Payroll Schedules and Their Implications
At Globaine Payroll, we specialize in processing payroll for global teams. Our platform enables payroll management for entire global workforces across 150 countries on a self-serve system.
1. Weekly Payments
| Frequency | Payments per Year | Payroll Date | Ideal For | Challenges |
|---|
| Weekly | 52 | Weekly | Employees who live paycheck to paycheck | Higher administrative costs for the company |
- Benefit: Ideal for employees who need regular paychecks to manage day-to-day expenses.
- Challenge: The frequent processing of payroll incurs higher administrative costs for employers.
2. Bi-Weekly Payments
| Frequency | Payments per Year | Payroll Date | Ideal For | Challenges |
|---|
| Bi-Weekly | 26 or 27 | Every 2 weeks | Employees who prefer receiving an extra paycheck annually | Misalignment with monthly bills can make budgeting difficult |
- Benefit: Offers employees the possibility of receiving an additional paycheck in the year, helping with savings or covering large expenses.
- Challenge: Since the cycle doesn’t align perfectly with monthly expenses, budgeting can be challenging for some employees.
3. Semi-Monthly Payments
| Frequency | Payments per Year | Payroll Date | Ideal For | Challenges |
|---|
| Semi-Monthly | 24 | 15th & Last Day of the Month | Employees with fixed monthly expenses like rent | Calculating overtime may be complicated due to irregular workdays |
- Benefit: Aligns closely with common fixed expenses, like rent or mortgages, making it easier for employees to budget for the month.
- Challenge: The varying number of days in a month can complicate overtime and shift calculations.
4. Monthly Payments
| Frequency | Payments per Year | Payroll Date | Ideal For | Challenges |
|---|
| Monthly | 12 | End of the Month | Long-term budgeting, employees with substantial financial planning | Requires careful planning to stretch income throughout the month |
- Benefit: Simplifies payroll processing and encourages long-term budgeting.
- Challenge: Employees must manage their funds carefully to ensure their salary lasts the entire month.
Sample Payroll Schedule Comparison
Here’s a side-by-side comparison of the four payroll frequencies with key details.
| Frequency | Payments per Year | Payroll Date | Hours per Pay Period | Ideal For |
|---|
| Weekly | 52 | Weekly | 40 hours | Employees needing frequent payments |
| Bi-Weekly | 26/27 | Every 2 weeks | 80 hours | Employees who prefer occasional extra paychecks |
| Semi-Monthly | 24 | 15th and Last Day of the Month | 86.67 hours | Employees with fixed monthly bills |
| Monthly | 12 | End of the Month | 173.33 hours | Long-term planners, businesses with simpler payroll |
Payroll Calculations for New Hires
Scenario: Bi-Weekly Payroll for a New Hire
- Annual Gross Salary: CAD 160,000
- Pay Frequency: Bi-weekly (26 pay periods per year)
- Gross Salary Per Pay Period: CAD 6,153.85 (CAD 160,000 ÷ 26 pay periods)
1. Gross Salary Per Pay Period
| Gross Salary Calculation | Amount |
|---|
| Annual Salary | CAD 160,000 |
| Number of Pay Periods (Bi-weekly) | 26 payments/year |
| Gross Salary per Pay Period | CAD 6,153.85 (CAD 160,000 ÷ 26) |
2. Total Working Hours per Pay Period
| Hours per Pay Period | Amount |
|---|
| Assumed Working Hours | 80 hours (8 hours/day × 10 working days) |
3. Earnings for a Pay Period
| Earnings per Pay Period | Amount |
|---|
| Gross Salary | CAD 6,153.85 |
| Prorated Salary for Mid-Pay Period Start | Applied based on the number of hours worked. |
Payroll Calculations for Existing Employees
Scenario: Salary Increase for Existing Employee
- Old Annual Salary: CAD 126,000
- New Annual Salary: CAD 145,000
- Effective Date: November 6, 2024
- Pay Frequency: Bi-weekly (26 pay periods/year)
Step-by-Step Breakdown of the November 2024 Pay Period
| Date Range | Working Days | Hours Worked | Earnings |
|---|
| November 4–5, 2024 | 2 days | 16 hours | CAD 969.23 (Existing Salary) |
| November 6–17, 2024 | 8 days | 64 hours | CAD 4,461.54 (New Salary) |
| Total for Pay Period | 10 days | 80 hours | CAD 5,430.77 |
BREAKDOWN OF EARNINGS
Existing Salary Portion:
| Description | Amount |
|---|
| Existing Pay Period Salary | CAD 4,846.15 |
| Salary for 2 Days | CAD 4,846.15 × (16/80) = CAD 969.23 |
New Salary Portion:
| Description | Amount |
|---|
| New Pay Period Salary | CAD 5,576.92 |
| Salary for 8 Days | CAD 5,576.92 × (64/80) = CAD 4,461.54 |
Implications for Employers and Employees
For Employers:
- Ensure Payroll Accuracy: Payroll calculations should be accurate, especially when salary adjustments are made mid-pay period, to comply with legal and contractual obligations.
- Track Hours Meticulously: Employers should monitor hours worked in bi-weekly pay periods to avoid discrepancies and ensure accurate payroll processing.
For Employees:
- Understand Payroll Cycles: Employees should familiarize themselves with payroll cycles to manage personal finances more effectively.
- Prorated Salary Awareness: Salary raises mid-pay period typically result in prorated pay. Employers should communicate these changes clearly to employees.
