Determining employee compensation twice per month, often on the 15th and the last day of the month, is a common payroll frequency. This method involves dividing an employee’s annual salary by 24, resulting in each pay period representing half of a month’s earnings. For example, an employee with an annual salary of $60,000 would receive $2,500 per pay period ($60,000 / 24 = $2,500). This approach contrasts with bi-weekly payroll, which operates on a schedule of every two weeks, and monthly payroll, which distributes earnings once per month.
Processing employee payments on a semi-monthly schedule provides a predictable and regular income stream for employees, which can aid in budgeting and financial planning. For employers, this frequency can simplify accounting processes compared to more frequent payroll schedules. Historically, semi-monthly pay periods were often favored due to alignment with calendar months, offering a natural division for accounting and record-keeping.
