If an employer and his employee agree to a salary of say, 'X' CU (Currency Units) per year, then paying 'X / 26' units every fortnight (say every Monday) will NOT be equal to the agreed salary.
To this extent, the employee's contention is right.
His conclusion that he is being underpaid is, however, incorrect.
In fact it is the other way round.
The employer will end up spending more by paying on fortnightly basis, unless there is an adjusting payment once a year.
The reason is simple and is as under:
If the entire year’s salary is paid during only 26 fortnights, he will end up paying extra, over and above the agreed sum, for remaining day / days of the year. No year is over in 26 fortnights (= 52 weeks = 364 days). There will be nearly a day (or two in a leap year) remaining in the year, for which payment will be made in the subsequent year.
The solution to this dilemma - which can satisfy both employer and the employee - is to agree not to fortnightly payments, but, instead, to semimonthly (twice a calendar month) payment, say on the 16th day and the last day of the month. Each installment should then be ‘X / 24’ CU (instead of ‘X / 26’ CU, as is done hitherto).
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| 08/19/2014, 3:19 AM | SALARY FORTNIGHTLY VS MONTHLY |
| 08/25/2014, 3:27 AM | Re: SALARY FORTNIGHTLY VS MONTHLY |