Pay cycle

What Is a Pay Cycle?

A pay cycle refers to the recurring schedule on which an employer processes payroll and distributes wages to employees. It defines how often employees are paid, such as weekly, fortnightly, or monthly, and plays a critical role in both business operations and employee financial wellbeing.

The choice of pay cycle affects everything from cash flow management to employee satisfaction, payroll compliance, and superannuation obligations. In Australia, there is no legally mandated pay cycle length, but employers must ensure that employees are paid at least monthly, in line with their relevant modern award, enterprise agreement, or employment contract.

Fair Work – Paying Wages

Types of Pay Cycles

1. Weekly
   • Employees are paid once every 7 days.
   • Common in construction, hospitality, and retail industries.
   • Offers fast cash flow for employees but may increase processing workload for payroll teams.
2. Fortnightly
   • Employees are paid every two weeks (14 days).
   • A popular middle ground across many industries in Australia.
   • Allows for easier budgeting for both employer and employee.
3. Monthly
   • Wages are paid once a month, typically on the same date.
   • Less frequent payroll processing, but may be less popular with employees due to longer wait times between paydays.
4. Bi-Monthly / Semi-Monthly
   • Employees are paid twice per month, such as on the 15th and last day.
   • Less common in Australia, more frequently used in the United States.

Why Pay Cycle Choice Matters

Choosing the right pay cycle impacts both operational efficiency and employee morale. Businesses must strike a balance between:

• Payroll admin time: More frequent cycles mean more processing and reporting.
• Cash flow management: Aligning pay cycles with income and invoicing cycles can ease financial strain.
• Employee expectations: More frequent payments support better budgeting and reduce financial stress.

Legal Requirements and Fair Work Guidelines

Under the Fair Work Act 2009, employers must:

• Pay employees at least monthly
• Pay on time, according to the agreed schedule
• Include accurate payslips with each pay cycle
• Meet superannuation payment obligations (currently within 28 days after quarter end, but shifting to payday super from 1 July 2026)

Employers must also ensure that the pay cycle does not result in employees being underpaid or having access to entitlements (like overtime or leave accrual) withheld unfairly.

Explore: Superannuation and Payday Super Changes

How Pay Cycles Affect Payroll Processing

Each pay cycle involves:

• Collecting timesheets, leave records, and any applicable allowances
• Calculating gross pay, deductions (like PAYG withholding), and net pay
• Issuing payslips and transferring wages to employees
• Reporting to the ATO via Single Touch Payroll (STP)

Shorter pay cycles increase the frequency of these tasks, which is why many businesses rely on automated payroll software like Microkeeper to streamline the process.

How Microkeeper Helps You Manage Pay Cycles

Microkeeper's payroll platform is designed to handle flexible pay cycle configurations while ensuring compliance and automation:

• Set weekly, fortnightly, or monthly pay runs
• Automate payslip generation and email delivery
• Integrate rosters, timesheets, and award interpretation for accurate calculations
• Automatically process superannuation payments
• Sync with ATO STP submissions and general ledger exports

Discover Microkeeper’s Payroll Tools

FAQs About Pay Cycles

Can an employer change the pay cycle?

‍Yes, but only with proper notice and agreement from affected employees. Employers must also check the applicable award or agreement for guidance.

What’s the difference between pay cycle and pay period?

‍The pay cycle is the schedule (e.g. fortnightly), while the pay period refers to the actual dates worked (e.g. July 1–14).

Do all employees have to be on the same pay cycle?

‍Not necessarily. Businesses can run multiple pay cycles for different departments, roles, or employment types if needed.

How does payday affect leave accrual and super?

‍Leave accrues progressively with each pay cycle. Super is calculated based on ordinary time earnings (OTE) during the pay period.

Best Practices for Managing Pay Cycles

• Communicate clearly with employees about payday and payslip availability
• Ensure payroll data is accurate and up to date before each cycle
• Use software with award interpretation and automatic STP reporting
• Keep detailed records in case of audits or disputes

Final Thoughts

A well-chosen and well-managed pay cycle helps foster trust, reduce payroll errors, and support employee financial wellbeing. Whether you're a small business or a large enterprise, optimising your pay cycle with the right tools and practices is essential.

With Microkeeper’s all-in-one payroll and HR software, you can confidently manage any pay cycle while staying compliant and efficient.

_{Disclaimer: This glossary entry is for general information only and does not constitute legal or financial advice. For specific guidance, consult a qualified professional or the Fair Work Ombudsman.}