What is weekly pay?
In a nutshell, weekly pay is what an employee earns in a week for their work. Employees under this structure receive their pay every week instead of monthly.
For individuals working hourly, on shifts, or on a rota basis, this is determined by the total hours worked in a week. But for salaried employees, weekly pay is simply a portion of their monthly or annual salary.
The benefits and potential risks of weekly pay
Benefits
Improved cash flow management
Easier budgeting due to regular income
Ideal for lower-paid workers who may need more frequent access to their earnings
For employers, weekly pay can serve as an effective retention and attraction strategy for employees who prefer more frequent pay periods
Potential risks
Processing weekly payments can be more labour-intensive and costly
The increased frequency of calculations may also lead to inconsistencies
For employees, weekly payments could encourage short-term financial planning rather than saving or budgeting for long-term expenses
Both employers and employees must carefully evaluate these aspects when considering weekly pay structures
How to calculate weekly pay
Method 1: Converting annual salary to weekly pay
To calculate the weekly pay for salaried employees on a fixed annual salary, divide their annual wage by 52 (the number of weeks in a year). For example, for an employee with an annual salary of £30,000, their weekly wage would be roughly £576.92.
Method 2: Calculating weekly pay based on hourly rate, shifts, or irregular hours
Hourly
For hourly employees, weekly pay is calculated by multiplying their hourly rate by the total hours worked in the week.
Shifts and rotas
For shift or rota workers, weekly pay calculations must consider the total hours worked. For instance, a nurse working 3 twelve-hour shifts in one week and 4 in the next, at a rate of £15 per hour, would have a weekly pay of £540.
Irregular hours
For employees with irregular hours, the '52-week period' rule is useful. If an employee worked a total of 1,200 hours over 52 weeks, for example, you would divide 1,200 by 52 to find their average weekly hours (23 hours), then multiply by their hourly rate to calculate their average weekly pay.
The '52-week period' method
The '52-week period' is a method used in the UK to calculate weekly pay for workers whose hours fluctuate from week to week. As an employer, you look at the worker's pay for the last 52 weeks they worked, excluding any week they didn't work at all. You then sum the pay for these weeks and divide by 52 to get an average weekly pay.
If the worker has been with the business for less than 52 weeks, use the number of weeks they’ve worked to date to work out this average.
This rule also applies to holiday pay calculations, redundancy payments, and compensation claims. It provides a fair representation of a worker's usual earnings, even if their hours vary considerably.
Calculating additional weekly pay: overtime, bonuses, commissions and more
Overtime, usually paid at a higher rate, should be added to regular weekly pay. Performance-related bonuses also factor into weekly pay. These bonuses should be averaged over a specific period, then added to the employee's regular weekly pay.
Remember to include any income from previous employers during the same pay reference period in the weekly pay calculations.
Lastly, consider deductions such as taxes, National Insurance, student loan repayments, and pension contributions when working out net weekly income.
By understanding and applying these calculation methods, you can ensure fair pay for all employees, promoting transparency in the workplace.
Wrapping up
Whether you pay your team weekly or monthly, the most important thing is accuracy and consistency. Weekly pay can be a great way to boost employee satisfaction and financial stability, but it does require careful calculation and a proper system to manage the more frequent payment cycles.
To help simplify the process, use reliable software like Tide Payroll to automate your weekly pay runs, handle all the calculations, and ensure all your payments are accurate and on time, giving you more time to focus on your business.
Image from Unsplash published by amstram
