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Everything You Need to Know About Payslips

By
Kihu
Stan

Global Payment and Compliance

Everything You Need to Know About Payslips

What is a payslip? Details in a payslip. Calculating basic and net salary. Taxable deductions. What happens if you don’t get a give or get a payslip? Importance of payslips.

March 2, 2022
min read
By
Kihu
Stan
|
March 2, 2022
8 min read
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Everything You Need to Know about Payslips 

When was the last time you got a payslip? Did you check all the details on it? Payslip is not a new term to most people, especially those who work or have worked in the corporate sphere, big organizations, or companies. They are also referred to as salary slips. This post is a complete guide that decodes your payslip and its details. It also answers some of the frequently asked questions. Keep reading. 

What is a Payslip Anyway? 

A payslip is a document given to employees to show how much their employer paid them, and it entails a breakdown of all salary components, deductions, and allowances. It’s worth noting that a payslip can be a hard copy (print document) or soft copy (an email or accessed from an online system). Payslips are given on or before the payday. 

Often, people use terms such as a PayStub, Salary slip, and Itemized, Pay Statement to refer to a Payslip. 

But who should get a payslip? According to the International Labour Organization R085, workers should be informed with each payment of wages related to the pay period concerned as highlight the following particulars:

  1. Gross income of wages earned 
  2. Any deductions made (it should include reasons and the amount)
  3. The net amount of wages dues 

Details Found on a Payslip 

Payslips vary, and a company might have a different payslips format from the other. Additionally, laws governing employment and labor-related issues may differ from country to country. However, specific details must be on any payslip regardless of your employer. Let’s decode the details of a payslip. 

Employers details 

Your employer’s details should be included in a payslip. For example: 

  • Employer’s name 
  • Employer’s address 
  • Signature or stamp of the employer 

Employee’s details 

Below are details of employees that should reflect on a payslip: 

  • Employee’s name
  •  Payroll number 
  • Employee’s address 
  • Employee’s ID or other vital details such as social security number, tax code/pin, insurance number, bank account, etc. 

Income and allowances 

Any payslip ought to show the basic salary and allowances an employee gets. However, allowances vary depending on what your employer has to offer. They include house allowance, medical allowance, conveyance/travel allowance, performance allowances, etc. 

Deductions 

Most employees get deducted a certain portion of their salary/pay, which must be included in the payslip. Deductions might vary depending on your employer, profession, regulations set, and country you work from. 

Common deduction might include things like: 

  • Tax deductions 
  • Professional deductions 
  • Union dues 
  • Loan(s)
  • Child maintenance fee
  • Insurance deductions 
  • Court order deductions 
  • Penalties, etc. 

Note: any deductions should also be represented with the exact amount for each deduction and possibly an account number the deduction was paid into.

Date of payment and  pay period 

Your employer should indicate on the payslip the exact date your salary or wage will be credited to your respective bank account. A payslip should also indicate your salary's pay period, i.e., an outline of exact dates 

Additionally, some employees might include par rates and hours worked. They can be shown as a single total or broken down to daily and weekly hours worked. 

Total gross and net pay 

Every payslip must indicate the total gross and net amount of pay an employee will receive. 

What is the total gross pay? It’s the total amount of money an employee has earned before deductions from his pay. 

What is the total net pay? It’s the actual earning an employee receives after all deductions have been made.  It’s also called “take-home pay.” 

Importance of a Payslip 

Are payslips of any essence to an employer and the employees? No doubt, a payslip is essential to both parties. Here is how: 

4 Reasons payslips are important to an employee: 

  1. It’s proof you’re employed. Sometimes while applying for a new job, you might be required to show payslips. It validates you’re working for a particular firm, organization, or company and earning a certain amount of salary.  You can as well use it to negotiate salaries. 
  2. It’s proof of financial stability to financial institutions while applying for loans or mortgages. Payslips are among the vital documents you must submit while applying for loans.
  3. You can use it as a legal document when the need arises. By the way, a payslip is termed a legal document, and that’s why regulatory agencies, governments, and financial institutions outline specific formats for payslips. For instance, you can use payslips as reference documents in resolving conflicts involving money claims against your employer. 
  4. It’s proof of income and helps you file income returns. 

3 Reasons payslips are important to an employer 

  1. A payslip to employees is formal confirmation that you paid your employees and how much you paid them. Therefore, it’s a legal document you can use in payment claim cases against your employees. 
  2. It shows you, as the employer, you’ve upheld your side of the contract and compensated your worker or employee. 
  3. It enhances the employer's and employees' transparency on how much was deducted and the reasons for the deduction. 

Frequently Asked Questions 

What happens if you don’t get a give or get a payslip?

In most parts of the world, law and labor agencies require employers to give their employees payslips within a certain period and include all the necessary information. Failure to adhere to respective set laws and regulations could lead your business, organization, or company to be fined or sworn before a court or served with an infringement notice. 

If you’re an employee or worker and don’t get your payslips, you should first check with your employer or manager before raising a formal complaint. However, if your problem isn’t solved and you’re entitled to get a payslip, you can now forward a claim to the relevant employment tribunal. 

Why should you keep your payslip, and for how long should you keep it? 

A payslip is proof of your earnings, and you can use it in instances such as obtaining loans from banks, filing your tax returns, and in legal claims against your employer regarding payments. Additionally, payslips contain some of your confidential information, such as bank account numbers 

The period you keep a payslip varies depending on your reasons to do it and your respective location.  For instance, according to the United States Department of Labor (DOL), payroll records should be kept for at least three years, while the UK's HMRC recommends keeping payslips for at least 22 months. 

Why is it important to check your payslip? 

It’s essential to check your payslip after receiving it to ensure the pay and details on the payslip are correct. 

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