27th and 53rd payroll

A 27th payroll period occurs approximately every 11 years for employers who pay employees on a biweekly schedule. Because a biweekly pay cycle results in 26 pay periods in most years, a calendar alignment will occasionally produce 27 pay periods within a single calendar year. This creates challenges for payroll professionals: annual salary calculations based on 26 pay periods will overpay salaried employees if adjustments are not made, benefit deductions calculated as flat amounts per period may be over-withheld, and tax withholding calculations may require recalibration. Employers must proactively plan for the extra pay period by reviewing salaried compensation arrangements, communicating changes to employees in advance, and adjusting payroll software settings accordingly.

A 53rd payroll period can occur for employers using a weekly pay schedule when the calendar year contains 53 of the designated payday (e.g., 53 Fridays). Like the 27th biweekly payroll, a 53-period year happens infrequently but requires advance planning to avoid payroll errors. Hourly employees are straightforward—they are simply paid for the hours worked in each period. But salaried employees present a challenge: if annual salaries are divided by 52 for weekly pay, an extra period creates an overpayment situation unless salaries are prorated over 53 periods for that year. Benefit deductions, retirement contributions, and garnishment calculations should all be reviewed and adjusted. Payroll professionals benefit from identifying upcoming 53-period years well in advance to update policies and notify employees.

Handling salaried employee pay during an extra payroll period year requires a deliberate policy decision and clear communication with employees. Employers generally have two options: reduce the per-period pay amount so that total annual compensation remains unchanged across 27 or 53 periods, or maintain the normal per-period amount and absorb the additional cost. Both approaches are legally permissible, but each has implications for employee morale, budgeting, and benefit calculations. Whichever approach is chosen, employees should be notified well in advance—ideally several months before the extra period occurs. Payroll software must also be updated to reflect the correct annual period count. HR, payroll, and finance teams should coordinate on the decision and document the rationale to ensure consistent treatment across the organization.

An extra payroll period—whether a 27th biweekly or 53rd weekly period—can significantly affect benefit deductions and retirement contributions if they are structured as flat amounts per pay period rather than percentages of salary. Health insurance premiums, HSA contributions, FSA elections, and supplemental insurance deductions set as per-period flat amounts will be deducted an additional time, potentially causing employees to over-contribute to certain accounts. For 401(k) contributions expressed as flat dollar amounts per period, employees may hit IRS contribution limits early, creating excess contribution issues. Payroll teams should audit all per-period deduction amounts well in advance of an extra-period year and work with benefits administrators to determine whether adjustments or employee communications are needed.

Communicating an extra payroll period to employees is an important step in preventing confusion and maintaining trust. The message should be delivered early—ideally in the prior year's fourth quarter—and should clearly explain what an extra pay period means, how it will affect take-home pay, and what changes, if any, will be made to salary or deductions. If the company is choosing to prorate salaries, employees will notice a slightly smaller paycheck and should be warned in advance. The communication should come from HR or payroll and be reinforced through multiple channels—email, employee portal notices, and manager briefings—along with FAQ documents addressing common employee questions.