Why are annual salary divided this way?

Question

I just graduated and this is my first "salary" based job. So bare with me.

When I got my pay check, I realized my salary is divided down into 13 months, and then divided again into 4 weeks (the later, I understand, I get paid on a weekly basis, but the 13 months instead of the 12 months system? I don't quite get it). Can someone explain in detail for me? Thanks :)

And when you get a signing bonus, do you usually get it within the first month or what (it's been two paychecks for me, and still no signing bonus)?

Answer 1

There are 52 weeks in a year, or an average of 4 1/3 weeks per month, so dividing into 13 "months" lets you know exactly what to expect from every four-week period, and thus what to expect each week.

As for a signing bonus, that tends to vary from place to place. Some employers pay what they call signing bonuses, but which are actually loyalty bonuses, once an employee has stayed on for a certain period of time (one month, six months, etc.). Some pay right up-front. I'd ask your HR department.

Answer 2

More than likely, your annual salary was divided into 52 weeks because there are 52 weeks in a year. If they actually DID divide it into 13 and then into 4, it's because there are four quarters to a year with 13 weeks in each quarter. Either way it works out to the same amount.

As for the signing bonus, it's supposed to be paid when you sign your contract (or at least on your first paycheck). If you didn't get it, you should ask for it.

Answer 3

Hi Sassy,

I have never worked in payroll and always paid someone to handle it for me so I am guessing on this one based on experience.

Companies are calculating your compensation for their BENEFIT to level cash flow per pay period and maximize their tax advantages.

If you get paid weekly keep in mind that there are a couple months with THREE weeks; kind of BONUS time for you.

Try this. Take your salary and divide it by 52. To make the math easy assume that you are making $26K a year or $500 a week. After 4 weeks (or paydays) your GROSS income should be $2,000.

If every month had FOUR weeks it would work out after a year at 48 times $500 or $24,000. Now add the additional 4 weeks and you are at $26,000.

Net compensation I can't even guess because of the tax issues, social security and IRA contributions.

If this makes no sense, go to payroll and ask them. If they gave you a signing bonus they want YOUR FULL ATTENTION and NOT bothered by a festering sore about compensation.

Regarding the signing bonus. Look at your offer letter and it should be addressed. They may have specified when it would be paid contrairy to what they may have "implied" during verbal discussions.

If it were my call it would be paid AFTER your probation period. In California, probation is 90-days at will. Yours may be different so check the offer letter for the details.

If you are working for a small company with no real policies then you are on your own to SELL IT based upon your initial performance.

Just make yourself so VALUBLE that they CAN NOT afford to LOOSE you over something STUPID.

Good Luck,
Jacques

Answer 4

There are 52 weeks in a year, and if you divide 52 / 12, there are 4.3 weeks in a month - but 13 * 4 = 52, that's why they "make" 13 months first.

You should have gotten your signing bonus with your first paycheck, unless it was conditional on you staying a certain period of time. I hope that the offer is in writing, or they may refuse to pay it and you have no recourse - not written, not said.

Answer 5

Most companies payrolls are set to run every two weeks. Since there are (as may have pointed out) 52 weeks in a year, that means there are 26 pay periods, two per month. Except that twice a year (if you get paid every 2 weeks) you get and extra paycheck that month. Paydays "float" through the months. It's a bit confusing at first, but you'll get used to it.

You should ask whoever told you about the signing bonus as to when it will be paid. They might be holding it until you pass a probationary period?

Answer 6

This a very accurate payment system. It's well balanced as far as income tax is concerned. Most people who use this pay on a two week basis. Not at all unusual. $52,000 a year divided by 52 weeks = $1,000 a week or $4,000 a month for 13 months.

The signing bonus is another story. I'll call the payroll department on that one.

Answer 7

13 times 4 is 52, the number of weeks in a year. The average weeks per month is actually 4.33 so if they were to divide by 12 first, it wouldn't work out in the long run.