Pay Cycle | Meaning and Definition

What is a Pay Cycle?

It refers to the defined period for which an employee works before getting paid. For example, an employee may work for two weeks and then get paid on the first of the following month. In this case, the pay cycle would be bi-weekly. They can vary in length depending on an organization’s payroll schedule. Some companies might have a monthly pay cycle, while others may have a weekly or bi-weekly pay cycle. The length of the pay cycle is typically determined by the frequency of payroll cycles.

Types of Pay Cycle

  •   The Normal Payroll Cycle is the most common type of payroll cycle. It refers to the regular pay schedule that an employer follows in paying their employees. Typically, salaries are paid out on a set date each month – for example, on the 1st or 15th of every month. This payroll cycle is easy to track and plan for both employees and employers alike.
  •   The Off-Cycle Payroll is a less common type of payroll cycle. It refers to when an employer pays their employees outside of their normal schedule. For example, an employer may choose to pay their employees a bonus. This type of payroll cycle can benefit employees who need their salaries sooner, but it can also be more difficult to keep track of.
  •   The Retroactive Payroll Cycle is the least common type of payroll cycle. It occurs when an employer pays their employees for work done in the past – typically, this happens when an employee has been with the company for a long time and has accrued a lot of vacation days.
  •   The final payroll cycle is when an employer pays employees their final paychecks after leaving the company.
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