Why You Should Set Up A Semi-Monthly Pay Schedule

Most employers pay their employees monthly or weekly. Monthly payments allow employers to balance their financial figures with bills and income, while weekly allows employees to have control over how much they work.

We are here to suggest a third option - semi-monthly payments.

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What Is A Semi-Monthly Pay Schedule?

A semi-monthly payment schedule is when the employees get paid twice a month. It will be on the same dates each month, normally the 1st and 15th. 

This type of schedule is often confused with biweekly payment, and although they are similar, semi-monthly payments only occur twice a month, while biweekly payments could happen more often.

This type of payment schedule is perfect for employers who have hourly workers, rather than salary-based employees. However, unlike biweekly payment schedules, they can be used for both types of workers, making it even better for companies that use multiple types of payments.

Let us explain how.

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5 Benefits Of A Semi-Monthly Pay Schedule

Some of the benefits we are about to share are specifically for the employee, while others are aimed at businesses.

It’s Easier For Employees To Manage Their Money

If you pay your employees weekly or biweekly, you may end up hearing the same issue time and time again. Anything from “I don’t have enough money to pay my bills” or “ Yeah, I spent everything already”.

This may not be a reflection on how much you are paying your employee but on their ability to manage monthly bills with weekly payments. 

Weekly payments, means that employees can get their hands on their cash faster. This can help them pay off debts, buy essentials, and understand how much money they have. However, weekly payments are hard to manage if your bills are monthly.

Using semi-monthly payments will give your employees the same quick-cash feeling but will allow them to pay their bills with greater ease. This is because they will be handed a greater sum of money in one go, which they can put straight towards their outgoings.

The latter payment of the month can then be used to splurge, giving your employees greater control over their overall spending.

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It’s Easy To Mix This Method With Other Payrolls

Semi-monthly payments can help a business manage its outgoings alongside its incomings, especially if its bills or payments come out at peculiar times. Splitting the month into two can help the business reach smaller goals with more ease, as you can see and better judge how far the financial cash flow can reach.

You can also ensure that salary-based workers can get paid on the same day as the semi-monthly workers as these dates are fixed. They might be getting paid once per month, however that one time can line up with the scheduled payment of the semi-monthly worker. This is why semi-monthly is easier to manage than bi-weekly.

Bank Holidays Won’t Mess Up Your Payment Schedules

If your employees are paid weekly or bi-weekly, the bank holidays can mess up their financial plans. They might miss a day or even 3 as they wait for the next payment to arrive. If the bank holiday appears on a Friday or Monday, this could mean using one week’s pay to stretch to a second week.

Using semi-monthly payment schedules, missing 3 days out of 15 will not be as impactful. Your employees will be able to regulate their payments easier causing less stress overall. 

Leap Days And Odd Numbers Days Are No Longer An Issue

If you normally pay weekly, or bi-weekly, odd-numbered days and leap years can create a world of confusion. Your employee might receive their payment on Mondays, then Tuesdays, on the 10th, and then on the 11th.

This inconsistency will cause your employees to constantly message their managers about payday. However, if you pay semi-monthly, the date will always be the same. The day might change every once in a while, but your employees will always know what date to look out for.

Figuring Out Accruals Will Be Easier

If your employees are entitled to benefits, calculating the accruals will be easy when you know that the number of days worked will be the same every time.

This means that compliance, taxes, and complex periods in the year will not confound your accounting team every 6 months.

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2 Things To Be Aware Of

Although we recommend switching to a semi-monthly payment schedule, there are a couple of aspects to the plan which might put you off.

Half-Days And Shift Swappers Might Be Hard To Track

Semi-monthly payments are perfect for salary workers and hourly employees that work to a schedule. This will allow your accounting department to easily send out the same or similar pay packet every half month.

However, if you have part-time employees, allow half days off, or have a system that allows people to swap shifts, then there might be a complication.

Because these employees don’t stick to a regular schedule, you won’t be able to manage your budget accordingly. 

You can still use the semi-monthly system, however, it cannot be automatic.

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If You Have Deadlines For Hours Work, It Can Get Confusing

In an attempt to control the amount of overtime an employee makes, some employers give their workers a cut-off time to submit the hours. This allows employers to figure out their taxes and how much they need to spend on pay.

However, if you allow 50 hours of work total per week, but the first payment is over 2 weeks long, it can be confusing for the employee to see how much they have accumulated.

For systems such as these, semi-monthly payments may not work.

Summary

If you have workers on a salary, working hourly, or a mixture of both, then consider using a semi-monthly payment system. It can help your business control its cash flow while allowing your employees to manage their bills.

This payment method is great for any job that doesn't include shift swapping or capped hours.

A free paystub generator is a great, affordable way to create custom paystubs.