A client ask me recently how often they should pay their employees? There are many options.
In general over the last 25 years working with manufacturers I have seem several pay frequencies that companies use to pay their employees. The most common I’ve seen is bi-weekly with some who employ more low wage employees feel the need to move to weekly. Its not uncommon to see 2 pay cycles, salary bi-weekly and the hourly employees paid weekly.
Semi Monthly is seen from time to time and is great for salary workers when you don’t have to worry about pay week ending time for over time calculation purposes but but adds complexity when to cut off the pay period in time to process payroll for the hourly workers. This is often the 15th and the last day of the month.
Monthly pay cycles are rare but I have seen them from time to time generally for a salaried work force and almost always are Asian owned companies or the occasional European owned company.
EOWEO-for “every other weekend off.” Running a 24 hour operation such as some heat treating where the cost and time to start up and shut down equipment makes it impractical to shut down nights and weekends. Employees follow a 14-day pattern of 2-days-on, 2-days-off, 3-days-on, 2-days-off, 2-days-on and 3-days-off.
Yes that one needs a chart to follow but it works.
Choosing a pay frequency (s) for your team is not always easy and needs some thought about the unique business needs and about the make up of your employees, hourly or salary.
There was a time when paying less often saved you money. Bi-weekly was cheeper than weekly, not 1/2 the price but significantly less. I don’t see that much any more and while many payroll companies still charge per check, many have gone to PEPM, per employee per month. In that model you often can produce payroll more frequently with little or no additional fees.
What about paying daily? What a night mare? No, not really but I will save that for next time.
Jim Stowe runs FreshHR, a Macomb Township Michigan consulting organization as
CHIEF INSTIGATOR of: HR EFFICIENCY ,TAX REDUCTION & COST OPTIMIZATION.
Jim has an extensive background in HR services including over 30 years at companies such as ADP, General Mills and Liberty Mutual among others and holds a Master’s Degree in International Business from Central Michigan University