Although not the most common type of payroll, semi-monthly pay schedules are still frequently used among businesses around the world. The most commonly asked question about semi-monthly payroll is whether it means twice a month or every two weeks.
What is Semi-monthly?
By definition, semi-monthly means two times per month. The most common application of semi-monthly is with payroll schedules.
When a business elects to use a semi-monthly pay schedule, its employees will get paid twice a month, or 24 times per year. In most instances, this will happen either on the 1st and 15th of every month or the 15th and last day (28th, 30th, or 31st) of every month.
Other common types of pay schedules include weekly, bi-weekly, and monthly, with bi-weekly being the most popular.
Semi-monthly vs. Bi-weekly Payroll
Many people ask: What’s the difference between semi-monthly and bi-weekly? Isn’t it the same thing?
Although they are similar, semi-monthly and bi-weekly do not mean the same thing. Semi-monthly means twice per month and bi-weekly means every two weeks. You may be asking yourself why this distinction is important.
The distinction between the two is important because not all months have the same number of days. Some months have 30 days, some have 31, and February has 28. An employee would receive 24 paychecks per year with a semi-monthly pay schedule 26 paychecks per year with a bi-weekly pay schedule.
|Frequency of Paychecks||Twice per month||Every two weeks|
|# of Paychecks Per Year||24||26|
|Payday (Day of the Week)||Inconsistent||Consistent|
Which is Better?
It depends who you ask. From an employers perspective, semi-monthly is preferable since there are two less paychecks per year for the company to prepare making it more efficient.
On the other hand, employees may prefer bi-weekly payroll since they still get paid twice a month but get two extra paychecks per year. Also, they get paid consistently on a particular day of the week, for example, every other Thursday, rather than a random day of the week.
Semi-monthly Payroll Example
Let’s pretend that Company ABC pays its employees semi-monthly, with its employees receiving their paychecks on the 1st and 15th of every month. An employee earning $100,000 per year will receive 24 paychecks of $4,166.67, less taxes.
Bi-weekly Payroll Example
Let’s pretend that Company XYZ pays its employees bi-weekly, with payday being every other Friday. An employee earning $100,000 per year will receive 26 paychecks of $3,846.15, less taxes.
Other Pay Schedules
Other pay schedules include weekly and monthly. When an employer elects for a weekly pay schedule, employees get paid once per week, for example every Friday. Under a monthly pay schedule, employees will get paid once per month, typically on the 1st of the month.
Preferred Pay Schedules By Industry
Although it is up to every individual company to decide which type of pay schedule they want to implement, certain types of pay schedules are more popular in some industries.
For example, banks and other financial services industries often elect for monthly paychecks since people in this profession earn higher than average salaries. For industries that pay low hourly wages, such as food service, weekly paychecks are more common.