Bi-Weekly and Semi-Monthly. Two of the most popular payroll frequency options. However, these also tend to be the most confusing. Just looking at the two, they sound like the same thing. Yet each payment schedule has some key differences and choosing the right one is crucial. So let’s dive deeper into the differences between Semi-Monthly vs Bi-Weekly Payroll.
Before we get any further, it’s important to note there are four common types of payroll frequencies which are weekly, monthly, and the two we are discussing, bi-weekly and semi-monthly.
- Weekly: Once every week
- Monthly: Once per month
- Bi-Weekly: Once every other week
- Semi-Monthly: Twice per month
What is Semi-Monthly Payroll?
Semi-Monthly basically means the payment is made and received twice a month. Therefore, a total of 24 paychecks a year, if salaried. Typically, it occurs on fixed days like the 1st, 15th, or 30th of the month.
What is Bi-Weekly Payroll?
Bi-Weekly pay is when employees are paid every other week on a specific day. For example, a bi-weekly pay frequency on a Thursday would mean employees get paid every other Thursday of the month. With bi-weekly payroll, employees are paid 26 paychecks a year, compared to 24 like bi-monthly receives.
Semi-Monthly vs Bi-Weekly Payroll
Because semi-monthly and bi-weekly payroll are two of the most popular payroll frequencies, choosing between them will be difficult. Take a look at the differences, pros, cons, and statistics between the two to help narrow down your choice.
3 Key Differences Between Semi-Monthly vs Bi-Weekly Payroll
Bi-weekly and semi-monthly pay are similar, but there are three key differences.
Bi-weekly payroll ensures employees receive their wages the same day every two weeks. Meanwhile, with semi-monthly, the day of the week can change. Semi-monthly payroll goes off of two dates in the month, generally the 1st and the 15th, thus the day it falls on per month can differ.
2. Amount of Paychecks per Year
As a result of the pay frequency difference between semi-monthly and bi-weekly payroll, semi-monthly employees receive 24 paychecks each year, while biweekly employees receive 26.
3. Paycheck Quantity
In semi-monthly frequencies, payroll is processed fewer times than biweekly, so employees’ paychecks are larger. Furthermore, biweekly paychecks are smaller, but employees will receive two extra paychecks to make up the difference. However, as it stands, the two differ in paycheck quantity.
Pros and Cons of Semi-Monthly vs Bi-Weekly Payroll
After learning the difference between semi-monthly and bi-weekly payroll, let's look at the pros and cons of each.
Easy to Understand
Because Semi-Monthly pay occurs on the same two days every month, it takes the guesswork out for employees. Employers do not have to hear “when do we get paid” because those days are solid. Having fixed paydays also allows employees to budget their finances effectively.
Saves Companies Money
Compared to a bi-weekly payroll, semi-monthly has significantly fewer pay periods. Which equates to reduced employee paychecks and company savings.
Aligns with Business Cycle
A notable benefit of semi-monthly pay is that it aligns with the business' cycle. Since employees get paid around the same time as the business makes money, it is easier to pay them on time.
Not Suitable for Hourly Employees
Businesses with hourly employees or commission employees may not find a semi-monthly frequency is the best option. When overtime and specific hours need to be determined weekly, it can be challenging to adapt to a semi-monthly pay schedule. Since the commission and hourly wages need to be divided between two different pay periods, it can be difficult for employers to adjust without needing to do it separately.
Delayed Paychecks for New Employees
When it comes to Semi-Monthly payroll, new hires will typically need to wait 4-6 weeks before receiving their first paycheck. This depends on the day they started in comparison to the payment schedule. For example, if an organization pays based on the previous period like the 16th to the end of the month. Then, if an employee starts on the 1st, they wouldn’t be paid until the end of the month. Others may choose to pay for the hours worked currently until the 15th. Either way, the full paycheck will be delayed for many new employees on a semi-monthly payroll cycle.
Because semi-monthly pay is on two solid days per month, it can be inconvenient when holidays occur. If a payday falls on a federal holiday, or weekend, the payday will need to be pushed up. Or even back by a day or two. Meaning employees will need to keep this in mind ahead of time.
Summary: Semi-Monthly Pros & Cons
|Easy to Understand||Not Suitable for Hourly Employees|
|Saves Companies Money||Delayed Paychecks for New Employees|
|Aligns with Business Cycle||Inconsistency|
Although bi-weekly offers smaller paychecks each pay period compared to a semi-monthly pay schedule, it still equates to more paydays. This makes it easier for employees to save more money during certain months because they receive an additional paycheck. Additional paychecks can be very beneficial during the holiday season.
Overtime is Easy to Calculate
When businesses operate on a biweekly pay schedule, overtime pay is much simpler to calculate than when operating on a semi-monthly pay schedule. Because calculations take place every other week, it is easy to manage overtime accordingly.
Receiving up to two additional paychecks per month compared to a semi-monthly pay schedule is certainly a bonus for employees. However, for business owners, it can be a hassle. For months where additional planning was not put in place, a small business may not have sufficient funds for a three paycheck month compared to a two paycheck month.
Although more paychecks may be a pro to some, the drawback of the checks being smaller may be a con to others.
Summary: Bi-Weekly Pros & Cons
|More Paychecks||Uncertain Budget|
|Overtime is Easy to Calculate||Smaller Paychecks|
Our Recommendation Between Semi-Monthly vs Bi-Weekly Payroll
We recommend you take the three key differences and pros and cons between semi-monthly vs bi-weekly payroll when making your decision.
Next, based on the differences between the two payroll frequencies, we recommend that if you have more hourly employees you go with bi-weekly payroll, and if you have more salary employees you choose semi-monthly payroll.
Finally, consider popularity. By far, biweekly payroll is the most popular option. According to the Bureau of Labor Statistics, 36.5 percent of employees are paid biweekly. Meanwhile, 19.8 percent of employees get paid semi-monthly.
Compare Payroll Service Options
Now that you’ve determined which payroll frequency is right for you, it’s time to compare service options. Payroll is one of the most important aspects of running your business, yet shopping for payroll services can be confusing.
At 360Connect, we connect you with up to 5 FREE price quotes from pre-qualified suppliers. Ready to get started? Get your FREE quotes HERE.