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Many employers are preparing for a unique payroll challenge in 2026: the year includes 27 pay periods instead of the usual 26.
Once every 11-or-so years, the stars align for a 27th biweekly pay period.
However, this extra pay period can create budgeting, compliance, and administrative headaches if not handled properly.
At Namely, we understand how complex payroll management can be, which is why our all-in-one HCM platform is designed to simplify payroll processes, compliance, and reporting for growing companies.
Worried about that extra pay period this year? Follow these five steps to stay ahead and keep your employees paid and compliance teams happy.
How can Companies Handle an Extra Pay Period?
There are two different payroll strategies for tackling Pay Period #27: pro-rata adjustments or a pay-as-usual approach.
Understanding Pro-Rata Adjustments
With this approach, employees keep their annual salary, but their biweekly pay is recalculated to spread that amount evenly across all 27 pay periods.
How It Works:
- Divide the employee’s annual salary by 27 instead of 26.
- Each paycheck is slightly smaller, but total annual compensation stays the same.
Example:
A salary of $52,000 normally results in $2,000 per paycheck ($52,000 ÷ 26).
In a 27‑paycheck year, the biweekly amount becomes $1,925.93 ($52,000 ÷ 27).
What Employers Should Know:
This option keeps payroll budgets predictable, and that’s a big plus! Just be prepared to communicate the change early and clearly so employees understand why their checks look different.
Understanding “Pay As Usual” (Employee‑Preferred)
This option keeps things simple: employees continue receiving the same biweekly amount they’re used to, even in a 27‑paycheck year.
How It Works:
- The biweekly pay rate stays the same as a 26‑pay period year.
- Employees are effectively paid two extra weeks of salary over the year.
Example:
A $52,000 employee keeps receiving $2,000 biweekly, totaling $54,000 by year‑end.
What Employers Should Know:
Employees love the consistency (and the extra “surprise” bump at the end of the year). Employers, however, should anticipate the additional payroll expense and how it may affect annual budgeting or cash flow.
5 Steps for the 27 Pay Periods
Once you’ve determined pro-rata vs “pay as usual” for your company, these five steps are crucial to continuing down the 27 pay period path.
1. Understand How and Why 27 Pay Periods Occur (and Tell the Others!)
Every 11 years or so, the calendar aligns in such a way that a biweekly payroll schedule results in 27 pay periods instead of 26. This happens because there are 52 weeks plus one extra day (or two in leap years), which can slip in an extra paycheck within the fiscal year.
Awareness is the first step. Knowing which years have 27 pay periods lets you prepare your budgeting and payroll schedules accordingly.
And don’t forget to clue in administration and/or executives who might otherwise be out of the loop!
2. Communicate Early and Transparently with Employees
Once you’ve explained it to those figures signing off on paychecks, it’s time to tell your employees about which payment option you’ll apply in 2026!
An extra paycheck may bring questions or confusion from your employees. Will the extra paycheck affect benefits, tax withholdings, or deductions?
Clear, proactive communication can ease employee concerns and even become an engagement opportunity. Use your HR platform’s communication tools, like Namely’s integrated messaging and mobile app, to keep your workforce informed about the payroll calendar changes and what they mean for them.
3. Adjust Your Payroll Budget Accurately
That extra pay period means a company-wide increase in gross payroll expenses for the year.
Adjust your budgeting to reflect this change so your finance team or payroll does not encounter surprises. Payroll software integrated with real-time reporting and forecasting — like Namely’s Reporting module, can help you visualize the financial impact and make informed strategic decisions.
4. Review Payroll Tax and Compliance Impact
An additional pay period affects payroll tax calculations, benefit deductions, and other statutory withholdings.
Ensure your payroll system accounts for the 27th pay period according to IRS guidance and local regulations.
Namely’s payroll automation simplifies tax handling and compliance across multiple states and jurisdictions, shielding you from costly errors.
5. Tap into Technology to Simplify the Extra Pay Period
Manual payroll adjustments add extra work and risk for your HR team.
With an all-in-one payroll and HR platform like Namely, you can automate payroll processing including unusual payroll years.
Namely’s managed payroll and compliance services relieve administrative burden, allowing your HR and finance teams to focus on strategic initiatives instead of manual calculations.
Final Thoughts
The 27 pay periods in 2026 don’t have to be a headache for your payroll team or employees. By understanding the how and why, communicating clearly, adjusting budgets, ensuring compliance, and leveraging technology like Namely’s integrated HCM platform, your company can navigate this payroll quirk confidently.
Ready to simplify your payroll with an intuitive, all-in-one platform? Request a demo today and see how Namely can help your business thrive in 2026 and beyond.
Namely — More Than Payroll. A Better Way to Work.
2026 Payroll: Managing 27 Pay Periods
Prepare for 2026’s 27th pay period. Learn how to manage pro-rata adjustments or "pay as usual" strategies to keep your budget and employees on track.
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