Monthly to fortnightly payments issue...

H3llR4iser

Hi folks, I just want to hear a few opinions on this - I know there is no solution to the issue other than "batten down the hatches" or change jobs.

Long story short, the company I work for recently switched from paying salaries monthly to a fortnightly payment; It was a completely unilateral and nonnegotiable decision. During the process, we were constantly reassured that nothing would in effect change, and that in the end adding up the two fortnightly payments in a month the sum would be equal to the previous monthly payment.

I objected that there are 12 months, but 52 weeks in a year and not 48; It makes 26 fortnights, not 24. I was told "it's not gonna be a problem".

Turns out it is a problem - salary is indeed spread out to 26 payments and not 24; As a result, over the "30 solar days" period I am nearly 300 Euro short of take home pay.

Now, I understand that the yearly total will be the same as before - May and December will have 3 payments instead of 2; Yet, in the months leading up to the "extra" payment, I rack up nearly 1200 euro of shortage compared to before.

I see it as a significant issue as I, and I guess most people, would have had their expenses planned based on monthly salary - "I earn X in a month, I can afford to pay Y in the same month in rent/bills/expenses". In many cases, making adjustments it's hard if not impossible (the only thing I could change, I could move to a cheaper place...but I'd need to move further away from work, and trasnport expenses would compensate). I'm now finding I have very little "disposable" income, and had to dip into my saving a couple of times already to get to the end of the month when I had unexpected expenses (e.g. dentist, mechanic).

Nobody else in the office seems to have an issue with it - they look at me like I have two heads if I bring up the "what if your boiler breaks in November?" issue.

What's your view on the situation? In my opinion, we've been misled quite a bit with the "it's gonna be the same" stance; Even when I raised the precise issue that then, inevitably, become a reality...

Mrs OBumble

To be blunt, if you are managing your money in a way that this is a problem, then you are living outside your means.

If the boiler breaks in November, you should be paying for the repair from your savings, not from October's paycheque.

In general, you should have enough savings to tide you over for three month living expenses - because if you got sick and could not work, it would likely take this long for welfare to start paying you a benefit.

In terms of being short 300 euro in the months that only have two pays in the - you would be better off thinking of your self as XYZ euro up in the months that do have an extra payment. Plan your budget on what you get paid in two pay periods, and use the occasional "extra pay" for savings or treats.

davo10

The flip side of this is that many employees have expenses that they pay immediately on receiving their monthly payment leaving them "short" the last week of the month so more frequent payments make it easier to manage incomings and outgoings. If your earnings are the same, what is the issue? You just adapt to the payment schedule.

Drexel

Mrs OBumble wrote: »

To be blunt, if you are managing your money in a way that this is a problem, then you are living outside your means.

If the boiler breaks in November, you should be paying for the repair from your savings, not from October's paycheque.

In general, you should have enough savings to tide you over for three month living expenses - because if you got sick and could not work, it would likely take this long for welfare to start paying you a benefit.

In terms of being short 300 euro in the months that only have two pays in the - you would be better off thinking of your self as XYZ euro up in the months that do have an extra payment. Plan your budget on what you get paid in two pay periods, and use the occasional "extra pay" for savings or treats.

harsh. A lot of people living paycheck to paycheck these days

Tigger

im confused
lets say you earn 26k
so you get 1k every fortnight so by week 12 of a given year you will have received 6k
if you had been being paid monthly you would get 26/12 a month or 2,166 a month and by week 12 you wold have recieved 2 monthly payments
after 13 weeks you would have recieved 6.5k but after 14 weeks youd have recieved 7k so its swings and roundabouts with you generally being one weeks wages ahead of the monthly system

H3llR4iser

I have to make it clear that the question was about the management's attitude of total idiocy - "you'll get the same money in the month". I still have the email with it written. It's a complete difference from STARTING a job with fortnightly pay, where you have a bit of negotiation room.

They way they put it, it meant that they would have adapted the salaries to compensate in a way that two fortnightly pays = one monthly pay - which would have completely plausible as it's a big company where a lot of people didn't receive any raises in years.

Anyhow:

Mrs OBumble wrote: »

To be blunt, if you are managing your money in a way that this is a problem, then you are living outside your means.

If the boiler breaks in November, you should be paying for the repair from your savings, not from October's paycheque.

In general, you should have enough savings to tide you over for three month living expenses - because if you got sick and could not work, it would likely take this long for welfare to start paying you a benefit.

Some people aren't lucky enough to have a Celtic Tiger level income. You don't know about the situation - my expenses are actually the bare minimum for a relatively decent lifestyle (roof over the head, bills, car to go to work). Going out/holidays/extras are kept to a minimum, if any at all. I know for a fact that this would be considered unacceptable for most people.

Mrs OBumble wrote: »

In terms of being short 300 euro in the months that only have two pays in the - you would be better off thinking of your self as XYZ euro up in the months that do have an extra payment. Plan your budget on what you get paid in two pay periods, and use the occasional "extra pay" for savings or treats.

So in short, what you are saying is "think that your salary was reduced by 300 Euro, and consider the two extra payments as extra". Which is exactly the way I see it and the reason why this is a problem.

I guess the landlord should also be happy if I tell him "hey, from now on I'll give you not 800 a month, but 370 every two weeks". He'll make two calculations, and come back with a resounding no, 'cause he has expenses now, not every six months when the balance adds up.

davo10 wrote: »

The flip side of this is that many employees have expenses that they pay immediately on receiving their monthly payment leaving them "short" the last week of the month so more frequent payments make it easier to manage incomings and outgoings. If your earnings are the same, what is the issue? You just adapt to the payment schedule.

They are not the same - as I said, in the month I'm earning nearly 300 Euro less. It will balance at the end of the year, but the expenses are monthly, as you said. So imagine this: the same employee who was paying stuff when the monthly paycheck came in and was "short" on the last week, now is getting a chunk less money each month for 5 months periods, with a "balance" at the 6th month.

Tigger wrote: »

im confused
lets say you earn 26k
so you get 1k every fortnight so by week 12 of a given year you will have received 6k
if you had been being paid monthly you would get 26/12 a month or 2,166 a month and by week 12 you wold have recieved 2 monthly payments
after 13 weeks you would have recieved 6.5k but after 14 weeks youd have recieved 7k so its swings and roundabouts with you generally being one weeks wages ahead of the monthly system

You are never really a "week ahead", it's illusory as by the end of the month you'll be nearly one week behind:



In your example, at the 28th of February the worker is already 332 Euro behind compared to the monthly schedule. Sure enough, on March 1st he/she'll get 1000 and another 1000 on March 15, so it appears he'd be initially 668 and then a whopping 1668 better off, but he'd be a fool to think so - he has to hang on that money because, compared to the guy paid monthly, on March 30 he'll be 498 Euro short. And the situation worsens and worsens until the "breather" of June.

The big issue stems from moving from one form of payment to the other, as I said already, and the fact that billing is monthly - most providers, at least the ones I use, don't want to know anything about "fortnight" payments. The landlord doesn't want to know about it. You are literally forced to budget monthly, and in that regards, the guy above is 166 Euro short.

To put it into other terms - If I told you "I'll take 1200 Euro off of you now, but I'll give back in 6 months guaranteed, keep that in mind", you'd be pissed off - and royally so

davo10

This has to win the prize for the strangest work problem yet. Op, in certain months you would be paid three times instead of twice, and if the gross/net balances out over a year, I think most readers would struggle to see your grievance.

dissed doc

I agree with the OP. Fortnightly salary is a pain, and is not in sync with how the normal world works. Mortage, rent, bills, everything uns on a monthly basis. It is more difficult to plan, especially if you are not earning a lot of money. It should be possible to simply request monthly salary like the civilised world and all service providers.

Mrs OBumble

There are plenty of people who regard monthly pay as abusive, and believe that we should all be paid weekly and not forced to wait a month.

H3llR4iser

davo10 wrote: »

This has to win the prize for the strangest work problem yet. Op, in certain months you would be paid three times instead of twice, and if the gross/net balances out over a year, I think most readers would struggle to see your grievance.

I myself fail to see how you and others can't see the issue. You are in a job for years and get paid a certain amount monthly. [/B]You organize your life around it - rent, bills, standard expenses. All of these run monthly courses, and there's no way around it. So, when renting a place, you go "I earn X a month, this costs Y...I can afford it!". Then one morning your employer goes "oh, I'm paying fortnightly now" and, because of that, it also means "I'm gonna keep a significant bit what you used to earn each month, and give it to you every six months". I really, really struggle to see how people think this to be ok. The "X" you had your expenses tailored to, is now X-t for periods of 5 months.

To make a long story short, once you've taken rent, electricity, internet, mobile credit, fuel and food expenses out, I'm now left with very little - meaning, it's as if I was effectively paid every 6 months.

dissed doc wrote: »

I agree with the OP. Fortnightly salary is a pain, and is not in sync with how the normal world works. Mortage, rent, bills, everything uns on a monthly basis. It is more difficult to plan, especially if you are not earning a lot of money. It should be possible to simply request monthly salary like the civilised world and all service providers.

That is it - somebody that's in touch with reality and understands the psychological pressure issue - you get the same amount of money in a year, but it comes through a drip with fortnightly pay. You never have the peace of mind of knowing that your monthly bills will be covered without having to dip into your savings even if something unexpected happens during the month (bar loss of income, but that's a completely different issue). When that "third salary in one month" comes, you will not want to touch any of it, because you know it's gonna be though for the next 5 months. My salary is quite a bit below average for the position I'm in, thanks to starting this job during the "recession", but I was more or less fine until the switchover - I even managed to save a little bit most months. Maybe it was just 100 Euro, but it was something. Now, I have to wait 5 months to have a bit of breathing room.

Mrs OBumble wrote: »

There are plenty of people who regard monthly pay as abusive, and believe that we should all be paid weekly and not forced to wait a month.

Frankly, I find weekly or fortnighly pay as stupid and archaic. Some people love it because they end up with holiday and Christmas money - the "extra" payments in May and December, which feels like your employer trying to manage money for you. Is it more "difficult" to budget for a monthly salary? Maybe, you need some discipline to make the money last. But I'll take discipline and a chunk more cash any day.

Besides, I will reiterate, what do you think about the misinformation "campaign" that I spoke about in the OP? Do you believe there are grounds for a complaint?

bonyn

Op, your spreadsheet's wrong. If you get paid fortnightly, they you will be paid on 1st January 2016, 15th January 2016, and 29th January 2016. So you're actually "better off".
Furthermore monthly pay has similar issues. Ff you get paid on the last Friday of each month, some times there will be 5 weeks instead of 4 til payday.

dissed doc

bonyn wrote: »

Op, your spreadsheet's wrong. If you get paid fortnightly, they you will be paid on 1st January 2016, 15th January 2016, and 29th January 2016. So you're actually "better off".
Furthermore monthly pay has similar issues. Ff you get paid on the last Friday of each month, some times there will be 5 weeks instead of 4 til payday.

Monthly pay is usually on a fixed date. Regardless of the amount of time, the monthly salary payment will be mostly (for 10 months of the year) bigger than the 2x fortnightly payments. The idea is the have a your income and outgoing all on the same schedule. That helps budgeting and planning and saving. It doesn't matter if it is sometimes almost 5 weeks because that goes for all bills as well.

And because your bills like rent, phone, television, are all monthly it is easy to see how much you have per week. I remember when the HSE changed from monthly to fortnightly and it was never normal, especially as medics end up on emergency tax every 6 months, and no as a very basic medic I did not earn a huge amount, and with monthly bills, you are always running tighter, and then every 5 months you get an "extra" payment but in reality, you have already had to spend that money because it is the extra few hundred per month that adds up after 5 months.

A salary of e.g., 30k is 24k net roughly. Getting 2k once per month on a set date is great. You know rent is say 650 a month, mobile phone is 50 a month, etc., . You can get income and all bills sorted on the same day, plan saving easily, etc., .

Now, if you are getting 923 every fortnight, on different days each month, it is only good if you are already pretty liquid. Most people are not! Throw in monthly fees for insurance, car loan, etc., . Everything on the planet works on months.

I think, weekly or fortnightly is more for people who are picking up short term work and want a more regular paycheck. That is fine, if someone else is paying your bills and housing costs!

caviardreams

But on that basis, on the 15th February you are over €1800 ahead of what you would have been paid on a monthly schedule. Is that not an advantage? Instead of having to wait until the end of the month, you actually get paid sooner. It's a positive thing imo.

bonyn

dissed doc wrote: »

Monthly pay is usually on a fixed date.
....
Now, if you are getting 923 every fortnight, on different days each month, it is only good if you are already pretty liquid.

If monthly pay is on a fixed date, you get paid on different days each month also

Avatar MIA

Most people would see the benefit of more frequent payments, with it averaging out the same over the year.

Now, here's the thing. IF your company does AS YOU SAY, and a lot do. Then they are overpaying you by paying fortnightly.

Because, while there are indeed 12 months in a year, there are not 52 weeks in a year or 26 fortnights. If they simply divide your Gross salary by 26 then you are gaining.

I'll leave you do the math to figure out how much you'll actually gain - don't want to totally spoon feed you.

dissed doc

bonyn wrote: »

If monthly pay is on a fixed date, you get paid on different days each month also

No:

you get paid e.g., on the 25th. If that is a weekend or bank holiday, it is is typically on the closest working day before it. If 25th is a Sunday, you get paid on the Friday for example, like in January 2015.
- So, you are never behind in the total salary if it happens that the date is not on a normal working day.
- the issue is about getting all your salary at a time which you need it, not being paid "back" once every 5 months the missing 5-10%.
- you are never behind or short-salaried in monthly payments, but it can and does happen with fortnightly salary changeovers.


IN February 2015 for example the company changes to fortnightly, but as is normal, salary is not paid in advance, it is paid in retrospect for work done. So, the first two weekly salary is after the first two weeks, e.g., during the third week. So on around the 17th of February you get two weeks salary, but all your bills are arriving anyway still on a monthly basis. They next fortnightly pay is e.g., 3rd of March. And even at that point, you are now down almost 200 euros going into March, and are already behind on bills.

That is why is sucks. And it takes months to recover from it, until you have a few grand in the bank as a afloat. A lot people on smaller salaries do not have that and budget pretty tightly. It will take 5 months after the beginning to get into the cycle ahead of the paychecks, and not be behind all the time.

Now, jobs are not permanent. For me, it was moving jobs every six months as is the norm. So, you start a new job in July, and get paid for 2 weeks during the third week of July. Your rent or mortgagee, eg., must be paid for example before the 30th of the month, but you have only been paid 923 during the whole month instead of 2000. So you are broke, because 923 is not enough for a month to live, pay rent, petrol, eat when you are working. Throw on the HSE prize of being on emergency tax with every new hospital every six months and it was a complete mess. Almost invariably, the first fortnightly salary would only be paid after the first 4 weeks of work, so roughly at around week 6 you would be paid for the first two weeks. It makes everything needlessly complex and also difficult when trying to track the regular underpayments on salary (but that is just the HSE, maybe other employers are more reliable and don't **** with your salary so much).

If it works fine with monthly salary, why mess it up. It is fine if you are earning more and can cover bills from one fortnightly salary but many can't when you are earning 20-30k or at the beginning of a working life.

the_syco

On the fortnights that you receive more, do you come out with less due to tax?

Avatar MIA

the_syco wrote: »

On the fortnights that you receive more, do you come out with less due to tax?

No, their tax credits and bands would also be distributed fortnightly.