What is Biweekly Pay and How Does it Work

Author: Madalina Roman

Biweekly pay is a popular payroll option, but does it work for your business? With 26 paychecks a year, employees enjoy regular, predictable income. For employers, however, the decision to adopt biweekly pay involves more than just convenience.

Dive into this article to learn what is biweekly pay, how to calculate it, and what to factor in implementing it.

Takeaways:

  • Biweekly pay means that you receive 26 paychecks per year. That means two monthly paychecks, except for two months of the year when you’ll get three.
  • When deciding on the best pay schedule, companies must assess workforce composition (hourly vs. salaried), industry norms, payroll processing capacity, and cash flow. There’s no universal “right” choice.
  • As bi-weekly pay implies frequent paychecks, it’s best to implement an automatic payroll tracker to streamline the process and avoid asking yourself how to fill out timesheets.
What is Biweekly Pay

Biweekly pay 101

At its core, biweekly pay means that employees receive their paychecks every other week, typically on the same day each pay period, like every other Friday. Picture a calendar with 52 weeks in a year. With biweekly pay, you get a paycheck on 26 of those weeks or once every two weeks. Simple enough, right?

But here’s where it gets a bit more complex. Since there are usually slightly more than 28 days a month, a biweekly pay schedule doesn’t always align perfectly with the calendar months.

I’ve created an example to illustrate that:

Imagine you get paid bi-weekly, every other Friday. Here’s how a few months of your pay schedule might look:

  • Friday, January 13: Paycheck
  • Friday, January 27: Paycheck
  • Friday, February 10: Paycheck
  • Friday, February 24: Paycheck
  • Friday, March 10: Paycheck
  • Friday, March 24: Paycheck
  • …and so on.

Notice how paychecks don’t line up with the 1st and 15th of each month? That’s the nature of biweekly pay. It follows a 14-day cycle rather than the monthly calendar. Now, you might be wondering, “How many paychecks do I get in a year with biweekly pay?” Let’s do the math.

  • 52 weeks in a year ÷ 2 = 26 paychecks per year

But wait, there’s a twist! Because 26 pay periods x 14 days = 364 days, which is one day short of a 365-day year (and two days short on leap years), there are two months in the year where you’ll receive three paychecks instead of two.

How to calculate biweekly pay

Now that you’ve got the general concept down, let’s talk numbers. How do you actually calculate biweekly pay? I’m calculated differently as it depends on the nature of how you’re paid (paid hourly or fixed salary). Let’s explore how this works for both hourly and salaried employees.

For hourly employees:

  1. Take your hourly rate and multiply it by the number of hours worked in the two-week pay period.
  2. Don’t forget to account for any overtime pay.
  3. Subtract any deductions like taxes, insurance premiums, or 401(k) contributions.
  4. The result is your take-home gross pay for that biweekly period.

Here’s an example:

Let’s say you earn $15 per hour and work 80 hours in your monthly pay schedule (40 hours per week). Assuming no overtime and $100 in deductions, your gross biweekly pay would be:

$15 x 80 hours = $1,200

And your final take-home pay would be:

$1,200 – $100 in deductions = $1,100

For salaried employees:

  1. Take your annual salary and divide it by the number of pay periods in a year (26).
  2. Subtract any deductions.
  3. The result is your take-home pay for each bi-weekly pay.

So if your annual salary is $50,000 and you have $150 in deductions each pay period, your gross biweekly pay would be:

$50,000 ÷ 26 = $1,923.08

And your take-home biweekly pay would be:

$1,923.08 – $150 = $1,773.08

That’s straightforward, right? Whether you’re hourly or salaried, the biweekly pay formula follows the same simple structure, just with different inputs.

Industries with a bi-weekly pay schedule

While you might encounter bi-weekly pay in almost any field, some sectors prefer and need to have a pay frequency in a biweekly pay schedule. Some of the common ones are:

  1. Retail stores, restaurants, and hotels are processing their payroll in bi-weekly pay periods, as the type of employees working in such industries work by the hour. This is also due to the seasonality of these industries, and for their operational flow, it’s more efficient to pay employees in biweekly pay schedules.
  2. Healthcare: Many medical practices, hospitals, and healthcare organizations opt for bi-weekly payroll for their hourly and salaried staff. In this case, businesses get a steady cash flow, and handling overtime tracking is easy.
  3. Manufacturing and construction are also no strangers to biweekly payroll processing. Often, this industry opts for a bi-weekly schedule as it fits their business operations and rhythm of clocking in for shifts and working on specific projects.
  4. Education: Teachers, school administrators, and support staff, especially in public school systems, are often on the bi-weekly pay period, also due to seasonality. Moreover, with so many employees to manage, biweekly pay streamlines payroll processing and keeps things running smoothly in such institutions.

There are more industries with a bi-weekly pay schedule, as it is a versatile option. You’ll find it in finance, professional services, nonprofits, and plenty of other fields. It’s adaptable to a wide range of business types and sizes.

Biweekly vs. other types of pay schedules

Now that you’ve got a solid grasp of biweekly pay, you might wonder how it stacks up against other common pay schedules. To highlight the key differences, let’s compare biweekly to weekly, semi-monthly, and monthly pay.

Biweekly vs. weekly pay schedule

On a weekly pay frequency, employees receive paychecks from their payroll provider every week, typically on the same day (like every Friday). Here’s how it compares to biweekly:

  • Frequency: Weekly pay results in 52 paychecks per year, while biweekly pays out 26 times.
  • Payroll processing: As an employer, you have to run payroll every week with weekly pay, which is time-consuming and costly compared to the less frequent biweekly schedule.
  • Budgeting: As an employee, you may find it easier to budget with weekly pay as you receive smaller, more frequent paychecks that align with common weekly expenses.

Biweekly vs. semi-monthly pay

Semi-monthly pay periods mean employees receive two monthly paychecks, usually on specific dates like the 1st and 15th. How does it differ from biweekly?

  • Frequency: Semi-monthly results in 24 paychecks per year, while biweekly yields 26.
  • Pay dates: Semi-monthly pay always falls on the same dates each month, while biweekly pay dates shift based on the 14-day cycle (with the potential for “extra” checks some months).
  • Payroll processing: Employers run payroll less frequently semi-monthly than biweekly (24 times vs. 26 times per year).
  • Budgeting: As an employee, you might find it easier to budget with semi-monthly pay, as paychecks always arrive at predictable times that align with common monthly bills (like rent or utilities).

Biweekly vs. monthly pay

One of the most common pay schedules, monthly pay, as the name implies, means employees receive one paycheck per month, typically on the last day of the month. Here’s how it measures up to biweekly:

  • Frequency: Monthly pay results in 12 paychecks per year, compared to biweekly’s 26.
  • Payroll processing: Employers only need to run payroll once per month with monthly pay, which saves time and money compared to biweekly.
  • Budgeting: As an employee, monthly pay is sometimes challenging to budget, as you must stretch one paycheck to cover all your expenses for the month.
  • Cash flow: Employers may struggle with cash flow with monthly pay, as they must ensure enough funds are available to cover a larger payroll sum once per month.

There are both advantages and disadvantages to each pay period for all parties involved. Choose the type of pay schedule that suits your needs and context. You could prioritize the predictability of semi-monthly or monthly pay or appreciate the frequency and simplicity of overtime for biweekly or weekly pay.

Which payment schedule is best for your business?

When it comes to choosing a pay cycle, you need to consider many factors to determine the right cycle. It’s often not a one-size-fits-all, as what’s optimal for your organization can be totally not suitable for another.

  1. Start with assessing the nature of your workforce and address questions such as: Are most of your employees hourly or salaried? Do they work on predictable shifts or have fluctuating schedules? These questions will point you toward a pay frequency that aligns with your company’s operational realities.
  2. Financials have a big role. More frequent pay cycles, such as weekly or biweekly, will require more administrative resources, while less frequent schedules, such as semi-monthly or monthly, can be more efficient from a payroll processing perspective. Assess which one works best for you.
  3. Cash flow is another key factor. Does your business have enough cash flow to cover payroll on a consistent basis? You might find it easier to budget and manage cash flow with less frequent pay cycles or prefer biweekly or weekly pay’s steady, predictable cadence.
  4. Employee preferences and industry norms. In some sectors, certain pay schedules are simply more common and expected. For example, as mentioned above, biweekly pay is a standard in many retail and healthcare settings, while semi-monthly pay is more typical in office environments. Staying competitive in your industry should be your priority.

Ultimately, the “best” pay schedule is the one that strikes the right balance for the unique needs of your company and your workforce.

Yes or no to bi-weekly payroll?

As mentioned above, when deciding on a bi-weekly payroll schedule, you need to weigh its benefits, drawbacks, and impact on your business and employees.

As a final recap, you have the following:

➕ On the plus side, bi-weekly payroll simplifies financial planning for employees, as they receive consistent paychecks every two weeks. It reduces the frequency of payroll runs compared to weekly payroll.

➖ On the other side, for businesses, it comes with more difficulty managing payroll taxes and admin burdens, particularly in calculating and tracking overtime pay for employees with different schedules. Both overtime and tax reporting require you to diligently track and report them to stay compliant. Moreover, you need to account for months with three payroll periods, which could strain your cash flow.

If you decide to or are required to implement a bi-weekly payroll, you can reduce the hassle by using automated payroll software like Timeular. Timeular is a payroll tracker that helps you streamline payroll processing, track time efficiently, and minimize errors in this tedious process.

If your answer is “yes” to a payroll tracker, here’s what it includes for you:

  • All-in-one system: Timeular automatically tracks work hours, overtime, and PTO, all in the same app.
  • Customizable reports: With payroll tracking software, your bi-weekly timesheet reports are generated automatically with just a few clicks, as it provides payroll teams with the exact data they need for each pay period.
  • Payroll and invoicing integrations: The tool integrates with popular payroll and invoicing tools, allowing you to easily transfer employee hours data for payroll calculations. If you’re using bi-weekly pay, manual timesheets are not an effective option.
All you need from a payroll time tracker, centralized

Track work hours, overtime, and leave in a single app, and create comprehensive reports with a few clicks.