Universal Credit claimants can lose hundreds over date they get paid - charity
Being paid early as a result of weekends or bank holidays makes it look like a worker has earned more because they receive two payments in a calendar month.
The figures skew how much they are then assessed as being entitled to in benefits, according to the Child Poverty Action Group (CPAG).
It said one in 20 cases analysed by its early warning system, which uses evidence from welfare rights advisers to identify issues, were hit by problems with the monthly assessment system.
Alison Garnham, CPAG chief executive, said: "Universal Credit isn't working for working people.
"Our early warning system shows? claimants are often left flummoxed by how much, or how little, universal credit they will receive from one month to the next.?
"But we believe most of the problems created by the monthly assessment system can be fixed relatively easily if the political will is there.
"The mass migration of families on to universal credit should not begin until these fundamental problems are resolved."
Assessments for allowances are based on the date the benefit was first awarded to a claimant.
If the claimant's payday is on or close to the first day of their assessment period it can have a significant impact on how much they receive, CPAG warned.
"In the worst cases, people are losing out on significant amounts of money - hundreds of pounds over the course of a year - simply because of when their paydays and assessment periods fall.
"This unfairness is most starkly shown by the experience of employees at the same company, with identical hours and pay, some of whom are subject to the benefit cap most months of the year simply because they are on a four-weekly contract, while their colleagues on a monthly contract are not."
Back pay and tax rebates can also trigger the problem, the charity warned.
And the issue can also lead to claimants losing out on free prescriptions, eye tests, wigs and glasses.
As well as over-assessing how much someone has earned as a result of two paydays falling within one month, the system can also penalise them the following period, it found.
A cap on benefits payments that covers low earners who generally work under 16 hours a week can be triggered because the claimant appears to have zero payments in the month after their double payday.
CPAG called for reforms to the system, including allowing claimants to change the date of their assessment period dates so they do not clash with paydays.
It said earnings should be averaged when assessments are made over whether the benefit cap should be imposed.
"The problems we have identified undermine some of the key selling points of UC, namely that it was supposed to be simple, adjust to people's earnings in real time, and reward work or increased earnings in ways which are easy to understand," the report said.
"In reality the current monthly assessment system is a huge oversimplification which does not reflect the reality of people's lives and work."
Unison general secretary Dave Prentis said: "It's wrong that working people are losing money because of flaws in the system.
"This is causing chaos as this report starkly highlights. No family should be hundreds of pounds worse off just because of when they're paid. It means they can't budget.
"The Government has created this mess and it needs fixing quickly."
A Department for Work and Pensions spokesman said: "We are listening to stakeholders' concerns and working on issues regarding payment cycles and we will consider this report carefully."