A pay cycle is the repeating schedule on which a group of employees is paid. It bundles a frequency, a start date and a number of periods into one structure that the payroll runs against.
What it means
An employer can run more than one pay cycle at once - for example a monthly cycle for salaried staff and a weekly cycle for waged staff. Each cycle has its own set of numbered periods within the tax year, and an employee belongs to exactly one cycle at a time.
Where it fits in
The pay cycle determines which employees are processed together in a given pay run and how their PAYE is annualised. All the cycles' results still consolidate into the same monthly EMP201 for the employer, even though they were calculated on different schedules.
Key rules
- Defined by a frequency, a tax-year start date and a period count.
- An employer may operate several pay cycles in parallel.
- Each employee is assigned to one pay cycle, which sets when and how often they are paid.
- All cycles roll up into the employer's single monthly EMP201.
