When it comes to payroll schedules, businesses have several options, including weekly, bi-weekly, semi-monthly, and monthly pay periods. One of the less commonly understood pay structures is semi-monthly pay.
If you, as an employer, are trying to decide on a payroll system, or if you are an employee wondering just how this pay schedule works, this article aims to make the concept of semi-monthly pay clear along with the benefits that may be derived from it. This article will ensure that you know the proper answer to what does semi monthly mean.
What is the meaning of Semi-monthly Pay?
With a semi-monthly pay schedule, employees are paid twice a month for the days worked in the respective month on a predetermined date either on the 1st and 15th or the 15th and last working day of the month, providing 24 pay periods per year.
Compared with a bi-weekly pay schedule, which generates 26 pay periods in a year, semi-monthly pay ensures consistent paycheck amounts for employees, except where bonuses or commissions are concerned.
How Does Semi-Monthly Pay Work?
In a semi-monthly payroll, the pay slip for the first half of the month will be paid on one payday; the second will be paid out in the next payday. If payday is a weekend or holiday, the employers have the discretion of processing the payroll on the previous business day.
Understanding the Difference Between Semi-Monthly and Bi-Weekly
Since semi-monthly and bi-weekly have similar structures, there are many employees who are often confused between the two. The article will also make sure that you understand the difference between them properly.
| Feature | Semi-Monthly Pay | Bi-Weekly Pay |
| Pay Periods Per Year | 24 | 26 |
| Payday Frequency | Twice a month (fixed dates) | Every two weeks (day of the week varies) |
| Paycheck Amount | Slightly higher (since fewer pay periods) | Slightly lower (since more pay periods) |
| Consistency | Paydays may fall on different weekdays | Paydays always fall on the same day (e.g., Friday) |
Semi-monthly paydays are the best for employees who yearn for predictable paydays, whereas bi-monthly is good for employees who relish having more than two paydays in a month.
Exploring the Advantages of Semi-monthly Play
Along with understanding what is semi monthly pay, you should also take a look at the advantages that you will get.
- Predictable Pay Schedule – Employees always know when they are to be paid, thus helping them to budget for paying bills and expenditures.
- Less Payroll Processing – An employer processes payroll fewer times than it does under a bi-weekly scenario, thus reducing the administrative workload.
- More Simple Salary Computation – There are exactly 24 pay periods, so simply dividing the annual salary is all it takes.
Conclusion
A semi-monthly pay schedule provides employees with two consistent paychecks per month, making budgeting easier. While this signifies that it will not be ideal for hourly workers, it is a good alternative for salaried employees and any businesses that would like to streamline the processes. Employees and employers will be able to adopt the most preferable payroll system to them after learning the differences that set semi monthly apart from other payroll schedules.
