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What should you know about your payroll schedule?
A payroll schedule (also known as pay cycle, pay periods or payroll frequency) refers to how often you pay employees. The most common payroll schedules are weekly, bi-weekly, semi-monthly and monthly.
Choosing how often to pay your employees may feel like a small decision, but it touches everything from how much time you spend processing payroll to how confident your team feels about getting paid on time.
Why do payroll schedules matter?
Think of the impacts like the layers of an onion. Every choice you make about your small business payroll affects your employees, the governing agencies and, ultimately, your business.
- Employees: Knowing when you’ll get paid and that the payroll will be accurate and on time builds trust and confidence.
- For the government: The more structured you are with your payroll, the more likely you are to follow the rules and regulations and be in good standing.
- For your business: Having regular pay periods gives you a schedule so you know when to plan to have funds and to set the time aside to manage payroll.
Most common payroll frequencies in Canada
The biggest influence on payroll schedules? The humble calendar with its 12 months, 52 weeks and 365 days. Following the calendar, the most common payroll schedules are bi-weekly, semi-monthly, monthly and weekly. Here’s a quick breakdown of each one:
Weekly (once a week)
Weekly pay periods are when you pay your employees on the same day of the week, every week.
- Pay periods per year: 52 (52 weeks ÷ 1 payroll per week = 52 pay periods)
- Best for: Construction, retail, hospitality, or unionized businesses to support fluctuating shifts and hourly wages.
- Overtime: Since overtime is based on weekly thresholds in most provinces, weekly payroll aligns perfectly.
- Legal: In every province and territory.
- What else to know: While your employees will enjoy being paid more often, it also means you’ll be running payroll more often, potentially costing you more time and money.
Bi-weekly (every two weeks)
The most common payroll schedule, bi-weekly payroll is when you pay employees on the same day of the week, every other week.
- Pay periods per year: 26 (52 weeks ÷ 2 payrolls per week = 26 pay periods)
- Best for: Salaried employees and hourly employees with consistent hourly totals.
- Overtime: Second best, after weekly payroll, for overtime calculations.
- Legal: In every province and territory.
- What else to know: Considered the middle ground of payroll frequencies, bi-weekly payroll evolved from a compromise between unions and businesses. It’s also a pretty good balance of time and cost.
Semi-monthly (twice per month)
Semi-monthly payroll is when you pay your employees twice a month, typically the 15th and last day of the month.
- Pay periods per year: 24 (12 months x 2 payrolls per month = 24 pay periods)
- Best for: Salaried employees, often at businesses that provide professional services.
- Overtime: Because the length of pay periods can vary with long or short months, overtime can get complex.
- Legal: Some provinces require written employee consent for semi-monthly payroll.
- What else to know: While the accounting of dividing salaries equally into 24 pay periods is simpler, you may find yourself stopping to answer employee questions more often.
Monthly (once a month)
This probably comes as no surprise: Monthly payroll is when you pay employees once a month, usually at the end of the month. It’s also the least common payroll schedule.
- Pay periods per year: 12 (12 months ÷ 1 payroll per month = 12 pay periods)
- Best for: Salaried professionals, executives and owner-operators.
- Overtime: Not ideal for overtime, it’s intended for people who don’t have overtime.
- Legal: Many provinces only allow monthly payroll for specific categories of professionals.
- What else to know: Although monthly payroll requires the least amount of admin and oversight, non-executives might struggle adjusting to longer times between paycheques. For certain businesses, this can also negatively affect talent recruitment.
What should you consider when choosing a payroll schedule?
Choosing a payroll schedule comes down to what works best for your team and your business. Here’s a checklist of questions to ask:
- Are your employees hourly or salaried? Weekly and bi-weekly work best for hourly. Semi-monthly and monthly work best for salaried employees.
- Do you need to account for overtime? If so, weekly and bi-weekly payroll is likely best.
- What are the rules for payroll schedules? In Canada, this isn’t just where you do business, it’s also where your employees live and work.
- What are the business costs of administering the schedule? If you run weekly payroll, you’ll have to have the cash flow to support it. Not to mention the time to approve and administer the payroll.
- What will payroll software cost? Check with your provider to clarify how the pricing is structured in relation to your needs, especially in terms of frequency and the number of employees.
Is there a way to make small business payroll easier?
We think so, which is why we’re building Huumans Payroll. Embedded inside Roy AI, Humans Payroll not only makes paying employees easier, it also connects your payroll data to the financial health of your company. So you’ll be able to keep an eye on costs and even model if you can afford a new hire.
