A pay period is the duration (or number of days) wherein regular non-salaried employees receive their pay. Employees paid per hour receive varying payments according to the hours or days they worked for, while salaried employees receive a pre-set pay regardless of the length of pay period.
Pay periods vary for each company; some pay weekly, while others pay bi-weekly, monthly or even yearly. The most common pay period is bi-weekly, usually on the 15th and last day of the month. Each of these pay periods have their own advantages and disadvantages. For instance, freelance workers are paid every day after work; while this may benefit the employee, it can be a time-consuming ordeal for employers as they have to create payrolls everyday.
Weekly pay periods can be a time-consuming process for employers are payroll and check signing are done every week. For employees, a weekly pay period can become a disaster, especially for those who are not good at budgeting funds. Since employees paid weekly tend to spend over their limits since the next paycheck is just 7 days away, they are stuck being unable to pay for monthly utility bills, rent and other necessities.
The most common type of pay period is a bi-weekly system wherein employees are paid every two weeks. Both the employers and employees find this system very effective since not only do employers save time and money for payroll, but employees also have a chance to manage their money more appropriately.
For employees paid by the hour that follows a bi-monthly plan, their expected pay usually varies because some pay periods have more days than others do. This happens because months like February have smaller number of days, so the first paycheck for March usually turns out low paying.
Monthly pay periods are rare, but are only appropriate for employees with good budgeting skills since after receiving your paycheck, it would be another 30 days until you receive another check. However, the rarest type of pay period is the yearly paycheck.
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