As an employer in Canada, you have a lot of responsibilities. Such as hiring employees, conducting interviews, determining pay rates, etc. Moreover, being an employer, you should know how to choose the correct payroll period or payroll schedule for your employees.
Simply put, you need to know how often your employees will be paid. For example, will it be weekly, biweekly, monthly, or semi-monthly?
How To Choose A Payroll Period For Your Employees?
1. What is a Payroll Period?
A payroll period is a recurring time an employee gets a salary. Besides, how often you pay employees depends on the length of your pay periods. A payroll period has many other names. Such as payroll schedule, payroll frequency, pay period, and pay frequency.
2. What are the Four Types of Payroll Periods?
Although, there are several types of payroll periods. But there are four most common options, which are as follows:
- Bi-weekly (once every two weeks)
- Semi-monthly (twice a month)
3. How to Choose the Right Payroll Period For Your Employees?
In this schedule, an employee gets paid weekly. He/she will receive 52 paycheques a year. You can choose a weekly payroll schedule for hourly employees and part-time employees. Moreover, the weekly method is ideal for employees who work overtime. Or whose work schedules change every week.
It is just like the weekly schedule. In a bi-weekly schedule, employees get their pay on a specific day of the week. The main difference is that payroll is processed every other week in a bi-weekly payroll structure. Thus, resulting in 26 paycheques, sometimes 27 per year. For the companies which follow this payroll structure, the payday could be every other Friday.
Check another interesting article by Yogi & Associates on how to do a payroll business. Click here, How To Do Payroll in Canada: 5 East Steps.
This payroll period or schedule is similar to the biweekly schedule. The only difference is that paydays are connected to two specific month dates. The entire paycheques will be 24 per year. So, employers can pay checks on 1st and 15th or 15th and 30th/31st. And if the weekend falls on these days, the employer can deliver checks either on Friday. Thus, the employer should provide checks on weekdays.
“Bi” means two = [Every two weeks]
“Semi” means half = [Every half month]
As the name implies, this payroll schedule works monthly. So the total number of paycheques is 12 per year. The specific date of payday can vary. For instance, you can choose to pay your employees every last Thursday. A monthly payroll schedule is the least attractive pay period for employees. Because employees need to wait a month to get paid.
4. How Do You Calculate Payroll Period?
You need to divide the total annual pay for the employee or department by the number of pay periods. For example, divide the amount by 52 if your pay periods are every week. For biweekly payments, divide the amount by 26. Moreover, use the number 24 for semi-monthly. And 12 for monthly payroll in your division calculation.
5. Making Your Choice For the Perfect Payroll Period
When it comes to selecting the optimal payroll period, it’s clear that there’s no “one size fits all” solution. Also, each payroll schedule has its pros and cons. So, the ultimate solution is to choose an option that satisfies your employees. And it should also meet your business needs.
Lastly, selecting a suitable pay period is essential for your small business. So, you need to check various factors. Such as your company’s finances, and human resources, when looking for a payroll period.
6. Need Support With Your Payroll?
Only some payroll periods or schedules fit all problems entirely. Each of the four pay periods has its advantages and disadvantages. The only thing that can help you make the final decision is considering your employee’s ultimate satisfaction. And your province’s frequency requirements. And last but not least, your business needs.
Let’s discuss if you’re considering outsourcing your payroll. So, get in contact with us right away to discover more about our services.