3.3 Pay Periods and Pay Cycles

3.3.1 What are pay periods and pay cycles?

Pay periods and pay cycles are closely related, and these terms are sometimes used interchangeably. Pay periods are the timeframe used when calculating wages and determining when employees receive their pay. They are fixed and most often recur on a daily, weekly, biweekly, semi-monthly, or monthly basis. An employee paid biweekly will have 26 pay periods in one year. Payroll may number the pay periods for ease of reference (e.g., January 1–15 may be pay period 1). An employee’s paycheck, usually issued after the pay period has ended, will usually include the start and end dates of the pay period.

Pay cycles are the frequency an employer pays employees and can be daily, weekly, biweekly, semi-monthly, monthly, or any time interval a business chooses to settle its employee dues, within the limit of what is allowed by employment standards legislation.

3.3.1.1 Common Pay Cycles

The following are commonly used pay cycles in the Canadian workplace:

• Daily: In a daily pay cycle, the employer pays employees at the end of every day, amounting to approximately 260 paydays per year. This figure is arrived at by multiplying 5 working days per week by 52 weeks in a year; that is, 5 × 52 = 260. Note that a leap year has one additional payday, making 261 paydays in those years.
• Weekly: The employer pays employees every week in a weekly pay cycle. This results in 52 paydays because there are 52 weeks in a year.
• Biweekly: Employees get their earnings every 2 weeks in a biweekly pay cycle model, meaning there are 26 paydays in a year. This is achieved by dividing the number of weeks in a year (52) by 2; that is, 52 ÷ 2 = 26.
• Semi-monthly: In a semi-monthly pay cycle, employees receive their pay two times per month, often on the 15th day and the last day of the month, for 24 paydays per year. This number is arrived at by multiplying 12 months of the year by 2 paydays per month; that is,  12 × 2 = 24.
• Monthly: In a monthly pay cycle, employees receive their pay once every month, resulting in 12 pay days per year.

3.3.2 Regular vs. Non-Regular Earnings

Regular earnings are payments made to an employee on a pay period basis for the duties performed. Although there are many different types of regular earnings, this chapter will emphasize salaries, piecework, hourly wages, vacation pay, shift premiums, and overtime. Please keep in mind that hourly wages, vacation pay, and overtime pay are dictated by employment standards in each jurisdiction, as discussed in Chapter 2. Regular payments are made regularly; that is, at an established frequency.

On the other hand, non-regular payments are not made each pay period and do not have an established frequency. In this chapter, we will discuss retroactive earnings, bonuses or incentive pay, vacation pay (where no vacation time is taken), and director’s fees.

Image Credit

Marking Calendar Date by Mohamed_hassan, Pixabay licence