared away altogether—by monthly payroll. Look into your industry’s standards to ensure you don’t defy a norm.

State payroll laws

In the US, state laws dictate a minimum pay period which directly impacts the payroll schedule. These laws vary from one state to another, and businesses must comply with local state laws.

The US Department of Labor has outlinedstate payday requirementsthat local businesses must follow. These laws can differ vastly in each state, so it’s important to stay up to date on local payroll laws.

For example, in South Carolina, there areno regulations specifying mandatory paydays. In contrast, Arizona demands that payday occur at least twice per month, not more than 16 days apart. The frequency in other states, such as California and Michigan, is determined by the occupation.

Failure to comply with these state laws can lead to fines, back pay, and even criminal punishment.

International payroll laws

The globalization of the workforce and the rise inremote teamshave increased the focus oninternational payroll processes. International payroll laws impact the payroll schedule and should be considered if you have employees in multiple countries.

If your team hires staff in France, you need to pay your employee once a month in the euro (EUR).French labor lawdictates it’s not permitted to pay wages exceeding €1,500 (EUR) per month in cash. The alternative is direct deposit.

In Mexico, direct labor employeesmust be paid at least every week, and all other employees must be paid at least every two weeks. These laws constantly change, such as the recentUS-Mexico-Canada Agreement (USMCA), which has enforced Mexican labor laws against US companies.

The Netherlandsrequires the employment contract to dictate the payroll schedule, giving employers the option to pay either monthly or weekly, in EUR. Weekly payments should not be made later than one month after they’re due, while monthly payments must be paid within three months after due.

Familiarizing yourself with the intricacies ofglobal payrollwill help you make the best decision for the businessandyour employees.

Payroll processing costs

Each payroll cycle costs the business money, which you should consider before determining the best payroll schedule for you. The payroll schedule will also impact thetotal cost of an employee.

These costs should align with your business’s cash flow rhythm. Payroll management is typically one of a business’s highest expenses, so cash must be available to cover the payroll processing costs and the final payment. This is one of the most important considerations forstartup foundersand self-employed business owners who need to keep costs down.

Overtime and other benefits

Overtime and employee benefits can complicate the payroll process, taking extra time to calculate.Global employee benefits, such as health insurance or retirement plans, also take time to administer correctly during the payroll process.

For example, any deductions forhealth insurancebenefits need to be confirmed between the employer and employee to avoid any cash flow issues.

Top tip:Investing in anautomated payroll systemand financial apps can cut downhow long it takes to process payroll, saving you both time and money.

Simplify payroll scheduling with Deel

There are many moving parts to paying a global team—but making global payments shouldn’t be an insurmountable challenge.

With Deel, you can fund payroll with just a click of a button and automatically calculate taxes for different pay periods.

Deel continues to be one of the top-ranked global payroll providers, with4.6/5 rating on G2and4.8/5 rating on TrustPilot.

Our multiple currency options, payroll services, and various withdrawal methods make it easy for your team to get paid on time, every time so that you can have one happy team.

Learn more about Global Payrollwith Deel andbook a demoto see the Deel platform in action.