Thinking is easy, acting is difficult, and to put one’s thoughts into action is the most difficult thing in the world. Johann Wolfgang von Goethe, 1749 – 1832
When you run a payroll every two weeks, you can reliably compute twenty six payrolls a year (26 x 2 = 52 weeks). If you pay salaried employees on this bi-weekly schedule, you may have taken the annual salary (e.g. $52,000 and divided by the 26 weeks for a bi-weekly salary of $2,000 per payroll). This is all fine and good for most years.
However, every so often there are twenty seven payrolls because three hundred sixty five days divided by fifty two leaves a remainder of one day. Leap year enters into the equation so really it’s only every eleven years or so that twenty seven bi-weekly payrolls will occur in your payroll calendar.
Do you pay the salaried person for the “extra” payroll ? In the first example, you could pay your salary person the additional $2,000 and proceed as normal. Many employers, however, believe they have contracted with their salaried employee an annual salary or a monthly salary. The reasoning goes that the fact that there happens to be an additional payroll should have no bearing on their annual or monthly salary.
If you choose to forgo paying your salaried employees, you’ll want to be very clear in your communications with them including providing them with plenty of notice so they can plan their finances accordingly. Look ahead in the calendar.
January 1, 2010 falls on a Friday. Depending upon your bi-weekly pay schedule, next year might be the 27 payroll year. Or if you move January 1,2010 to December 31, 2009, you may have 27 payrolls this year (2009).
Take a peek at your calendar for this year and the next. If you see twenty seven payrolls, you’ll have a head start on whichever way you proceed.
Cheers,
Bryan Dear
