What is biweekly pay? How does it work?

Employers who opt for a biweekly payment schedule compensate their staff every two weeks, resulting in 26 payments annually. To simplify the process, many companies select a specific day of the week, such as every second Friday, for automated payment processing. This biweekly pay approach streamlines payroll operations and enhances financial planning for both the company and its employees. Additionally, the increased payment frequency compared to other schedules can lead to higher employee satisfaction.

Biweekly vs. semimonthly pay schedules

The biweekly payroll schedule is the most popular in the United States, with about 42% of private-sector businesses using this method. In addition to employees receiving their wages every two weeks, it offers a "bonus" of sorts, as two months each year will have an extra payday.

Conversely, the semimonthly payroll schedule results in 24 equal payments per year, occurring twice monthly. Under this system, payments typically happen on set dates, such as the 1st and 15th or the 15th and last day of each month. This predictable schedule provides consistency but doesn’t offer the occasional "extra" payday that the biweekly system does.

Pros and cons of biweekly pay schedules

Choosing a biweekly pay schedule involves comparing various advantages and disadvantages from both the employer's and the employee's perspectives. Doing so will help you select a pay schedule that best aligns with your business operations and your team's preferences.

Pros

• Consistent paychecks: Employees receive compensation every two weeks, aiding in financial planning and budgeting compared to monthly payments.
• Simplified overtime calculations: Overtime pay is easier to calculate since it typically begins at the start of the week (usually Monday) and ends at the end of the week (usually Friday).
• Reduced payroll processing errors: Compared to weekly pay, biweekly pay reduces the chances of mistakes in payroll processing because it involves fewer pay periods to manage each year.

Cons 

• Complex bookkeeping: With two months having three pay periods, biweekly pay can be more complicated than semimonthly or monthly pay for accountants and business managers.
• Higher payroll costs: Payroll providers that charge per pay period may result in slightly higher fees compared to semimonthly schedules.
• Administrative overhead: The more frequent cadence of biweekly pay, compared to monthly payroll, can increase administrative overhead.

How to calculate biweekly pay 

How you calculate biweekly pay depends on whether the employee is an hourly worker or a salaried employee. Here’s an example for each:

Hourly workers

• Multiply the number of hours worked in the two-week pay period by the employee’s hourly rate.
• For instance, if an employee works 80 hours in two weeks and has an hourly rate of $20, their gross pay would be $1,600.

Salaried employees

• Divide the employee's annual salary by 26 to determine their biweekly gross pay.
• For instance, if an employee’s annual salary is $52,000, their pay would be $2,000

Global payroll for international teams

Managing payroll for international teams can be complex, considering the varying local regulations, tax laws, and currency differences. Oyster's global employment platform simplifies this process by handling payroll, benefits, and compliance across multiple countries. With Oyster, your teams are paid accurately and on time, no matter where they’re located.

Discover how Oyster can help you streamline payroll management for your international team.