In 2009 because of the way the pay dates fall, companies that process payroll on a bi-weekly basis may have a situation where they will have 27 pays. The problem is: what do you do with that extra pay for Salaried staff? Do you:
- Take the salary and divide it by 27 instead of the usual 26. If so, the bi-weekly pay amount is drastically reduced. That's hard on your staff. Probably won't be a very popular decision.
- Just pay the extra pay. If you do this one, you better include it in your 2009 budget. You could do this in lieu of a salary increase. You'll just have to explain that the salary increase will take place on December 31.
- Todd at New Pointe Community Church is brilliant. He decided to shift all of the salary staff to twice a month instead of bi-weekly. They move from 26 or 27 pays to 24 pays per year. The hourly staff stay at bi-weekly. They avoid a huge hit from 27 pays. The only problem with this is that the number of pays that are processed increases. In fact, in some months, there could be one payroll per week.
It's an issue worth considering. It could have a negative affect on your 2009 budget. Has anyone else recognized this issue? Anyone else have a good solution?
7 comments:
Dave,
Thanks for the kudos. I wish I could include your very kind words in my salary review. That could make the 26 / 27 pay thing mute. (Just kidding)
How are you going to handle the 27 pays?
Todd,
We haven't decided how we're going to handle the 27 pays. Since we put it off until 2010, we're going to wait until later in 2009 to decide.
Dave
It must depend on the day you are distributing. We do every two weeks on Friday, starting on 1/9, and we will still have 26 pays during 2009.
I agree with xmaveric who said that 27 pay periods are in 2010.
Thanks for sharing the "2009 - The Year of 27 Payroll Pays. You can also find information about Money exchange.
nice post!
I know this is a really old post, hopefully you still get this. The problem is there aren't 26 bi-weekly pay periods in a year, there are 26.0714 (26.1429 in a leap year) If you use that divisor instead of 26, and then accrue this isn't an issue.
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