The number of pay periods in a year depends on the pay frequency chosen by the employer.
Weekly Pay Frequency:
With a weekly pay schedule, employees receive their wages every week, typically on a designated day such as Friday. Since there are 52 weeks in a year, there are 52 pay periods for those paid every week.
Bi-Weekly Pay Frequency:
Bi-weekly pay frequency means employees get paid every two weeks or once every 14 days. In this case, there are 26 pay periods in a year. However, due to the nature of the calendar, some years may have an additional bi-weekly pay period, resulting in a total of 27 pay periods. This phenomenon is known as a “payroll leap year” and occurs roughly every 11 years.
Semi-Monthly Pay Frequency:
A semi-monthly pay schedule is when employees get paid twice a month, resulting in 24 pay periods per year. These payments are made on specific dates, such as the 1st and 15th of each month, or the 15th and the last day of each month. Although the number of days between pay periods varies, the total number of pay periods remains consistent at 24 per year.
Monthly Pay Frequency:
Monthly pay frequency means that employees receive their wages once a month, usually on a predetermined date such as the last working day of the month or the first day of the following month. With this pay schedule, there are 12 pay periods in a year.
Both employees and employers need to be aware of their pay frequency and the corresponding number of pay periods, as this information is crucial for budgeting, financial planning, and tax-related purposes. Different pay frequencies may have advantages and disadvantages depending on factors such as cash flow, payroll processing costs, and employee preferences.