Pay Period - How to Choose the Right Pay Period For Your Company

Human Resources

Of all the various intricacies involved with employing workers remotely, the pay period you choose to adopt might seem like something to be placed towards the bottom of the list of priorities. This would be a mistake.

The gamut of remote employee compensation is subject to numerous laws and regulations, and failure to meet these requirements can leave businesses under threat of severe legal and financial penalties. 

Pay periods, like remote working itself, are evolving rapidly, and companies must be adaptable to upcoming changes. As reported by Forbes, in a survey of workers aged 18-45, a whopping 83% believed they should have access to wages at the end of each day or shift.

Furthermore, 81%also said they would take a job that provides wages on demand over one that doesn't. Recruitment and staff retention will both be increasingly affected by changes to traditional pay periods.

Fortunately, as the popularity of remote working continues to climb, so does the number of resources available to remote business owners, including companies such as the educational platform, NoHQ, the self-styled wiki of tools for remote work.

What is Pay Period?

Prior to examining the more complex aspects and implications of choosing the right pay period for your company, it is important to understand what a pay period is, and what it isn’t.

A pay period is a fixed interval of time used by employers to gauge how much compensation an employee is due for work carried out in that fixed interval of time. 

Pay periods can vary across different companies, industries, and regions. For instance, in the United States, the most common pay period is bi-weekly, (salary paid every two weeks), whereas, in the United Kingdom, a monthly pay period is by far the most common practice. 

This is of particular significance for companies that employ remote workers that might not only reside in a different state from their employer but even a different country.

Different Types of Pay Periods

Weekly Pay Period

Weekly pay periods are typically utilized by businesses whose employee salaries are calculated on an hourly, rather than an annual basis. For instance, a service industry position offering compensation of $15 per hour versus a marketing manager role with an annual salary of $40,000. 

This accommodates the varying natures of each role. Where, typically, a marketing manager will work to a fixed schedule of hours, the number of hours worked by a restaurant server will often vary from week to week.

A weekly pay period will allow a business to handle the variation in hours worked much more easily than longer pay periods. This benefit is multiplied when dealing with employees that often work overtime. 

Weekly pay periods are usually worked one week in lieu, with an employee receiving their salary one-week after the week they worked. 

Bi-Weekly Pay Period

A bi-weekly pay period is, again, typically used for jobs with salaries calculated on an hourly basis, only this time, wages are paid every fortnight, rather than every week. 

The main benefit for businesses using a bi-weekly pay period, rather than weekly, comes through reducing the amount of administration and payroll reporting required. 

Bi-weekly pay still allows for a high level of flexibility in managing variances in the number of shifts or hours worked. 

Monthly Pay Period

As alluded to above, a monthly pay period is often best for salaried positions that work a fixed number of hours. 

This again reduces some of the complexities that can come from adopting shorter pay periods and simplifies the job of the payroll department by dealing with fewer pay periods, pay dates, and other reporting requirements.  

Pay Period VS Pay Cycle

The terms “pay period” and “pay cycle” are often used interchangeably to refer to the fixed period of time used to calculate earned wages. Though there is a subtle distinction between the two. 

In short "pay period" is a broader term that can refer to any length of time between paydays, whereas “pay cycle” refers to the specific number of days in a pay period.

Pay cycles determine how often payrolls are run and the dates on which employees are paid.

In terms of typical usage both terms are, to all intents and purposes, the same thing. 

Why Pay Period is Important?

Choosing the right pay period allows a company to perform at its most efficient, whilst simultaneously working towards maximizing the benefit to employees. 

From an employee point of view, nothing is as important as ensuring that they are paid both accurately and on time. 

On the business side, in conjunction with maintaining employee satisfaction, optimizing internal processes around employee compensation (reporting, accounting, budgeting, taxation, etc.) can often be the difference between a business succeeding and failing. 

This is particularly true of small businesses and new start-ups that may not have access to the capital or funding required to continue operating over long periods of time.  

How to Choose a Type of Pay Period for Remote Employees?

Step #1: Consider Gross Pay

Owners of remote businesses should understand gross pay because it is an important factor in determining their company's financial stability and success.

By understanding the gross pay of their employees, business owners can make informed decisions about their budget, staffing needs, and overall financial management. 

Additionally, a clear understanding of gross pay can help business owners ensure that they are in compliance with legal requirements. This will account for things like minimum wage and overtime pay, aswell as accomodating requirements for deductions such as taxation and retirement contributions.

Step #2: Learn the Employment Laws

Remote business leaders must learn employment laws to ensure they comply with legal requirements, avoid legal disputes and penalties, and foster a fair and safe workplace for their employees. 

Compliance with employment laws protects both the business and its employees and helps establish and maintain a positive and professional work environment. 

If you employ remote workers from outside the United States then you must recognize, understand and comply with any such regulations stipulated by your employee’s country of residence. 

Step #3: Consider the Salary Type

Considering the type of salary (e.g. hourly, salaried, commission-based) works to aid a number of business goals. The right salary type ensures that your employees are compensated fairly and in line with industry standards, and also takes into account factors such as the nature of the work and the overall financial goals of the business.

Different salary types have different implications for both the employer and employee in terms of taxes, benefits, and work hours. 

It's important to choose a salary type that aligns with your business and employees' needs to foster a positive and productive work relationship.

This involves determining the best payment method (direct deposit, mobile wallet, check, etc.), the impact on payroll reporting, and ensuring compliance with all relevant local, state, and international regulations.

Step #4: Choose a Payroll Service

These days, there is an abundance of payroll services companies that can accommodate the needs of any business. This allows business owners and senior staff to focus more time and energy on running the business rather than dealing with payroll. 

A payroll service will:

  • Streamline your payroll process
  • Ensure you are in compliance with tax laws and regulations
  • Handle all payroll-related tasks (calculating taxes, processing employee paychecks, producing reports)
  • Provide expert advice
  • Keep up to date with any changes in tax law
  • Reduce the risk of penalties and fines for non-compliance

By outsourcing payroll, remote business managers can focus on running and growing their business, rather than managing complex payroll processes.

Payroll service companies are just one type of external resource that can bring major benefits to remote businesses. If you are interested in learning more about the growing number of businesses and platforms available to remote business owners you might want to have a look at NoHQ. 

NoHQ is one of the leading educational platforms for remote companies that helps companies excel at enabling remote working.  


Choosing the right pay period is important for remote businesses and their employees as it impacts financial stability, legal compliance, and employee satisfaction. 

This is particularly salient for young businesses and new start-ups where cash flow and funding may be impactfully limited. 

If you are a remote business or are considering the switch to remote working, please have a look at our toolkit to get an understanding of just how much support is out there to help make your business the success it deserves to be. 

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